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The credit crunch and worsening economic climate are hitting some of Sussex's most prosperous residents, it has been revealed.

Brighton-based debt solutions firm iva.com has reported a huge increase in the number of wealthy individuals such as bankers, lawyers and company directors in financial distress.

The website specialises in Individual Voluntary Arrangements (IVAs), an alternative to bankruptcy which sees a debtor come to a formal agreement with his or her creditors to make reduced payments towards the total amount of their debt over a fixed period of time, usually five years.

Terry Balfour, director of iva.com, said that in 2007 his firm heard from just four high-earning individuals.

This year they have been contacted by more than 40.

Mr Balfour said: "The fall-out from the credit squeeze is not just affecting those on lower incomes and workers with poor credit histories who are struggling with rising living costs."

Sussex is home to many commuters who work in the City, which is currently undergoing a wave of redundancies as the credit crunch results in major financial institutions tightening their belts. Mr Balfour said: "The level of enquiries from people whose finances would usually be regarded as watertight indicates just how pervasive the current crisis is and points towards more casualties to come throughout the year.

"People in higher wage brackets are finding themselves completely unprepared for the sudden pulling of the plug on their financial resources."

A company director who wished to remain anonymous said he got in contact with iva.com after he was forced to use personal borrowing to keep his company afloat.

The director added: "My company suffered a number of serious trade debtors in one year.

"I then found it increasingly difficult to make repayments on my personal debts without affecting the recovery of my business, so an IVA seemed to be the best option that would enable me to continue to earn my living."

Mr Balfour added that it is not just high earners who are enquiring about IVAs He said: "The average debt volume is around £25,000 - but we have seen people owing as little as £6,000 wondering whether to go down the IVA route.

"Although an IVA doesn't suit everybody's situation, it is a useful vehicle for those with some disposable monthly income and a willingness to pay the creditors.

"And it provides an alternative to bankruptcy - the option that many people fear the most."

Another client of iva.com was a police officer who said: "I was panicked about the level of joint debts that had been run up between myself and my wife.

"With three children as well and a hefty mortgage, money didn't go far and we found that we could keep getting new credit cards.

"We worked out that we had £43,000 of unsecured debt and only £10,000 equity in property, as we remortgaged last year.

"We couldn't afford to go bankrupt because it would mean I would lose my job and we would also lose our family home.

"The next five years will be difficult but we will be better off in the end and the worry and stress has gone."

1:39pm Tuesday 8th April 2008

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