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What if my lenders don't accept my IVA?

An IVA (Individual Voluntary Arrangement) is an insolvency solution that could help you if you need a way of dealing with significant unsecured debts you can't repay in a reasonable amount of time.

As with most approaches to problem debts, an IVA requires the agreement of your unsecured lenders before it can go ahead. If enough of your lenders - those who hold 75% or more (between them) of the total debt you owe - agree to your IVA, it'll be able to go ahead.

Let's take a look at how an IVA works and what you could do if your lenders don't accept the proposed terms.

What you need to know about an IVA

An Individual Voluntary Arrangement - better known as an IVA - could help you if:

•  You have sizeable unsecured debts (such as credit card, overdraft and catalogue debts)

•  You can't afford to repay what you owe in a realistic period

•  You're a resident of England, Wales or Northern Ireland.

Once you enter an IVA, you will make a single, reduced payment per month, calculated to be affordable alongside all your essentials (rent/mortgage, food, utilities - to name a few).

You'll make these payments over an agreed period - typically, for 5 years - and your lenders will agree not to take any further action against you. If you're a homeowner, you may also have to release some equity during the IVA process so you can repay more of your debt.

Finally, on successful completion of your IVA, any included debts you can't afford to repay will be written off - leaving you free of your unsecured debts (though your credit score will be affected for a year afterwards, if your IVA runs for the usual 5-year period).

We answer more of your IVA questions here.

What happens if my lenders don't accept my IVA?

An IVA must be approved by lenders holding 75% or more of the unsecured debt you owe.

As long as that happens, your IVA will go ahead, and all your lenders will be bound by the terms - even if some of them voted against it (or not at all).

However, if your lenders reject your IVA proposal, what happens next? Your Insolvency Practitioner (IP) may be able to negotiate new terms for your IVA (such as higher payments, if you can realistically afford them) that your lenders are happy with.

If your lenders still don't accept your IVA, you'll need to look at a different way of dealing with your debts altogether - and we could discuss your options with you.

By Daniel Culpan.

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Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on completion of an IVA, alternative solutions may be offered. If your IVA fails, it could lead to Bankruptcy. Your ability to obtain credit will be affected for at least 6 years. Homeowners may be required to release the equity in their property.