en-us http://backend.userland.com/rss Your Friends @ Myvesta.org.uk (stever@myvesta.org) myvestaukblog_archive.html stever@myvesta.org 115298377946379514 The Governments plans to make it easier for consumers to take out Individual Voluntary Arrangements - should be coming closer to realisation.

Under plans currently being rubber stamped, a 'Simple IVA' will be introduced later this year or early 2007 and this will help speed up the application process and allow more people to apply for the debt repayment plan as an alternative to bankruptcy or non binding Debt Management Plans offered by charities and commercial groups.

Currently, for an IVA to be approved, creditors responsible for 75% of the value of the debt have to give the green light. It is expected that this will be reduced to 51% for people with debts below £75,000.

A standard application process and contract will probably also be introduced to speed up the time it takes to complete an IVA. However, it is believed plans to introduce another tier of IVA, which would have allowed anyone with debts below £25,000 to be automatically approved, have been rejected.

An IVA is a legally binding contract between an individual and his/her creditors that is less restrictive than choosing bankruptcy. Lenders agree to wipe out a proportion of the balance, usually up to 65p in the pound, if the creditor agrees to make a regular monthly repayment.

Existing IVA laws were introduced by the 1986 Insolvency Act and were designed for more complex business-generated debts incurred by entrepreneurs. However, in recent years they have increasingly become a tool for ordinary over-indebted consumers.

The Government wants to make it easier to take out IVAs in a bid to stem the number of consumers choosing bankruptcy. More than 47,000 declared themselves bankrupt last year, up from 35,000 in 2004, and the International Monetary Fund has warned that the UK economy could be damaged if the rate of growth continues.

Ironically, insolvency experts blame the rising bankruptcy rate on the 'quickie' bankruptcy law of 2002. It cut the discharge period - when a bankrupt cannot lead a normal financial life - from three years to one, making bankruptcy less damaging and embarrassing.

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