Even though you possess zero property or assets, it doesn’t preclude you from suggesting an Individual Voluntary Arrangement to your creditors. Anyone can present proposals for an IVA to their lenders provided they are insolvent. There’s no need to own a house or indeed any other property, for instance a motor vehicle or a boat.
Your IVA offer can be centred around offering a lump sum payment or regular monthly payments from your earnings. The lump sum might be provided by your family or by a friend who is willing to advance such funds to you to settle the money you owe via an IVA. If you don’t have a lump sum payment to offer and you have no substantive property then you need to have some amount of regular disposable income to offer to your creditors.
Disposable or excess income is the cash you have left over once you’ve paid all reasonable living expenses both for yourself and for any dependants you have.
The amount of excess income you have is based entirely on your position. Income comprises your take home pay from your occupation, any benefits you might obtain for instance disability benefit or social welfare benefits, pensions, tax credits, dividends, child benefit, rental income from a lodger and so forth. Realistic cost of living will include the cost of rent, council tax, utilities including water, gas and electricity, food, housekeeping, telephone and mobile, TV & internet, life insurance, house insurance, car operating expenses such as HP, fuel, parking, motor insurance, road tax, repairs and servicing, clothing and footwear, optical dental and medical needs and all the usual expenses borne in supporting your family.
Obviously if it takes all of your earnings to cover your fair living expenses then you will be left with simply no excess money and thus you’ll have absolutely nothing to provide to your lenders in an IVA. Alternatively, should you have a reasonable amount of excess income and your financial obligations are not excessive, creditors can anticipate being paid a decent dividend in your IVA. The fact that you aren’t a homeowner shouldn’t have any effect on the frame of mind of your creditors whenever they contemplate whether to approve your IVA proposals or to decline them. If you were to be made bankrupt, creditors would in most cases receive afar lower dividend than you can offer in an IVA. Indeed, in many bankruptcy cases lenders are given no dividend whatsoever. Should you have no assets it can be that bankruptcy is a better option for you than an IVA would be and you should look at the disadvantages and benefits of both remedies before deciding on your course of action.
Lenders have revealed what they consider to be fair living expenses for individuals proposing an IVA, whether they are single, married or co-habiting, with or without children. They offer guidelines for household expenditure and they expect debtors to conform to these rules of thumb. If a consumer has unusual or extraordinary costs, lenders expect to see compelling explanations why such expenses should be allowed in an IVA. There is no adequate definition for what lenders would consider a reasonable dividend. It really does rely on the amount of the debts and the level of disposable income that the debtor has. Bear in mind an IVA is generally geared to people with debts more than £15,000. It could be hard to obtain the authorisation of creditors for an IVA if the monthly excess income is less than £200, but there are exceptions.
Whilst there’s no minimum dividend mandatory by law for an IVA to be proposed, lenders nowadays have great difficulty in agreeing to IVAs where the projected dividend is lower than 25p in the £, even though in exceptional cases they might agree to a much lower dividend than that. Some lenders specify a minimum acceptable dividend at a much higher amount than that, possibly as much as 40p in the £. A few lenders have a policy of rejecting all IVAs with which they are presented out of hand and without reason. Even though this may seem unjust to the insolvent debtor, luckily such creditors are in a minority and unless they hold over 25% of the debts, they can be outvoted by the other lenders who might be pleased to approve the IVA proposal. Each case is considered on its own merits. At least 75% of voting creditors must agree to your IVA offer for it to be authorised and lenders take many factors into consideration in making their determination whether or not to accept or reject each IVA proposal. If you don’t own a home, it shouldn’t prevent you from presenting an IVA to your creditors and it should not be an obstacle to their approval of your Individual Voluntary Arrangement.