The Debt People is the name of a debt advice company that provides nationwide services in the UK. The Debt People is a privately owned company. The company offers consumers advice and information on various debt solutions. They have a free 24-hour phone line at 08000 285 286. The Debt People is composed of counselors, lawyers, accountants and others who can provide comprehensive answers to most debt questions. They specialize in IVAs or Individual Voluntary Agreements, but can provide advice on other options, also.(www.thedebtpeople.co.uk)
Why are IVAs so popular lately?
The rate of people choosing IVAs has indeed risen sharply over the past few years. Introduced in the mid-80s as a tool for sole-action traders to avoid bankruptcy, they have been discovered by consumers as an attractive option to bankruptcy and, more importantly, by companies who make a great deal of money processing and administering them. In 1998, there were less than 5,000 IVAs nationwide, and by 2005, there were over 20,000.(www.iva-information-centre.org.uk) Some experts predict this rate will rise to 100,000 per year in the next few years. Reasons for their increased use include:

1. There are more people with debt problems than ever before. It is estimated that over 2 million UK citizens have unsecured debts of over ₤10,000.(www.creditaction.org.uk)
2. IVAs offer some benefits to the consumer that bankruptcy does not, such as retaining possession of homes and jobs, and less publicity.
3. IVAs offer some benefits to creditors in comparison with bankruptcy. In bankruptcies, creditors often recover less than 10% of debts, while with IVAs, creditors can recover in excess of 35% of debt.(www.dailyreckoning.co.uk)
4. IVAs are strongly promoted and advertised by debt management companies as the answer to consumers’ debt problems. Money Guardian says “Aggressive marketing has sent IVA numbers soaring.” (www.moneyguardian.co.uk)

Are IVAs the answer for everyone with debts?
No, IVAs are really only suitable in certain circumstances. The Debt People note that for consumers with debts under ₤15,000 they may suggest a do-it-yourself packet with information and forms to allow you to deal with creditors yourself. They also note they do not handle consolidation loans, but may suggest a company who does, if it is in your best interest. They may also recommend you to their sister company DebtPoint, if you prefer a debt management plan.
            IVAs are for people with over ₤15,000 in unsecured debt to two or more creditors. It is also required that you have sufficient disposable income to make the payments of generally ₤200-300 per month. (www.iva-information-centre.org.uk)  The Debt People and many other companies will set up an IVA agreement for you if you meet these guidelines. If you cannot afford the payments, bankruptcy may be an option for you.
How much do IVAs cost?
Most debt management or IVA companies state that the client pays nothing, all fees are paid by creditors. However, fees come out of the monthly payments made by clients, and usually before any other payments are distributed. The Debt People, in their IVA contract arrangement note that “Fees, costs, charges and expenses of the supervisor shall be paid out of the assets of the arrangement…paid in priority to all other charges” (www.thedebtpeople.co.uk)  Most companies charge a  “setup” or “nominee” fee at the beginning of the agreement that can cost from ₤1200—1500 and supervisory fees  generally run about ₤500 per year for 5 years. (www.iva-information-centre.org.uk)  IVA fees usually start around ₤4,000. (www.uk.biz.yahoo.com)
            Many experts are critical of the advertising barrage touting IVAs as the answer to consumer debt. Paul Lathem, financial director of DebtFree Direct, says “There are people in our industry who are not giving the best advice either to the debtor or the lender. Some advisors charge the debtor upfront to arrange an IVA which is not refunded if no agreement is reached.” (www.uk.biz.yahoo.com)
            Neil Pearson, national debt coordinator for AdviceUK, says “Debt management companies are attracted to the high fees that can be generated by offering IVAs.” and  non profit organization Consumer Credit Counseling Services notes that it recommends IVAs to only 3%  of its clients. (www.uk.biz.yahoo.com)
How Does an IVA work?
Most IVA companies such as Debt People and others, begin by reviewing your financial situation. If you have unsecured debts in excess of  ₤15,000 to 2 or more creditors, and have sufficient disposable income to make the monthly payments, an agreement will be drawn up submitting your proposed amount of repayments to your creditors. A meeting of your creditors will be arranged and if 75% by value of the creditors agree to the plan, it will become a legally binding document. All creditors, even those who did not vote for the agreement, are bound by the agreement. (www.w3debtsolutions.co.uk) After you make the scheduled payments for a term of generally 5 years, the balance of debt is written off.
Customer Comments about the Debt People
Several customer testimonials are included on the Debt People website including:

1. “Thank you so much for your expertise and always making me feel like a real person.”
2. “Now I can see the light at the end of my tunnel and this is all down to you”—Mrs.B.
3. “I would like to put on record that my dealings with you and Gill have been probably the most friendly and professional I have experienced in any company.”—Mr. C.(www.thedebtpeople.co.uk)