Creditors are a scary notion even for those with no debt. Having to owe someone money and having that person follow your every move like a hawk is intimidating to say the least. One of the biggest motivations behind opting for an IVA is avoiding the constant calls by the creditors. However, you still have to go through them to get your IVA plan approved. Here’s everything you need to know regarding creditors and their IVA reactions!
Creditors and voting on an IVA
All the creditors need to vote positively for approval of an IVA plan. When it comes to the vote itself, remember that creditors have their own agendas when judging your application. They will review the amount being offered as a repayment, how much you owe, the value of your assets, how much they expect to receive from the IVA and the reasons for your debt. Creditors will also consider how committed you are to repaying your debts and may expect you to give up luxuries such as beauty treatments and holidays to ensure you can manage the monthly repayment.
You have to remember that it is not personal. Additionally, your insolvency practitioner will know best about the reactions of these creditors. Your IP will also advise you on whether it’s likely that your IVA will be accepted by your creditors. You won’t have to give up everything as part of your agreement. Creditors simply want to ensure you are doing what you can to repay your debts.
How your IVA payments are calculated
Your monthly payments are usually based on your basic monthly net income minus all your essential living costs – such as mortgage/rent, utility bills, telephone costs, travel costs and housekeeping.
When your creditors vote on your IVA, they can ask for your monthly payments to be increased if they think your expenditure is excessive. Your income and expenditure will be reviewed annually during your IVA to see if you can afford to increase your payments into your IVA. If you can’t afford your monthly payments into your IVA due to a change in your financial or other circumstances, then it is possible to ask creditors to accept a revised proposal to reduce your monthly payments. If your creditors accept this, then your IVA will continue on the revised terms.
Don’t let creditors worries get you down. We are here to allay your worries!