What happens if the creditors don't like the IVA deal?
IVA can be restructured or modified if rejected
We receive a lot of calls and emails from the public asking; "What happens if the creditors don't like the IVA deal?".
For an IVA to be successful the proposal needs the necessary support from creditors. If the creditors do not like the deal then they can vote against the IVA of make modifications to it.
Please note that Money Advice Direct panel of IVA Insolvency Practitioners have the highest IVA acceptance rate in the UK. This is because the IVA unit does not take on IVA where failure is likely.
Prior to or at the creditors' meeting the IVA creditors will decide to; accept, reject or make modifications to the IVA proposal. Sometimes, creditors will ask for amendments or modifications to be made to a proposed IVA before voting to approve it. This is usually because they think that the proposed IVA changes would ensure that more funds could be made available to them.
You do not have to accept the requested IVA modifications but you do then risk failure of the IVA (you may not get 75% of the creditors to approve it).Be aware however that if you do accept the requested amendments, you are then bound by them and the IVA will only come into force once those criteria have been met.
IVA meeting adjournment
If the creditors don’t like the IVA deal then they may ask for modifications or changes to the IVA proposal. Under the IVA rules the IVA Insolvency Practitioner may adjourn the IVA meeting for up to 14 days. During this time the changes to the IVA can be considered by the creditors and the debtor.
After the 14 day IVA adjournment period if the creditors do not accept the IVA then the IVA will be rejected
Chances of IVA rejection
To have an IVA approved at the Creditors Meeting, more than 75% in value, of the creditors must approve the arrangement. If this figure is not reached and creditors who may not have already voted cannot be persuaded to vote in favour, then the arrangement would be rejected.
When the IVA proposal is being put together, the Practitioner will make sure that the dividends that individual creditors seek in an IVA are met where possible. It is not his intention to offer you an IVA if he does not think that there is a good chance of it being accepted. Remember, the Insolvency Practitioner is working on your behalf, and their aim is to give you best advice.
There are certain creditors who require specific dividends over the 5 years. In the main, most creditors would look to at least 25% of their money back through the IVA, however the Insolvency Practitioner will be able to assess the latest requirements of the creditors involved before putting forward the proposal.
If a debt is quite new, then there is a risk that a creditor will reject the IVA proposal. If the creditor thinks, that the debtor obtained the money when they knew they couldn’t afford to repay it, then this could be seen as having fraudulently obtained money.
IVA deal must be attractive
To have an IVA approved at the Creditors Meeting, more than 75% in value, of the creditors must approve the arrangement. If this figure is not reached and creditors who may not have already voted cannot be persuaded to vote in favour, then the arrangement would be rejected.
When the IVA proposal is being put together, the Practitioner will make sure that the dividends that individual creditors seek in an IVA are met where possible. It is not his intention to offer you an IVA if he does not think that there is a good chance of it being accepted. Remember, the Insolvency Practitioner is working on your behalf, and their aim is to give you best advice.
There are certain creditors who require specific dividends over the 5 years. In the main, most creditors would look to at least 25% of their money back through the IVA, however the Insolvency Practitioner will be able to assess the latest requirements of the creditors involved before putting forward the proposal.
If a debt is quite new, then there is a risk that a creditor will reject the IVA proposal. If the creditor thinks, that the debtor obtained the money when they knew they couldn’t afford to repay it, then this could be seen as having fraudulently obtained money.
Please beware of the many IVA companies that are just interested in making money, they charge the client up-front fees knowing full well the IVA will fail. This practice is called a 'Kamikaze IVA'.
If you are considering an IVA and want to know what happens if the creditors don't like the IVA deal and understand how it can help you please complete the following form or telephone freephone 0800 074 6918.
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- Who will know if I do an IVA? |
- Will my landlord need to know if I do an IVA? |
- I've decided to do an IVA, should i stop paying my creditors now? |
- Will an IVA affect my employment or my ability to get a job? |
- I'm in an IVA and I've lost my job, what can I do? |
- What situations would prevent me from doing an IVA? |
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- Can I exit out of my IVA before five years? |
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- What percentage of IVA's are blocked by creditors? |
- What happens if my IVA fails? |
- What if I can't remortgage as per my IVA proposal? |
- My husband and I are considering an IVA as a solution to our £25,000 debt |
- What happens if I change from being employed to self employed during my IVA? |
- If my partner enters an IVA will I have to sell my car because it is registered in my name? |
- What happens if my income rises during an IVA, would the creditors want all of the increase? |
- What is the minimum level of debt for an IVA? Is it 12000 or 15000 pounds? |
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IVA's
The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.
In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]
What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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DANGER
Due to the tremendous demand for debt consolidation services the United Kingdom is now overloaded with debt management companies that contain misleading information. [more...]