Creditors Meeting for an Individual Voluntary Arrangement IVA

The nominee must inform all creditors of the date and time of the meeting, which is normally held in the nominee’s offices and chaired by her/him. The client is usually required to attend, (although not so common nowadays) wherein the creditors will consider the proposal and eventually vote on it. Although the proposal can be amended, the client must consent to any modifications. It is not unusual for IVAs to contain provisions for any ‘windfall’ payments received by the client during the period of the IVA to be taken into account. It is also usual to include specific proposals with regard to any beneficial interest the client may have in the family home.

The proposal must be approved by 75 per cent in value of the creditors voting on the proposal — i.e., if someone has £50,000 worth of debts and a creditor is owed £10,000, that creditor’s vote counts as 20 per cent. Certain creditors, such as banks and the Inland Revenue always vote at meetings and, as they also tend to be the largest creditors, any proposal is unlikely to be approved unless these creditors can be brought on board. The nominee may well discuss the proposal with creditors prior to the meeting in the hope of obtaining agreement. The meeting cannot approve a proposal that would affect the rights of a preferential creditor in bankruptcy (such as arrears of wages owed to employees of the client) or the rights of secured creditors (such as a mortgage lender) without their consent.

Usually, the nominee’s appointment is approved at the meeting and s/he becomes the 'supervisor' of the IVA. If the proposal is approved, it takes effect immediately and is binding not only on every creditor who had notice of the meeting and was entitled to vote, but also on any other creditor who would have been entitled to vote if s/he had received notice of the meeting. Such creditors are entitled to claim from the client the amounts they would have received under the IVA and the client will have to make these payments in addition to those made under the IVA; alternatively such creditors may challenge the IVA. The outcome of the meeting must be reported to the court within four days. The court will record the effect of the report and discharge the interim order.

Once the Individual Voluntary Arrangement - IVA is approved you are legally contracted to keep up your monthly IVA payments. Once accepted your creditors can never bother you again. This monthly payment should be easily affordable because it is based on your disposable income.