What is a Debt Relief Order and how does it work?
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Are you considering an IVA as a solution to your debts? If so, the creditor meeting is very important, make sure you know how it works.
When you’ve got to the stage where your Insolvency Practitioner has put together your IVA proposal, there needs to be a meeting so that your creditors can decide whether or not to accept what’s being offered. Without this meeting going ahead your IVA cannot be approved to begin, so it must take place. This is simply known as the creditor meeting, but it may not be as you first imagine it.
First of all, you do not have to physically attend this meeting, but you do have to be available on the phone. That’s because your Insolvency Practitioner might need to call you to ask you whether you agree to a change that a creditor wants to make and, of course, to let you know whether it’s ultimately successful. However, your IVA provider will represent you in this meeting and answer any questions that your creditors may have.
What happens during the meeting?
Before the IVA can go ahead your unsecured creditors need to review the proposal, ask questions, make modifications if necessary and ultimately reject or accept what’s on offer.
The creditors have a 17 day notice period to review the proposal and decide how they feel about it. They will then send their votes across on the day of the meeting itself. Your creditors don’t have to attend the meeting either (although they can if they wish) and will usually send their response via email, post or fax.
For your IVA to go ahead you don’t need every single creditor to agree. Instead you need acceptance votes from 75% of voting creditors by value. It’s also important to understand that if they suggest a modification and you agree then that counts as a yes vote.
You are under no obligation to accept any modifications that the creditor suggests. In order for your IVA to go ahead it is really important that you, as well as your creditors, are happy with the terms.
After the meeting
You should get a call or email soon after the meeting to let you know how it went. After every meeting something called a Chairman’s Report is produced, which shows how each creditor voted and what they asked for. You will get a copy of this report for your own records.
It’s not always possible to come to a definite answer on the same day of the meeting. A lender might want more time to consider a proposal, or you might want more time to think about accepting any modifications. If this is case the meeting can be adjourned for up to 14 days.
Your IVA provider wouldn’t put forward a particular proposal unless they think there’s a good chance of it being accepted. However, there is no guarantee that it will be. If it’s rejected, it’s not the end of the world and there will other ways for you to deal with your debts. It may be possible for your provider to change the terms of the offer and send it back to the creditors to try again to get it accepted, or, if this is not suitable, then it may be best to look at another debt solution. Your IVA provider will help you look at your options.
We hope that has put your mind at rest when it comes to the creditor meeting. Now you know that you will not need to attend, but you do need to have your phone to hand just in case. Remember, IVAs are just one debt solution and have their pros and cons like any other. To really know which one is right for you it’s important to get expert advice. If you have any other questions about IVAs, or any the other debt solutions make sure you get in touch using the options on the left.
by Christine WalshBack to blog home