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Last Updated: Tuesday, 24 October 2006, 10:21 GMT 11:21 UK
Boomtime for debt management firm
Advert for debts.co.uk
Debts.co.uk expects its advertising to generate much more business
The debt management company Debts.co.uk has reported a 62% jump in its annual profits to 2.1m.

The company is one of several that specialise in setting up individual voluntary arrangements (IVAs) for people who cannot pay all their debts.

The sector is growing rapidly, and Debts.co.uk said annual sales rose by 79% to 6.1m in the year to 31 July.

The government recently rejected calls by the banks for greater regulation of debt management firms.

The chief executive of Debts.co.uk, Paul Carter, said his firm had nothing to fear from greater regulation.

"The board welcomes the recent calls to increase the current levels of regulation in the IVA market and will ensure that best practice advice continues to be offered to our customers," he said.

Growing business

The results from Debts.co.uk - the first since it floated on the alternative investment market (AIM) in May 2006 - give an insight into the rapid growth of the business of arranging IVAs and offering other forms of debt advice.

IVAs are not the be all and end all
Paul Carter, Debts.co.uk chief executive

Currently handling about 140 IVAs a month, the company expects that to rise to 500 per month, partly thanks to a new advertising campaign which started last month.

Staff numbers have risen from 86 at the time of its flotation to 156 now.

The group, which covers three businesses, has moved into new offices in Borehamwood and is planning to expand into new purpose built offices in Chesterfield which can accommodate 400 employees.

About 50% of its customers end up in IVAs.

But the company also arranges formal bankruptcy proceedings, and also organises loans secured on its customers' properties - so they can use the equity in their houses to repay their debts.

Chief executive Paul Carter said: "It is about the whole market sector - IVAs are not the be all and end all."

Rising debts

With the level of personal unsecured debt now standing at more than 200bn, there has been a rapid increase in the number of people seeking to escape their debts by way of an IVA.

The procedure, first devised in 1986, is an alternative to bankruptcy and allows individuals to come to an agreement with their creditors so that they pay off a proportion of their debt but not all of it.

Some banking executives have complained that this is an easy escape route and is partially responsible for a big rise in their own losses to bad debtors, which totalled more than 3bn in the first half of this year.

However, earlier this month, Department of Trade and Industry minister Jim Fitzpatrick rejected their complaints, saying the problem was partly their own fault for lending money too freely.




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