The number of people seeking to enter into Individual Voluntary Agreements (IVAs) rocketed by 117 per cent in 2005, according to an industry conference.
And the demand for this alternative to the blacklisting of bankruptcy is threatening to cause serious problems for creditors owing to the "huge volume of paper work".
The number of applications is taking its toll in terms of the cost of paper, packaging and post, with the same proposal sometimes "sent out as many as six times to creditors who may have customers with multiple accounts", according to KPMG's head of personal insolvency, Steve Traherne.
He added that ways to streamline the process needed to be found and a working party was set up at the conference to investigate the area further.
Another concern for the 125 delegates from the finance and insolvency industry was the need to confirm that an IVA is the most appropriate course of action for an individual struggling with debt.
IVAs allow people to pay off their debts to a number of different creditors using a single lump sum monthly payment.
However, they may not always be the best means of clearing debt, and it is necessary to be sure of keeping up with repayments.
There are also fees to pay and it may be necessary to release some of the equity in a property as part of the terms of the deal.
Debt consolidation loans are another alternative, offering lower interest rates and monthly repayments over a longer loan duration, often secured on a property. To read more about consolidation loans, click here.
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