What do creditors expect from an IVA?

Most creditors expect at least 25% of their debts back

We receive a lot of calls and emails from the public asking; "What do creditors expect from an IVA?".

The creditors expect as much money back as possible from an IVA. The least the creditors expect is the same amount they would have received if the debtor filed for bankruptcy.

In practice most creditors expect at least 25% of their debts back over a maximum of 5 years. The creditors look at the debts income and expenditure account in details and expect as much of the disposable income as possible. Disposable income is money left over after all reasonable living expenses have been met. The IVA creditors expect you to be honest and fair with the expenses because they know what is a reasonable amount of money to live on.

Do some creditors expect more that others?

The amount required to successfully propose an IVA usually between 25-40%. There are certain creditors, such Paragon, Northern Rock, HSBC, RBS Group, M&S Money, HBOS, and First Direct who require specific dividends over the 5 years. In the main, most creditors would look to at least 25% of their money back through the IVA, however the Insolvency Practitioner will be able to assess the latest requirements of the creditors involved before putting forward the proposal.

Do creditors expect the equity in your property?

Under the terms of an IVA you will not be forced to sell your home, house or property. In some IVAs the creditors may request you release some of any equity from the property and then pay it into the IVA, for payment to the creditors. The creditors can request up to 75% of the equity payable either during or at the end of the IVA.

In some IVA cases people may be unable to release 75% of the equity. If this situation occurs then the creditors sometimes accept a lower. To make up for the lower amount the credits may ask you to offer 12 months further payments. This would mean you will not lose your home, house or property; instead your IVA would be 6 years instead of 5.

If you are considering an IVA and want to know what creditors expect from an IVA or can this all be done by post and understand how it can help you please complete the following form or telephone freephone 0800 074 6918.

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IVA's

The IVA Guide
Money Advice Direct has put together an IVA Guide based on the enquiries and questions that we receive at our helpline offices.

In the guide we cover such subjects as IVA Approval, early settlment of your IVA, missed IVA payments, IVA failure, additional debt claims and much more.
[click here for IVA Guide]

What is an IVA?
The IVA is an extremely powerful tool enabling you to clear your debt and return to a clean financial bill of health. Visit Money Advice Direct's Guide to Individual Voluntary Arrangements (IVAs).
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What do creditors expect from an IVA?

Most creditors expect at least 25% of their debts back

Do some creditors expect more that others?

Do creditors expect the equity in your property?

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