Options if your IVA is Rejected

16/03/2023
Options if your IVA is Rejected

Acceptance of your IVA proposal is not guaranteed. It could be rejected. There are a number of things to consider if this happens.

Included in this article:

Could your IVA be Rejected?

Before your IVA can start it must be accepted by the creditors. Each will receive a copy of your payment proposal and be asked to vote on whether they agree to it or not.

As long as at least 75% of the value of creditors who respond say yes then the Arrangement will start. All the creditors are then legally bound to it even if they did not respond or said no.

However there is no guarantee that the required majority will agree. If more than 25% say no the IVA is rejected and cannot go ahead. The likelihood of this happening increases if you only have one or two creditors.

If you have a large creditor they may require you to accept changes to the terms of your IVA before accepting it. If you refuse it is then treated as having been rejected.

Struggling to get your head round all of this? We can Help. Give us a call (0800 011 4712) or complete the form at the bottom of this page. The advice is free and confidential.

What happens if your IVA is Rejected?

If your IVA is rejected your situation should be no worse than it was before you started the application. You will not be forced into taking any other action. You do not have to go bankrupt.

However the debts you owe are still outstanding and you will still need to deal with them. However you are free to make your own decision about how to do this.

If you were up to date with your payments prior to making your application but fell into arrears during the process your credit rating may now be worse. However given you are unable to pay your debts this would have happened anyway.

After your IVA has been rejected you must not delay in making a new plan for how you will deal with your debts. Your creditors will start collections action against you unless you act quickly.

Can you apply for another IVA?

There may be a number of reasons why your original IVA was rejected. If one of these was that there were errors in your first proposal there is nothing to stop you applying again.

Perhaps something was missed from your first offer or your circumstances have now changed. As a result you can now afford to pay more into the Arrangement.

If this is the case you can change the details of your IVA proposal and submit it again. However you should only do this if you are sure you can offer a material change to your first proposal. Otherwise you will be wasting your time as it is likely to be rejected again.

It is possible to reapply for an IVA after your first offer is rejected. You will normally need to use a different IVA Company to help you.

If your IVA is Rejected what are your other Options?

After your IVA has been rejected you are in control of what you do next. You do not have to reapply if you do not want to. Having sad that given you are still unable to pay your debts you will need to take some kind of action.

There are a number of other debt solutions you can consider. If you are not a home owner or you have little or no equity in your property one of these is the option of going Bankrupt.

If you have no assets to lose bankruptcy could be the fastest way to become debt free. However if this does not appeal to you or you do have equity in your home a better option might be a Debt Management Plan.

Has your IVA been rejected? We can help. Give us a call (0800 011 4712) or complete the form at the bottom of this page. The advice is free and confidential.

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8 thoughts on “Options if your IVA is Rejected”

    Mark J says:
    13/04/2021 at 17:24

    Hi. My 1st iva was rejected by a creditor that had 30% stake in my debt. Can i pay him back till his value drops under 25% and then reapply? If he is below 25% and objects I do not need to worry about it? Or do i need the remaining 75% to agree to the iva?

    Reply
      James Falla says:
      13/04/2021 at 17:28

      Hi Mark

      Yes you can. In the mean time you should maintain the minimum payments on the other debts. If this is not possible you could consider managing them with a debt management plan.

      If you reduce this particular debt down to just under 25% then getting the IVA accepted might still be tough as you would still need all of the remaining creditors to agree. If just one rejects or doesn’t vote, it will still fail. So you really need to get this debt down to less than 20% of the total debt to have a chance.

      Reply
    PaulMc says:
    17/05/2021 at 17:25

    I have already set up payment plans about a couple of weeks before i decided to apply for an IVA, if my IVA is rejected, can I just carry on with the payment plans that i have already set up?

    Reply
      James Falla says:
      17/05/2021 at 17:29

      Hi PaulMc

      You have no reason to be concerned. If your IVA is rejected, there should be no problem with you simply continuing to maintain the reduced payment plans you have already agreed with your creditors. This would be one of the options I would advise you to consider in the event of a rejected IVA.

      The only time when this would not be possible is if you do not make the agreed payments for a few months. Your creditors could then argue that you have broken your promise of payments and so they don’t have to keep theirs. For this reason, I suggest you go ahead and make the first of the agreed payments on the date they are due even if this is prior to your creditor meeting. If the IVA is rejected, it will stand you in good stead. If it is accepted, the fact you have made this payment does not matter.

      I assume when added together, the payments you have agreed to make do not add up to more than the amount you are proposing to pay into your IVA each month. If they do then I think it would be prudent to let your IVA company know so they can be prepared for any questions as to why the IVA figure is lower.

      Reply
    ANDREW says:
    01/12/2021 at 12:12

    about 12 months ago I applied for a Iva but was rejected as only 65% agreed, Will I be able to apply for this again to see if I can get the 75% that is needed.

    Reply
      James Falla says:
      01/12/2021 at 16:32

      Hi Andrew

      It is possible to get an IVA accepted if the first proposal was rejected. However, there would normally need to be a material change to the proposal to overcome the reason for the first rejection. To be able to properly advise I would need to know more about your situation. If you would like to have a free, no obligation chat, please give me a call (0800 011 4712)

      Reply
    Helen O says:
    16/06/2022 at 11:59

    Hi I’ve been rejected for an IVA by the main creditor because i only took the loan 4 months ago . Can I re apply?

    Reply
      James Falla says:
      22/06/2022 at 13:19

      Hi Helen,

      It is possible to re-submit an IVA proposal after it has been rejected the first time round. However, this will normally only be successful if there is a material change in your proposal. For example, your surplus income was initially miscalculated so the payments in your new proposal can be increased.

      Were there is no material change, or if the rejecting creditor’s policy is simply to say no to any IVA proposal regardless, they are likely to reject again. If their debt is more than 25% of the total, it will be impossible to get the IVA accepted.

      In these circumstances you would then need to consider using an alternative debt solution – a debt management plan or if you are not a home owner, going bankrupt.

      Reply

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