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IVAs on the rise, despite fall in insolvencies

The number of struggling borrowers entering into IVAs (Individual Voluntary Arrangements) increased in the third quarter of 2011, despite a big drop in the overall number of insolvencies.

Figures from the Insolvency Service show that there were 13,048 IVAs between June and August this year - a 0.7% increase on the same period a year earlier, and a 7.5% increase on the second quarter of 2011.

But overall insolvencies fell by 11% on the third quarter of 2010, largely due to a sharp drop in bankruptcy orders (31.2%).

Debt Relief Orders saw a 7.6% increase on the third quarter of 2010, continuing their steady increase. Only in the final quarter of 2010 has the number of DROs fallen since their introduction in April 2009.

The figures may suggest that struggling borrowers are increasingly moving away from bankruptcy as a solution to their problems, although experts have noted in the past that falling bankruptcies may be in part due to pressure from the Government for lenders to be lenient towards struggling homeowners.