People who are suffering with severe financial problems generally have three ‘debt solution’ options available to choose from, to assist them in becoming debt free.
These choices are Bankruptcy, an Individual Voluntary Arrangement (IVA) or a Debt Management Programme.
But recently creditors have been reeling from the sheer number of people declaring themselves insolvent, and they are now looking for methods to reduce the amount of IVAs being accepted, and therefore reduce their own losses to bad debts.
For an Individual Voluntary Arrangement (IVA) to become legally binding, it must pass a ‘Creditors Meeting‘, and once the Individual Voluntary Arrangement (IVA) has been agreed, the debtor repays an affordable payment each month for the agreed term of the Individual Voluntary Arrangement (IVA). When the Individual Voluntary Arrangement (IVA) has been successfully completed, the creditors are obliged to write off any outstanding balance from the original debt, thus making the debtor debt free, even if they haven’t paid back all the money they originally owed.
Even though Individual Voluntary Arrangements (IVAs) have been around since 1986, there has been a large increase in the number of applicants. This increase is due to more people being in financial trouble than ever before, and also an increase in client awareness of the IVA process, and its Pros and Cons.
The method that some creditors are exploring is to use a common company to represent their interests at the creditors meeting. This will have the advantage of giving them a block vote, and therefore increase their control over the outcome of the decision.
It has been speculated that by using the technique of block voting, as many as 10% of IVA cases currently being passed at creditors meetings, might actually face a rejection by creditors instead.
The Debtors whose Individual Voluntary Arrangement (IVA) case had been rejected would then have only either a debt management programme or bankruptcy as available solutions.
If you are experiencing financial difficulties, and would like to discuss your financial circumstances with an experienced debt specialist, then call My IVA Adviser for free on 0800 088 7503 anytime.
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