Research from RSM Tenon suggests that the number of personal insolvencies in England and Wales is set to reach 150,000 by the end of 2010. This represents a 12% increase on 2009 figures.

This rise is the result of an increase in the number of people entering Individual Voluntary Arrangements (IVAs). More than 47,000 people entered an IVA in 2009, an increase of 22% on the previous year. Additionally, the introduction of Debt Relief Orders (DROs) has led to a fall in the number of people entering into bankruptcy, with quarterly totals down 5.5% on levels seen in the final three months of 2008.

An Individual Voluntary Arrangement (IVA) is a legally binding agreement between the debtor and the Insolvency Practioner. The agreement freezes all interest rates and reduces the monthly repayments of the debt over a period of 5 years. IVAs are therefore aimed at people with higher levels of debt.

Debt Relief Orders (DRO) were introduced in April 2009 for people whose level of unsecured debt does not exceed £15,000. .A DRO usually covers a 12-month period, during which time the debtor will not have to make any repayments towards the debts listed in the order. What's more, during that same period, the creditors will be unable to take action against the debtor as an Official Receiver administers the debt.

Other debt solutions do exist. Debt Management Arrangements are aimed at people with relatively low levels of debt. Unlike IVAs or DROs, Debt Management Arrangements do not consist of a legally binding contract between the debtor and their creditors. It is an informal arrangement on behalf of the debtor's creditors whereby it is agreed that the debt's monthly payments are to be reduced. However, there is no guarantee that the interest rates are to be frozen. However, debt management companies will act on the debtor's behalf in order to prevent the level of debt from increasing.

Another solution aimed at people with a relatively low level of debt is Debt Consolidation. This involves regrouping all outstanding debts under one loan. Debt Consolidation is only viable if the service is deemed better for managing an individual's finances. A longer repayment period results because of lower monthly repayments.

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