PROFITS at Debt Free Direct have soared by 177 per cent, after the number of debt-laden Britons entering individual voluntary arrangements (IVAs) more than doubled in the past 12 months.

The Chorley-based company said that adjusted pre-tax profits had ballooned to £5.13 million in the year to April 30, as it predicted a fivefold increase in IVAs in the British market over the next three years. IVAs are an alternative to full-blown bankruptcy and allow people to repay a set amount of money each month in exchange for creditors freezing interest payments.

Debt Free Direct said that there were 20,000 IVA cases last year. This was expected to rise to between 45,000 and 50,000 this year and 100,000 in three years’ time.

There are at least one million overstretched borrowers in Britain and the number is growing rapidly, despite comparatively benign economic conditions with low interest rates and high employment.

Borrowers who turn to Debt Free Direct typically have amassed unsecured debts of about £46,000 and have a net post-tax household income of about £20,000.

Debt Free Direct gains new business mainly through _advertising. It receives a fixed fee for putting together a legal agreement with a customer’s creditors. It then receives a fee of about £75 a month, which is footed by the creditors.

The company said yesterday that it plans to expand into Australia, where consumers are reporting record levels of indebtedness.

If this is successful, the company will consider expansion in other countries.

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