Creditors try to fight back

People living in England, Wales, or Northern Ireland who are suffering with severe financial problems generally have four debt solutions available to assist them in becoming debt free.

The debt solutions are:

In 2006 creditors began reeling from the sheer increase in people declaring themselves insolvent and, as a result, they looked for ways to reduce the amount of bad debt write-offs.

Creditors were particularly concerned with the significant increase in the number of people opting for the IVA debt solution.

Explosion in IVA numbers

In 2006, as more people began experiencing financial difficulties than ever before, aggressive debt solution advertising enlightened people to the IVA process and, more importantly, the debt write-off that an IVA might provided as one of its main advantages.

As a result creditors saw a surge in IVA cases being proposed, causing huge increases in the bad debt they held.

Blocking Tactics

One method creditors decided on was to try and limit the amount of IVAs being accepted.

For an IVA to become legally binding on all creditors, it must be accepted by a majority of 75% of creditors, in debt value terms, at a 'Creditors' Meeting', otherwise the application is considered rejected.

This gave creditors the perfect opportunity to control the number of IVAs being agreed. By voting together, they found they could exercise more control over the numbers of IVAs they would accept.

Creditors fight back

So, to this end, creditors began using the services of a company called 'The Insolvency Exchange' or TIX, to represent their interests at the Creditors' Meeting.

By creditors joining forces and voting as one through TIX, they gained a huge advantage of having a block vote at Creditors' Meetings. This simple action significantly increased creditors' control over the how many IVAs would be accepted.

Significant numbers of high street banks and other major creditors enlisted the servies of TIX and, as a result, the TIX vote now controls the outcome of the majority of IVAs, through strategic block voting.

Consequently, any IVA case rejected by TIX, where they represent a controlling majority share of the debt, is left to consider a Debt Management Plan or Bankruptcy.

Fortunately, not all creditors have migrated to TIX's proxy voting service, so the impact on any one case will be determined by who's in the list of creditors.

Also, just because TIX represent the majority of cases, it does mean they reject IVA cases out of hand.

On the contrary, they have a commercial interest in making sure IVAs do go ahead on behalf of their clients, the creditors.

But creditors have, successfully, fought back and now have greater control over the number of IVAs being accepted.

Professional Advice

Would you like to know the chances of your IVA being accepted?

Would you like to know if your IVA will be controlled by the TIX vote?

If you are experiencing financial difficulties and would like the answer to these questions then please call 0800 088 7503.

The team behind My IVA Adviser have all the skills and experience you'll need to help you deal with your debts.

Alternatively, simply complete this form and one of our advisers will contact you at your preferred time.

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In accordance with the Financial Conduct Authority's guidance, please follow this link if you would like to read a free guide about In Debt - Dealing with your creditors
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