Notice of defaults: everything you need to know
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If you're applying for an IVA, your creditors get to vote on whether or not it should go ahead. This happens at the creditors meeting - which your IP will handle on your behalf.
If you're thinking of entering an IVA, the idea of a creditors meeting can be really off-putting. If you can't repay your debts as you originally agreed, you probably don't want to 'meet' your creditors face to face.
So you'll be relieved to hear that you won't have to - you'll just need to be reachable by phone on the day of the meeting, so your IP can call you.
Your IP will be there to represent you and answer any questions your creditors might have. After the meeting, they'll tell you how it went. And if you have any decisions to make, they'll help you do that too. This is what your IP is there for: they're there to make your journey out of debt as simple and stress-free as possible.
What exactly is the creditors meeting?
The creditors meeting is something that has to happen before an IVA can go ahead.
It's your unsecured creditors' chance to say whether they agree to the terms of your IVA proposal (the document that tells them how you and your Insolvency Practitioner (IP) think your IVA should work).
Remember: your IP can't guarantee that they'll accept, but they wouldn't submit an IVA proposal in the first place if they didn't think it was likely to be approved.
If enough of your creditors agree to the terms in your proposal, your IVA can start - and it'll be legally binding on all the creditors involved in your IVA, not just the ones who voted to accept the terms.
You'll need approval from creditors who 'own' 75% of the total value of your unsecured debt. However, if a creditor doesn't vote, their share of the debt won't be used in this calculation.
What kind of meeting is it?
It's not an actual meeting. Your creditors will probably send their vote by fax, email, phone or post (although they can be there if they want to).
And it's more of a deadline, really - your creditors might get back to your IP before the actual meeting.
What happens at the meeting?
Your creditors tell your IP how they feel about your IVA proposal. They could:
- Approve it
- Reject it
- Ask for changes to it (called modifications).
If a creditor asks for any changes that would affect you, your IP will need to discuss them with you. If you agree to them, that creditor's vote will count as a 'yes'.
Your IP won't need to call you about any proposed changes that don't affect you (a change to the fees paid to your Insolvency Practice, for example).
Remember: it's not in your creditors' interests to insist on payments that you can't realistically afford.
How soon will I know how the meeting went?
You should know within a few hours of the final vote. Your IP will make a Chairman's Report that shows who voted, who approved, who requested changes, etc. They'll send this Report to you and to all your creditors. They'll also call you to discuss how the meeting went.
However, there's no guarantee you'll get a definite answer on the same day. If your IP needs to 'chase' some of your creditors to get them to vote, or if you need some time to think about the modifications they've requested, the meeting can be adjourned for up to 14 days.
Remember: even if your IVA proposal does get rejected, don't panic. There are other ways of dealing with your debts - and your IP is there to advise you and help you find an approach that'll work for you.
by Christine WalshBack to blog home