New to forum - Why do IVA's fail?

[armstrongt]

Hello - I'm new to this forum and was wondering if anyone can advise of what reasons some IVA's fail. Was looking at entering into the process of IVA but feel really nervous although it looks like many applications do pass. [:)]

[Declan at DebtFreeDirect]

Hi Armstong
There are a number of reasons why IVAs fail. Generally speaking if you fail to keep up with your monthly payments the IVA will fail. However, one way to avoid this is to keep in regular contact with your Insolvency Practitioner and should something happen, once your IP is aware of this they can help you. Often the lack of communication can be the difference between and succesful IVA and one that fails.

Thanks

[MelanieGiles]

There are lots of reasons why IVAs fail - but perhaps some of the main ones are:-

Loss of income
Separation of divorce
Redundancy
Client apathy
Inappropriate budgets set by creditors

Whilst you are at the stage of considering options, you should ensure that you speak to professionals who will explain the advantages, disadvatages and implications of each one before deciding on an appropriate course of action - and often it is a good idea to get a second or a third opinion.

[armstrongt]

Thanks for your comments, much appreciated, I assume by keeping up with monthly payments you mean once your IVA has been approved - but can you give me some idea as to why some IVA's aren't approved to start with? Thanks so much.

[RJC]

Hi armstrongt, and welcome to the forum.

Some IVA's that are proposed are rejected by creditors due to the dividend being too low, or if creditors believe there might be further assets available that are being excluded under the IVA but would be available in Bankruptcy. There are some creditors that simply do not accept IVA's and have a policy to give a 'blanket rejections' no matter what the terms are.

There are also some creditors, where if there has been previous continued non-cooperation, then they would rather see someone go bankrupt rather than accept an IVA, even if it means receiving a lower dividend.

Good IP's have continued relationships with creditors, and can normally give you a rough indication by seeing a list of creditors as to what their response to an IVA would be.

Good luck with everything in the future!

[armstrongt]

Hi - been reading from some on the forum that they are required to re-mortgage towards the end of the IVA agreement if you've equity in the property, which we will have, does this apply to all IVA's [?]

[thefsg]

I think so. It has to be done in month 54 of mine, a relatively new IVA started in April this year.

The rules I have are:

* Get two quotes from lenders
* Up to 85% LTV
* Increase in monthly mortgage payments should not be more than 50% of IVA contribution
* IVA monthly payment reduces by increase in monthly mortgage
* Equity share to be paid over at the end of the IVA (up to 100% of what you owe your creditors of course)
* Don't bother doing it if there is less than £5,000 equity

[RJC]

Hi armstrongt,

Each IVA proposal is individual and tailored to you. If you so wished, you could exclude your property from the IVA and see what creditors come back with.

I would however be very very surprised if creditors did not put a modification back into the proposal stating the property was to be included and needed to be at 85% LTV.

It would depend on the level of return you was offering with the property being excluded of course, but realistically this clause forms the part of most IVA's these days.

[kallis3]

It's rare that a debtor can get a property excluded. I have heard of only one in recent months on here.

However, you do usually find that if you cannot remortgage, or the payments will be more than 50% of your IVA payments, then your IVA will continue for a further 12 months.

[MelanieGiles]

These days, especially in the era of the IVA protocol, it is very unususal to see properties excluded from IVA proceedings, except in very special circumstances such as the age of the debtor.