IVA Rejected. Urgent Advice needed. The IVA which my husband and I were hoping to enter was rejected yesterday. We are very upset. I will give a summary of our situation and would really appreciate any advice anyone could give us on our next steps.We have a property portfolio which unfortunately has gone very toxic and in our efforts to keep afloat we have run up large credit card debts and personal debt.
Amount owed on property = £750K
Value of property today = £330K
Credit Card Debt = £40K
Loan from relative = £147K
We have some equity in our family home (different lender to the property portfolio) = £44K
We are both PAYE employees and have moderate salaries. On consultation with our IVA practitioner the plan for IVA was to sell the family home and offer a Final Fixed sum £44K. The relative who is owed £147K would be the major creditor and would have the biggest vote when it came to the creditor meeting (He has deferred his claim for £147K in favour of the unsecured creditors)
Unfortunately the IVA proposal was rejected by the bank which has the mortgages for the properties in the portfolio.
Our understanding was that the bank had the secured loans and that voting was by the unsecured creditors only and as our relative was the major creditor and had the majority vote then the IVA would be allowed to go ahead. Apparently the bank may want us to enter a 5/6 year IVA and sell our house in year 6. To be honest the house is too big and costly to run and we have rising expenditure with our children in university and other children going to university. So even though we have moderate salaries we could not sustain the stress both financial and emotional of a 6 year IVA. It would seem that bankruptcy is the only alternative. We have a meeting with our IVA practitioner tomorrow but we need to know what we are dealing with and what we should do – so any advice would be helpful so that we can go to the meeting with some knowledge and know what questions to ask.
Hi and welcome and I'm sorry to hear about your situation, what I would ask though is why you didn't consider bankruptcy on that level of debt? Especially as you are not trying to protect your family home?
Have you spoken to your IP about the results? What are their thoughts at trying to get the iva pushed through?
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by lem
Hi and welcome and I'm sorry to hear about your situation, what I would ask though is why you didn't consider bankruptcy on that level of debt? Especially as you are not trying to protect your family home?
Have you spoken to your IP about the results? What are their thoughts at trying to get the iva pushed through?
We felt that bankruptcy was the the last course of action. The IVA FF was the most attractive for obvious reasons (no publicity etc) and our IP seemed to think it was a reasonable possibility. I guess my question to the forum is : how does the voting work at the creditors meeting - how much influence does the bank have since they have secured loans, I thought the vote came from the unsecured creditors. I agree with you that the amount we owe seemed to be directing us towards bankruptcy but the IP seemed to be confident that the FF IVA would be accepted. This is why I am so upset and disappointed
I would imagine though that what you are asking of your mortgage provider is to turn the secured lending into unsecured, therefore they then get voting rights. If you were keeping all your properties and continuing to pay the mortgages then yes they wouldn't have voting rights but I presume that's not the case?
font size="1" face="Verdana, Arial, Helvetica">quote:<hr height="1" noshade>Originally posted by lem
I would imagine though that what you are asking of your mortgage provider is to turn the secured lending into unsecured, therefore they then get voting rights. If you were keeping all your properties and continuing to pay the mortgages then yes they wouldn't have voting rights but I presume that's not the case?
This is what I am trying to get to the bottom of - I was told the bank (because the loans were secured) would not be voting. The voting would be driven by the main creditor whio is my relative and who has decided to defer his claim in favour of the other unsecured creditors. If this is correct then the IVA would have been approved by virtue of the majority vote. But in our case the bank appear to have voted. If what you are saying that the bank loans have become 'unsecured' and are now eligible to vote because we have ceased payments, then maybe we are getting closer to the reason why the IVA was not approved. I was unaware that they could turn from 'secured' to 'unsecured'. But the thing is we have been making some payments to these loans. We have a meeting with IP tomorow when all this will be made clear I guess. I just wanted any input from the experts on the forum.
I'm not an expert at all Josie and I am sure one of our experts will be along later, what does concern me though is that if you haven't actually handed the keys back yet to the properties and they haven't been repossessed then the mortgages are still secured and therefore they shouldn't have been able to vote, but I am sure one of the experts will come along and advise better than I can
Thanks Lem for your feedback. This is just a terrible time for my family and I. I am so worried. But the meeting tomorrow should help one way or the other.
I can completely understand how you must be feeling, but try not to worry, one way or another, it will get sorted and you will be able to get on with your lives, there will be a way out of this debt hole for you, stay strong
Hi Josie sorry to read of your recent rejection and the subsequent anxiety this is causing you. You really need to get full clarity from your own IP as they are the ones that have specific knowledge of your case and how the creditors were presented in your proposal. If it was understood that the properties would be included in the IVA and the shortfalls with the banks would be treated as unsecured debts then yes they have a voting right and although the exact balance of the shortfalls would not be known until the properties were sold at auction, they would still be a contingent creditor.
I hope the meeting tomorrow gives you all the answers you need and you can find a positive way forward to relieve the stress this is putting you both under.
Please keep us posted.
Regards, Tina Shortland, Debt Advisory Manager for Melanie Giles at Debt Advice TV.
If you’re looking for effective debt related information, articles and news, then go now to our on-line advice service at www.debtadvicetv.com
If you’re ready to ask us for specific advice or help, then get in touch at www.call-me.debtadvicetv.com so you can start to free yourself from the stress and anxiety of overwhelming debt.
Lenders are entitled to revalue their security for the purpose of voting in IVAs, and your IP would have been well aware of this. As you say the property shortfalls are around £420k, then this is the level of debt those creditors will suffer and which is unsecured - so of course they have the right to influence the decision, and had I been acting for you I would have canvassed their support in the early stages, rather than presented proposals and hoping that they would not vote.
I guess your IP now needs to fully understand the bank's reasons for rejection, and try to assure them that you are still putting your best foot forward. If you have disposable income, moreso once your property has sold because your costs may be lower, then the bank is not being unreasonable in asking you to pay contributions - indeed you may be required to do this under bankruptcy proceedings.
I nearly fainted after reading this souped up IVA...I need a drink.Made that a double gin and tonic. You must have had nearly a million pound property?
P.S When I did my IVA, the debt was big and scary.Just cannot imaging anything bigger for an none business related IVA. If my debt had been much higher, I would have to go bankrupt. Gave creditors 17p to the pound for £250k personal debt. I drank a bottle the night before the creditors vote.
Last edited by nonewdebt on Tue Aug 13, 2013 10:30 pm, edited 1 time in total.
