If you are planning on starting an Individual Voluntary Arrangement (IVA) you should include all of your unsecured debts. We consider whether there are any limits to the number of debts you can have in the arrangement.

There are no legal rules governing the number of debts you can include in an IVA. This means that in theory you could use this solution if you have just one debt or many debts.

However the key is that the Arrangement has to be approved by your creditors before it can be put in place. If they say no then you cannot start. As such it is often easier to get an IVA approved if you have 3-4 creditors or more.

Can a single creditor approve or reject your IVA?

In order for your IVA to be accepted and legally binding 75% of the value of creditors who choose to vote must agree to the proposal.

This means that if you have multiple creditors but only one of them votes and says yes it will be approved because 100% of the creditors who voted said yes. The arrangement is then legally binding on all of your creditors even though the others chose to ignore the proposal they were sent and did not vote on it at all.

However if only one of your creditors votes and they say no then 100% of the creditors who voted have said no and the Arrangement will be rejected.

For this reason it is generally far easier to get the Arrangement accepted if there are three, four or more creditors as it increases the chances that those who vote on the proposal will say yes to it.

Can I start an IVA if I only have one or two debts?

If you only have one creditor whether or not your IVA will be accepted will depend on that single creditor’s attitude. If they are happy to agree to your proposal then it will be accepted and become legally binding.

However if they are not supportive and are likely to say no to your proposal then there is no chance of it being accepted.

BMD Tip: If you believe you only have one creditor try to remember any other debts that you might have which could be included. These do not have to be debts to commercial banks. They could be to business associates, friends or family members.

Adding additional debts could mean that there are then enough supporting creditors to agree your IVA.

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

What if I have more than one creditor but one a very large?

It is quite common to have a number of creditors but one significantly larger one. The reason for this is that you might have consolidated a number of smaller debts into a single larger loan or you may have taken a large unsecured debt from your mortgage lender or owe a significant amount to HMRC.

In this situation,= if the single major creditor makes up more than 25% of the total value of your creditors they will then have the power to stop your IVA if they vote against it.

As such, in this scenario before you start the application process you will probably need to take advice as to the likelihood that the major creditor will accept your proposal.

BMD Tip:  If you are planning to use this solution try not to consolidate any of your debts beforehand. The rule of thumb is generally the more debts you have the more chance you have of the Arrangement being accepted.

Do friends or family count as debts in my IVA?

You can include any debts that you owe to your friends and family or other non commercial creditors in your IVA as long as they are legitimate.

Generally you will need to be able to prove that the money was lent to you and when but as long as you can do this then these people will be able to vote on your proposal and help to accept it.

It is important to understand that if you include these people as creditors, they will be given a copy of your proposal and so will find out all about your financial situation.

In addition, they may not be eligible to get payments particularly if they are family members. However, there is no reason why you cannot repay their debts later after your formal Arrangement is finished.