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<\/figure><\/div>\n\n\n\nObviously the proposal should be the insolvent debtor\u2019s<\/strong> best attempt to address their unsecured liabilities and the estimated dividend 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 person who has liabilities to HM Revenue & Customs<\/strong> (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 Self Employed returns<\/strong> to HMRC. If Self Employed 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 also put great store in the principle of treating all unsecured \ncreditors equally and they particularly dislike a proposal where what is\n often called a hostage creditor seeks to be treated more favorably than\n other creditors. For a Self Employed person, a hostage creditor is a \ncritical supplier of goods and\/or services to the debtor\u2019s business who \nwill only continue to do business with the debtor if they are excluded \nfrom the debtor\u2019s IVA and if they receive payment in full for all debts \nincurred by the debtor prior to the IVA being approved. This is \nobviously preferential treatment for that creditor who is holding the \ndebtor hostage. From the debtor\u2019s point of view, it\u2019s a case of damned \nif I do and damned if I don\u2019t! If they include the hostage creditor\u2019s \ndebt in the IVA, that creditor will stop supplying critical goods or \nservices and the debtor\u2019s business may fail as a result which in turn \nmay cause the IVA to fail<\/strong>. If on the other hand the \ndebtor fails to disclose the liability to the hostage creditor and \nexcludes it from the IVA, fully intending to service that debt secretly,\n than again the IVA may fail if and when the supervisor of the IVA or \nanother creditor discovers the preferential treatment. In these \ncircumstances the debtor\u2019s business is also likely to fail. Such a \ndebtor could hardly be described as being open, frank and honest.<\/p>\n\n\n\n Creditors may also reject an IVA if it is possible that in a Debt Management Plan<\/strong> (DMP), all creditors could be paid in full in less than ten years and in some cases in a period of one hundred months. Although such an outcome might well depend on some or all interest and penalties being frozen during the life of the Debt Management Plan, that is by no means guaranteed, given the varying approaches that different creditors adopt towards a Debt Management Plan<\/a>.<\/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 \ntwenty years \u2013 and the new debt was simply a consolidation of several \nexisting debts with that creditor, then it would be surprising if that \ncreditor were to reject the IVA, given the long term knowledge of the \ndebtor\u2019s financial history.<\/p>\n\n\n\n In the 2nd article in this series, we will look at factors such as \nthe past behaviour of the debtor, charging of assets and IVA viability \nwhich may impact on the attitude of creditors to an IVA.<\/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":"","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[7],"tags":[],"class_list":["post-2004","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\/2004","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=2004"}],"version-history":[{"count":1,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/2004\/revisions"}],"predecessor-version":[{"id":2034,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/posts\/2004\/revisions\/2034"}],"wp:attachment":[{"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/media?parent=2004"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/categories?post=2004"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nationaldebtrelief.co.uk\/debt-articles\/wp-json\/wp\/v2\/tags?post=2004"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}