{"id":11226,"date":"2011-01-20T16:26:02","date_gmt":"2011-01-20T16:26:02","guid":{"rendered":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/?p=11226"},"modified":"2019-08-07T16:46:23","modified_gmt":"2019-08-07T15:46:23","slug":"creditors-iva-proposals","status":"publish","type":"post","link":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/creditors-iva-proposals\/","title":{"rendered":"Creditors & IVA Proposals"},"content":{"rendered":"\n

The first thing that creditors look for in an IVA proposal is the \ntruth. They expect the debtor to be open, frank and honest. After all it\n is their money which is at stake and if a debtor is seeking their \nagreement to write off a large percentage of their liabilities via an \nIVA, the least they expect to see in the proposal is the truth, the \nwhole truth and nothing but the truth.<\/p>\n\n\n\n\n\n\n\n

The IVA proposal should be the debtor\u2019s best attempt to address their unsecured liabilities and the estimated dividend \u2013 the amount that creditors will be repaid over the life of the IVA – must be reasonable. Apart from the credibility of the proposal and the expectation of a reasonable dividend, there are a number of other criteria which creditors apply. Take the case of a self employed (S\/E) person who has liabilities to HM Revenue & Customs (HMRC). If the debtor has a history of non-compliance then HMRC are likely to reject the proposal. The most frequent such non-compliance and the most serious one is the failure to make S\/E returns to HMRC. If S\/E returns are up to date, HMRC may well accept the IVA proposal even when the liabilities to HMRC are substantial.<\/p>\n\n\n\n

\"HMRC<\/figure><\/div>\n\n\n\n

HMRC also put great store in the principle of treating all unsecured creditors equally and they particularly dislike a proposal where what is sometimes called a \u2018hostage\u2019 creditor seeks to be treated more favorably than other creditors. For a self employed person, a hostage creditor is a critical supplier of goods and\/or services to the debtor\u2019s business and who will only continue to do business with the debtor on the condition that they are excluded from the debtor\u2019s IVA and if they receive payment in full for all debts incurred by the debtor prior to the IVA being approved. This would obviously be preferential treatment of that creditor. From the debtor\u2019s point of view, it\u2019s a case of damned if I do and damned if I don\u2019t! If they include the hostage creditor\u2019s debt in the IVA, that creditor will stop supplying critical goods or services and the debtor\u2019s business is likely to fail. If the debtor\u2019s business was to fail, it would be highly likely that as a result the IVA would fail. If on the other hand the debtor fails to disclose to creditors the debt to the hostage creditor and excludes that debt from the IVA, fully intending to service that debt secretly, than again the IVA is bound to fail if and when the supervisor of the IVA or another creditor discovers the preferential treatment. In these circumstances the debtor\u2019s business is also likely to fail. Such a debtor could hardly be described as being open, frank and honest.<\/p>\n\n\n\n

Creditors may also reject an IVA proposal if it is possible that if \nthe debtor were to enter a Debt Management Plan (DMP), all creditors \ncould be paid in full in less than ten years and in some cases in a \nperiod of one hundred months. Such an outcome might well depend on some \nor all interest and penalties being frozen during the life of the DMP \nand that is by no means guaranteed, given the varying approaches that \ndifferent creditors adopt towards a DMP. <\/p>\n\n\n\n

The relationship between the creditor and the debtor is also a \nsignificant factor in shaping the creditor\u2019s attitude. If the debtor is a\n relatively new customer and the debt was incurred within the last six \nmonths, it would not be surprising for the creditor to reject the IVA. \nOn the other hand if the debtor was a long standing customer \u2013 say for \nten or more years \u2013 and the new debt was simply a consolidation of \nseveral existing debts with that creditor, then it would be surprising \nif that creditor were to reject the IVA, given the long term knowledge \nof the debtor\u2019s financial history.     <\/p>\n","protected":false},"excerpt":{"rendered":"

The first thing that creditors look for in an IVA proposal is the truth. They expect the debtor to be open, frank and honest. <\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-11226","post","type-post","status-publish","format-standard","hentry","category-iva-articles"],"_links":{"self":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11226","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/comments?post=11226"}],"version-history":[{"count":1,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11226\/revisions"}],"predecessor-version":[{"id":11240,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/11226\/revisions\/11240"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=11226"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=11226"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=11226"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}