What If My IVA Proposal is Rejected?
When you decide you want to go ahead with an IVA, you initially speak to an Insolvency Practitioner firm. They will work with you to determine how much you can afford to pay and pin down exactly what level of repayments you will offer to your creditors.
Once this agreement is in place, the Insolvency Practitioner takes your agreement to a meeting of creditors. In order for the IVA to be agreed, of the creditors that vote, 75 per cent, by value, of your debt must approve it, as a minimum.
Once approved, the agreement becomes legally binding on all unsecured creditors, even those that either don’t vote or vote against it.
When An IVA is Rejected
If one creditor rejects your IVA, and that creditor is owed more than 25 per cent of your debt, the whole agreement could be rejected, although in these circumstances they may adjourn the arrangement. .
So, why would they reject your IVA? Your creditor may believe that there is an omission, or they might know something about your payment history that they think you haven’t been honest about. The creditor might also be concerned about your lifestyle choices, or they could reject the IVA because the amount that is being paid back will be too low.
● At this stage, your Insolvency Practitioner might suggest that you amend your agreement. This is sometimes called an Adjournment. You can work with your IP to alter the agreement so that your creditors are happier with its contents. This may involve them pushing you to pay more towards your debts. Before agreeing to this, it’s important to consider the effect this would have to your budget over the full five or six year term.
● Alternatively, your creditors might suggest modifications to your IVA. You can review these and choose whether to accept them or not. If you don’t, your IVA will not go ahead.
● Some creditors may stick to their guns and refuse the IVA a second time. You would then have to consider an alternative solution like a debt management plan (DMP) or go bankrupt.
Don’t worry too much about your IVA being rejected. Your Insolvency Practitioner’s job is to make sure your IVA has a very good chance of being accepted by your creditors. Usually over 90 per cent are accepted.
If the worst comes to the worst and your IVA is not considered viable, there is always another way to deal with problem debt.
Take the Varden Nuttall IVA test to see whether an IVA is right for you.