An Individual Voluntary Arrangement (IVA) is a popular solution which is available if you have unsecured debts that you are having difficulty repaying. However you cannot start one unless it is agreed by your creditors.

For the Arrangement to be accepted 75% of the value of the creditors who actually vote on the proposal need to say yes to it. If the majority say no then it will not be not be accepted and can not start.

Given this in general it is easier to get agreement if you have more than one debt. The more you have the more likely you are to get the majority to agree even if some say no. If you only have one creditor it will be entirely up to them to agree or disagree with your proposal.

Should I consolidate my debts before starting an IVA?

If you consolidate your debts before you start the application process your IVA will rely on the acceptance of one or maybe two large creditors who now have all the voting power. If these debts have only just been taken out these creditors may be more inclined to reject your proposal.

You may run into further difficulties if you consolidate with a secured loan against your property. Secured loans cannot be included in this or any other debt solution.

As such if you are struggling with debt and are thinking about taking a secured loan to consolidate make sure that this will solve the problem once and for all. If it doesn’t you will certainly be reducing your debt solution options for the future.

Do you want help to start an IVA? Give us a call on 0800 077 6180 or complete the form below to speak to one of our experts 

If I only have one creditor is it worth applying for an IVA?

If you are considering an IVA but you only owe money to one creditor, or one major creditor and a couple of very small ones, it is possible that you can use the solution but it will normally rely on the major creditor agreeing to your proposal.

Whether or not they do this will depend on their attitude, how much they will ultimately be repaid and whether your offer of repayment is reasonable compared to other assets that you may own including your property.

BMD Tip: When putting together your proposal you should make sure you remember to include any other unsecured debts that you have. This could help with the acceptance of the Arrangement.

It may be that you have other debts you were not aware could be included such as debts to family or friends.  These debts can be included and this could be especially helpful in terms of getting the positive agreement you need.

Debts to family or other related people may not benefit from any money that is paid back during the agreement but there is nothing to stop you agreeing to repay them in full once it has finished.

How can I be sure a single major creditor will accept my IVA?

If you have only one creditor to include in your IVA there is no way of absolutely guaranteeing they will agree your proposal.

The first thing you need to ask yourself is how likely will it be that your creditor will agree? If the debt is personal or not owed to a commercial bank then there is always the possibility that they will use a personal angle in their decision making. If they just want to be stubborn and refuse your proposal there may be little you can do to change this.

In your proposal the return the creditor is offered will be compared directly to what they would get if you declared yourself Bankrupt. If this comparison shows they will be considerably worse off financially in this scenario then it is a powerful argument in your favour.

What if my IVA proposal is rejected?

It is important to understand that if you propose an IVA and it is rejected by the creditors you will not be forced to go Bankrupt. Ultimately this will be your choice.

However in the situation where you have only one creditor, before you start the proposal process you must consider whether you would you be prepared to go through with Bankruptcy if the Arrangement is not accepted.If the answer to this is yes then you are starting off on a very sure footing.

If are are ultimately forced into a situation where you decide to declare bankruptcy you can feel comfortable in the knowledge that you have made every effort to be reasonable and offer the best return you can to the creditor in question. If they then chose to reject that there is really very little more you can do.