There are certain creditors that will block an IVA
We receive a lot of calls and emails from the public asking; "What percentage of IVA's are blocked by creditors?".
Please note that Money Advice Direct have a 98% IVA success rate….the highest in the UK.
Money Advice Direct has been offering IVA advice since the IVA procedure was introduced in 1986. Since then we have built up a copious amounts of knowledge on Individual Voluntary Arrangements (IVA). To this we do not take on cases or clients whom we feel their IVA would be blocked by the creditors.
There are certain creditors that block an IVA if a minimum dividend is not met. Banks such as Paragon, Northern Rock, HSBC, RBS Group, M&S Money, HBOS, and First Direct are known to require specific dividends over the 5 years. In the main, most creditors would look to at least 25% of their money back otherwise they may block 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 block 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 and so block the IVA.
Unwritten rules on Blocked IVA proposals
Our extensive research in to the IVA sector has revealed that some creditors admit do not read the entire IVA proposal in full, instead they just refer the amounts they receive on income and expenditure section. Please note that due to the amount of IVA proposals being put forward the sad news is that an IVA can be blocked solely on a commercial basis.
HSBC’s IVA criteria
HSBC bank now accepts IVAs only if at least 40p in every pound is repaid
Student Loans Company IVA criteria
Student Loans Company insists on at least 80p in the pound is repaid
Northern Rock IVA criteria
Crisis-hit Northern Rock rejects most IVA applications unless strict criteria are met.
Other banks IVA criteria
- Abbey, Barclays and credit card giant MBNA reject proposed IVAs from customers on benefits.
- Some refuse IVAs where borrowers are thought to be too old.
- There are cases when there is an offer to pay 45p in the pound, only for the banks to then sell on the debt for less than 10p in the pound.'
The tough criteria that providers are taking means many people will either be forced into bankruptcy or informal debt management plans where interest payments are not frozen. For some, it will take up to 40 years to clear their debts.
If you have would like know under what percentage of IVA’s are blocked by creditors please complete the following form or telephone 0800 074 6918.
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