Acceptance of your IVA proposal is not guaranteed. It could be rejected. There are a number of things to consider if this happens.
- Could your IVA be rejected?
- What happens if your IVA is rejected?
- Can you apply for another IVA?
- What are your other options?
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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.
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.