Individual Voluntary Arrangements (IVAs) have been around since 1986 but increased awareness has led to an explosion in their use in the last few years.

IVAs are a halfway measure, which allow people to address their debts without declaring themselves bankrupt.

According to Pat Boyden, a partner at PricewaterhouseCoopers, they are effectively a "deal between a debtor and creditor" where the debts are frozen and current repayments scrapped in favour of a more manageable sum.

"Bankruptcy is for people with no assets and no income who cannot pay their debts while IVAs are appropriate for those who have over borrowed and can’t meet their repayments but have an income and want to continue making payments to eventually free themselves from the problem," said Mr Boyden.

A typical IVA agreement will see a creditor agree to write off a proportion of the debt owed to them. In return the debtor agrees to pay a fixed proportion of their monthly income towards the debt for a period of five years.

IVAs have much fewer restrictions than formal bankruptcy and allow the debtor to start borrowing money again straightaway - assuming they can find a lender prepared to deal with them.

But despite the easier terms, experts believe the explosive growth in the uptake of IVAs is more to do with awareness than careful consumer choice.

"In some cases bankruptcy is the most appropriate option but people aren’t generally encouraged to go bankrupt. But they are encouraged to go down the IVA route all day long on the television and radio, on the internet and in newspapers. The reason IVAs are so popular is because they are being extremely well marketed. There are tens of companies with hundreds of telephone sales staff encouraging people to consider them," said Mr Boyden.

A simple internet search produces a multitude of companies offering to reduce individual debt. Some offer seemingly irresistible offers like writing off 100 per cent of personal debt within 24 hours but experts warn that although IVAs are simpler and easier than bankruptcy, they should not be considered an easy option.

"Whether you do go down the IVA or bankruptcy route your credit rating will be hammered and most reputable lenders will be wary of extending you credit for around 5 years," said Mike Gerrard, head of personal insolvency at Grant Thornton.

Mr Boyden added that although IVAs and bankruptcy are different, lenders tend not to differentiate between the two when making credit assessments on future loans and either will seriously damage your ability to borrow money or get a mortgage in the short to medium term.

Mr Boyden also insisted that although outfits like Debtfreedirect encourage people to consider IVAs, they are essentially offering a service and reacting to an existing problem. "The real problem is a fundamental shift in consumer attitude: we live in a buy now worry later culture," he said.