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Personal debt in the UK is growing at a phenomenal rate. This is shown by the fact that it broke through the '1 trillion barrier in 2004 just seven years after breaking through the '500 billion barrier. Indeed, since Blair came to office in 1997, UK consumer debt has doubled.

According to Oliver Letwin when he was shadow chancellor, 'As many as one in 20 households now use up more than a quarter of their income on consumer credit repayments.'

This is not just worrying from an economic perspective. Debt is also having a serious effect on the nation's emotion health and wellbeing. The results from a recent survey show that over 63% of people who seek debt advice have suffered from health problems caused by debt related stress.

It is possibly not surprising then that so many people are starting to set up IVAs as a way of dealing with their personal debt problems.

IVAs were introduced by the government in order to offer people a good alternative to bankruptcy. With an IVA a debtor agrees to a legally binding arrangement with his creditors to repay his debts over a period of five years.

In return, a certain amount of the total debt is written off altogether (sometimes by as much as 85%) and repayment amounts are based on what the debtor can actually afford. These repayments can be as low as '200 a month.

Furthermore, interest on the debt is frozen and the creditors are not allowed to harass the debtor. After five years the debt is written off as long as the terms of the IVA have been met.
IVAs are proving successful as a way of reducing debt related stress because they give debtors a viable way to clear their debts. Furthermore, as creditors are not allowed to contact the debtor whilst the IVA is in place, debtors can stop dreading the receipt of threatening letters which is a key source of stress.

IVAs are becoming increasingly popular owing to their attractive terms and the way in which they help debtors to feel less stressed. Indeed by the end of 2005, 20,293 people had entered IVAs which was an increase of 88.7% on the 2004 figures.