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If you've ever felt so overwhelmed by debt that you've considered going bankrupt, you've probably looked at the alternative -- the Individual Voluntary Arrangement (IVA). Maybe you've even opted for one as they're becoming an increasingly popular route out of debt. According to research by accountancy firm, KPMG, more than 16,000 people took the IVA route last year, an increase of more than 75% on the previous 12 months. An IVA is an arrangement between debtors and their creditors to repay a percentage of the debt over the life of the IVA -- usually 5 years. It's done under the supervision of an insolvency practitioner and at the end of the IVA any outstanding debt is usually written off. They're usually only suitable if the debtor has unsecured debts of at least £15,000 and in order for an IVA to be accepted, 75% (in value) of creditors must vote to accept it. The advantage to them is that they usually get back more than they would have had the debtor gone bankrupt -- on average between 35% and 40% of the debt. In return, the debtor does not suffer the same restrictions imposed on bankrupts and pays a single affordable monthly payment which is determined by how much they can reasonably afford to pay after their normal cost of living expenses have been deducted from their income. KPMG's research shows that debtors opting for an IVA owed on average £60,000 -- typically three times their annual income -- and it mirrors a study last summer by another accountancy firm, PricewaterhouseCoopers. Both firms have found that in most cases the debts have arisen not from unforeseen events such as unemployment or relationship breakdown, but from people simply living beyond their means. While IVAs are an increasingly popular way forward for people in financial difficulty, research has shown that many who take them on give up on them and end up going bankrupt anyway. Obviously it's best not to let it get that bad in the first place. So let the Fool help you Get Out Of Debt and visit our Dealing with Debt discussion board.
