Go Bankrupt if IVA Rejected

Go Bankrupt if IVA Rejected

It is unlikely you will be forced to go Bankrupt if your IVA is rejected. However it could be the best option in certain circumstances.

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Do you have to go Bankrupt if your IVA is Rejected?

When you apply for an IVA your creditors have the option of either accepting or rejecting it. If the proposal is unreasonable or does not take into account all your assets it could be rejected.

If this happens you do not have to go Bankrupt. In fact you will not be forced or pushed into doing anything at all. What you do next will be left entirely for you to decide.

However remember that your debt situation has not changed. You need to take action reasonably quickly or it is likely that your creditors will start or continue their collections action against you.

If you stopped paying your creditors during your IVA application you may now be in arrears. You should act quickly to implement an alternative solution before your creditors start to chase you.

Can you choose to go Bankrupt if your IVA is Rejected?

Although you do not have to go bankrupt you can use this solution if you want. Depending on your circumstances it could work out even better for you than an IVA.

A significant advantage of Bankruptcy is that you only have to continue paying towards your debt if you can afford to do so. If you have little or no surplus income you will not have to make further payments at all.

Where you can afford to make payments these would only last for 3 years compared to 5-6 in an IVA.

If you are a home owner the risk to your property will depend on the equity in it. If you have substantial equity bankruptcy may not be for you.

Can you apply for another IVA if the first is Rejected?

If your first IVA proposal has been rejected you can try again if you wish. You can re-apply at any time. However you will need to change your proposal so it is more acceptable to your creditors.

This might mean including assets you previously wanted to keep out. Alternatively if your income has now gone up or expenses have reduced you will be able to increase the amount you offer to pay each month.

You can use the same IVA company to present your proposal if you like. However it is often best to use a new company who can bring a fresh perspective.

If your first IVA proposal has been rejected talk to us if you want to re-apply.

Other options after your IVA is Rejected

You may be a home owner with substantial equity. Alternatively you may just need some breathing space and more time to think. In these circumstances you could consider a Debt Management Plan (DMP).

This is an informal agreement allowing you to reduce your debt payments down to an affordable amount. There is no agreement to write debt off. You still have to pay back everything you owe.

However the Plan is very flexible. Unlike going bankrupt you can use it to give a short term breathing space from your creditors. You can then change to a different solution later if you want to.

A DMP does not give you legal protection from your creditors. There is still the risk that a creditor will take further action against you. Perhaps applying for a CCJ or Charging Order against your home.

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2 thoughts on “Go Bankrupt if IVA Rejected

    Jagbird says:

    I have had a Iva rejected by Everyday Loans and don’t know what to do now. I can’t afford to pay the debts and am really worried. I have thought about bankruptcy. I dont own the house but my husband does. Would the house be at risk?

      Hi Jagbird

      It is understandable that your IVA proposal was rejected by Everyday Loans. Their standard company policy is to reject all IVAs.

      You should speak to your IVA company to see if there is any option for getting the proposal accepted despite Everyday Loans. Are there any creditors who did not vote who might be persuaded to vote if the proposal is resubmitted?

      If not and you are looking at your alternative options, I would be concerned about you going bankrupt. As you and your husband are married, it is possible that his property could be at risk even though you do not own it. Depending on the circumstances, the official receiver could claim you (and therefore they) have a financial interest in it.

      Given this, I believe you should also be considering the option of a debt management plan. This solution would not put the property at risk in any way.

      If you would like to discuss the options of bankruptcy or a debt management plan in more detail, don’t hesitate to contact me (0800 011 4712). I would be happy to give you some advice.

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