IVA: the creditors meeting

If your debt problems have become so serious that you don`t think you`ll ever be able to pay off your unsecured debts, an IVA (Individual Voluntary Arrangement) could be right for you.

An introduction to IVAs

An IVA is a legally-binding agreement with your lenders in which you`ll repay as much of your unsecured debt as you can afford. On successful completion of the agreement, your lenders will write off the remaining debt, and you`ll be legally debt-free. Be aware, though, that an IVA is a substantial commitment and will damage your credit rating for six years.

Your IVA will usually involve making monthly payments over a five-year period (although this can vary, depending on what you agree with your lenders). Your repayments will be based on what you can afford once your essential costs have been covered.

You may also be required to contribute the majority of any increase in income received during the IVA towards your debts, and if you`re a homeowner you may be required to withdraw some of the equity in your home in the final year of the IVA.

You`ll be given annual reviews to make sure your IVA is still appropriate for your circumstances.

What is the `creditors meeting`?

Before you can enter into an IVA, you and your Insolvency Practitioner (or IP) will have to negotiate the terms with your unsecured lenders. To begin with, you will work with your IP to draw up an IVA proposal, and this will be sent to your lenders, who will be invited to `vote` for or against it.

They will be given a set time period (usually at least 14 days) in which to consider the proposal. At the end of this period, the `creditors meeting` will take place. These days, this is not so much a face-to-face meeting as a time slot in which you and your IP will make yourselves available to discuss any questions your lenders may have.

If the IVA proposal is approved by enough of your lenders (i.e. by lenders who collectively `own` 75% or more of the debt in question), it will be accepted. None of your lenders will be able to pursue you any further for the debts, as long as you keep up with your commitments as laid down in the terms of your IVA.

If the IVA is rejected, you can either negotiate further with your lenders, or opt for an alternative debt solution, such as bankruptcy or a debt management plan.

For more information on IVAs and a range of other debt solutions, click here or call 0800 195 2911 today.

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Related resources:

• IVA
• IVA FAQs
• Facts about IVAs
• The IVA Process
• IVA Proposal
• What types of debt can an IVA include?
• How does an IVA work?
• How much will an IVA cost me?
• IVA: what does an Insolvency Practitioner do?
• IVA companies
• How much debt do I need to qualify for an IVA?
• What is an IVA?
• Can charging order debts be included in an IVA?
• How long does an IVA take?
• Can I include an overdraft in an IVA?
• Can I get an IVA if I have bad credit?
• Do I need to include all my credit cards on an IVA proposal?
• Do all my creditors have to agree to an IVA?

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