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Avoiding bankruptcy no longer seems to be on most debtors' lists of priorities and the number of recorded bankruptcies is soaring. There were around 70,000 bankruptcies recorded in 2005 and about 45,000 of these were voluntary bankruptcies. This statistic clearly demonstrates the worrying fact that a large proportion of debtors see bankruptcy as a debt solution rather than as something to be avoided.

Bankruptcy trends are changing in a way that is concerning economists. In the late 1990s the UK also experienced increasing bankruptcy rates. However, 60% of these bankruptcies were as a result of companies becoming insolvent. The picture is very different today as most bankruptcies are the result of individual insolvencies. In the fourth quarter of 2005 there were 20,461 bankruptcies which resulted from individual insolvencies. This figure represents an increase of 57% against the same period in 2004.

Although many people do not seem concerned about avoiding bankruptcy they really should do so if at all possible.

Avoiding bankruptcy is important because of the penalties, disadvantages and stigmas that it carries.

Going bankrupt often means losing your home and your business and professional status. It also means that it is impossible to hold public office or form, manage or promote a company in the future.

Bankruptcy should also be avoided because it makes it very difficult to obtain credit and your employment prospects can be prejudiced.

Avoiding bankruptcy is both advisable and possible with an IVA. The government introduced IVAs in 1986 to help people to avoid bankruptcy.

An IVA is a binding agreement between a debtor and their creditors. The debtor agrees to repay their debts over a five year period via affordable monthly repayments. These monthly repayments can be as low as '200.

In return, the creditors freeze interest on the debt, agree not to contact the debtor while the IVA is in place and write off a proportion on the debt. It is not uncommon for as much as 85% of a debt to be written off with an IVA.

After five years the debtor is deemed to be debt free. There are no disadvantages or penalties associated with an IVA. Furthermore, because an IVA is a private agreement between a debtor and their creditors there is no stigma attached. As a result, an IVA is an excellent way of avoiding bankruptcy.