My Creditors Won't Agree to an IVA: What Now?
When times are tough it’s not surprising that consumers look for any way out of their problems. Debts mount up and for many the only solution is to effectively hand over control of their finances. For a long time bankruptcy was the only option for those struggling to make ends meet. But in recent years another option was created, one that was less severe than bankruptcy but still offered enough support for those severely in the red.
The individual voluntary arrangement, IVA for short, was created in 1986. It is a repayment vehicle for consumers struggling with mounting debts. Creditors will meet to discuss the debt and to decide whether an IVA can be entered into. In order for an IVA to be granted creditors must agree to wipe off 75% of the debt. The remaining 25% will then be paid back according to a strict payment plan issued to the person in debt.
StigmaWith bankruptcy still viewed with the same stigma as it was in the past – despite more people applying for it – the IVA is seen as a good alternative. The names of someone entering into an IVA do not have to be published in the local paper for example. This can save a lot of embarrassment and humiliation for the person in debt. The consequences are also more short-term with an IVA than they are with bankruptcy.
However it often happens that at the meeting of creditors a decision is made to not write off the amount of debt needed. If the creditors refuse to wipe out 75% of the debt then the consumer can not enter into an IVA. So what next?