We’ve answered your questions about IVAs and Creditors, from how many creditors you need to qualify for an IVA to looking at why creditors agree to IVAs, read on for the answers.
Can creditors change their minds if the IVA has been approved?
No. Once the IVA arrangement has been agreed your creditors are bound by the terms and, as long as you maintain your obligations (ie, keep up the payments and tell your supervisor if your circumstances change), they cannot take further action against you or demand a higher repayment from you.
What is the minimum number of creditors required for an IVA?
Two – but with at least three lines of credit. An overdraft and credit card with the same bank are normally considered to be a single creditor, despite being two debts, so in this or a similar scenario you would need another separate creditor. It’s important to be aware that many creditors operate under several brand names. For example, the Cahoot brand is part of Santander.
In terms of percentage of total debt, how many creditors need to attend the creditors meeting?
Only one. However, usually creditors do not attend the meeting, they vote by proxy, (meaning they register their vote without being there). Only one proxy is therefore required. A proxy is a person or agent nominated to act on behalf of an organisation. 75% by value of the creditors registering to vote will need to vote in favour for the IVA to pass. More than nine out of ten of the IVAs we propose are passed. Creditors that hold 75% of the debt (by value and voting) must agree to the IVA.
Are some of the creditors less likely to approve an IVA than others?
During late 2006 and early 2007, there was growing resistance to IVAs from some creditors which was blocking many fair proposals. It was their view that some IVA providers were misleading consumers about the suitability of IVAs. This issue was resolved in February 2008 when a code of conduct was agreed between the IVA providers and the bodies who regulate them. This became known as the IVA Protocol. The vast majority of creditors are now fully supportive of IVAs and with minor exceptions will, in the majority of cases, vote in favour of a well constructed proposal based on affordability.
Why would a creditor allow me to write off a proportion of the money I owe and accept an IVA proposal?
Should you go bankrupt, it’s unlikely a creditor will receive any of the money owed to him. Although an IVA does not give a creditor a full return on the debt owed, it does guarantees a percentage back therefore making it a more favourable option.
I'm considering an IVA but my creditors are taking me to court. Can this be stopped?
Your Advisor or Nominee will write to the court and the creditors concerned on your behalf. Further steps can be taken if necessary by way of an application for an Interim Order.