Most IVA proposals are agreed. However it is possible yours could be rejected. So what happens if your creditors don’t accept your IVA and what can you do next?
Included in this article:
- The implications if your creditors do not accept your IVA
- Is it possible to re-apply?
- Should you start a DMP or go bankrupt?
What are the implications if your creditors don’t accept your IVA
In order for your IVA to be accepted, 75% of the value of the creditors who respond have to agree to it. But acceptance is not guaranteed.
Some lenders such as HMRC require specific criteria to be met. If not they will reject. Other creditors such as Everyday Loans and Iwoca have a policy to automatically reject an IVA proposal regardless of the repayment offer.
If your creditors don’t accept your proposal, you are back to square one. Your debts are still owed and you will still need to find a solution for dealing with them.
You will not normally have lost anything other than time. However, you should be mindful of the fact that your creditors are now aware of your debt problems. This might mean that they speed up other enforcement actions against you. As such it is vital that you act quickly to make a plan for what to do next.
It would be unusual to have paid an instruction fee to the company who proposed your IVA. However, if you did, this will normally be non refundable if your proposal is not accepted.
Is it possible to re-apply for another IVA if your first is rejected?
Where your creditors don’t accept your IVA, you may be able to re-apply. If you want to do this, you should speak to a different IVA company.
A new company will give a fresh perspective and can advise you about why your first IVA was rejected. They may be able to identify problems with your first proposal which can be changed to make a second more attractive and likely to be accepted.
Some creditors (such as Everyday loans) don’t accept IVA proposals based on their internal policy. In these cases there would be no point in trying to re-apply. You will need to consider an alternative debt solution.
If you owe money to HMRC, specific processes have to be followed when putting forward an IVA proposal. We are experienced in working with people with tax debts. Speak to us for specialist advise in this area.
Should you start a debt management plan or go bankrupt?
Where your creditors don’t accept your IVA, you are free to chose what to do next to manage your debt. If you can’t re-apply, or decide not to, the options available are usually either a debt management plan (DMP) or to go bankrupt.
If you are a home owner with equity or have a car worth more than £1000 which you don’t want to give up, you will normally need to look at the DMP option.
A debt management plan will give you breathing space from your creditors and should protect you from further enforcement action. However, a significant downside is likely to be the length of time it lasts.
Where you are renting, your disposable income is low or you owe money to HMRC (or other more difficult creditors), you should consider going bankrupt. Despite what you may have heard or been told, this solution can offer massive benefits. All your debt is written off and you may not have to make any further monthly payments at all.
If your creditors don’t accept your IVA, you will not be forced to go bankrupt. However it is an option you can choose and should consider seriously.
IVA been rejected? We can advise you about what to do next. Give us a call (0800 011 4712) or complete the form below and we’ll get back to you.