Money Owed to Family

[Helhan]

In addition to our unsecured debts (loans and credit cards) we also owe a significant amount of money to a relative. If we enter an IVA, do we include our relative as a creditor? Do they vote? (they are very sympathetic, but need us to repay the money we owe them.) Or are we allowed to keep back enough to pay them the agreed amount each month?
Thanks
Helhan

[MelanieGiles]

Hi Helham

Yes you should include the relative's debt and they have a vote - although they have what is referred to as associated status. The rules for voting, where there are associated debts, are that if you receive any rejecting votes (in the event that you do not achieve a 75% majority first hand) that these are removed from the voting process and a second vote is taken. Providing you then get a 50% majority on the non-associated votes, the IVA will be accepted.

Often, the other creditors will ask for your relative to waive their right to a dividend payment. This will mean that your relative will not receive any payment from you for the period of the IVA. You will certainly not be allowed to prefer them over the other creditors, and this same rule also applies under bankruptcy and debt management procedings.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk