whether to put down my ex-partner as a creditor

[rebecca2809]

Hi, I'm just in the process of applying for IVA. I'm debating whether to put down my ex-partner as a creditor. I have a few questions which I would be grateful for advice on. I owe him approx £5500, which I intend to pay him back. It's a complicated story as to how I still owe him money (i'll go into details of its required for the IVA) but it is only fair and square that I pay him back. He has said that he would write the debt off but I would feel very guilty about this. We are on good terms, have remained good friends and he wants to see me sort out my financial difficutlties He agrees with me applying for an IVA so there is no fear that he would vote NO.
1) From what I understand he does have the right to vote but cannot recieve money from the pool of money that the IP distributes to the creditors, is this correct?
(2) I understand that he can make a postal vote but how much of the statement of affairs will he get to see? I am rather embarrassed by my situation so would prefer he sees as little as possible.
(3)If accepted for an IVA, i've heard that any additional income you have to pay 50% to the IP. Would I be able to use the other 50% to pay him back?

Many thanks for your advice

[Jo Rolland]

I know here in Scotland, any monies owed to family or friends where the debtor wants to include this in a Trust Deed, the IP would want to see legal documentation stating that the debt is actually owed.

You have to see it from the IP and Creditors point of view, as some debtors have been known in the past to invent such loans in order to out vote known objecters.

I am sure someone will be along with regards to the situation down south.

[ianmillington]

Hi

As Jo says, there needs to be clear evidence as to the existence and amount of the debt, as with any other creditor. I don't think we need be concerned about how the debt arose.

To answer your points:

1. He does have the right to vote and is just as entitled as any other creditor to receive a dividend from the arrangement fund. However, it might be considered to be a good strategy for him to agree that his entitlement to dividends be deferred in favour of unconnected creditors i.e he doesn't get paid anything out of the IVA until other creditors have been paid in full. This would be a smart move if you are on good terms. There are specific rules governing cases where associated creditors vote on arrangements, designed to prevent an associated creditor steamrollering approval against the wishes of a majority of unconnected creditors.

2. On the basis he is a creditor, he is entitled to a copy of the full proposal, the statement of affairs, and all ancillary documentation received by all the other creditors. Given that the nominee has a legal obligation to notify all creditors of whom he has become aware, the only way you will get round this rule is for your ex-partner to formally waive all rights in respect of the debt prior to issue with the proposal. You could elect of course to exclude your ex-partner from the proposal, however because of the obligation on the nominee he still requires a copy of it. Additionally, as excluding him from the proposal will mean he will not be bound by it, it is realistic to expect an adverse reaction from all your other creditors.

3. This point has been the subject of much debate on this forum. see http://www.iva.co.uk/forum/topic.asp?TOPIC_ID=8705
and in particular see the final post of Melanie Giles setting out the income reviews required by proposals issued under the forthcoming BBA protocol, which takes effect on Friday.

Hope this helps

Ian

[rebecca2809]

Thanks Ian and Jo for your advice

Yes, I do feel that there is proof that I owe him this money. I can understand what you are saying about how some people may invent such loans, etc and I'm sure there are people who try to manipulate the system, however, in my case this is genuine and anyway I don't think that the money I owe him will make any difference to the voting as my largest creditor is £40k. I just wanted to find a way of paying him back but didn't want it to make the situation worse if he were to oppose the IVA, which I don't think he would as he is hoping for some money back from me.

From your advice, on weighing things up it may be too complicated to include him in IVA proposal but will discuss with IP when the time comes. I am in a real financial mess and trying to find a way to pay back the money that I owe to both the creditors and ex-partner. My ex has said that he would probably write the money off but what people say now and in the future are two different matters (especially as his job is not secure) so just wanted to try and sort things out now. He knows I am in debt but is not aware of the true extent of financial problems therefore not sure if I want him to see this as I'm too ashamed.

I guess the bottom line is that he can't get blood out of stone and if I don't have the money to give him then there is nothing that can be done. This makes me very sad as I did not imagine things would ever get to this point, I kind of deluded myself that I would pay everything back. Up until last month I had never defaulted on a payment but I cannot sustain the level of repayments with the drop in my income. Reality hit home then and I had to seek advice.

Thanks again for the advice
Rebecca

[abc]

In addition to Ian's post there are benefits of including him as a creditor even if he waives his right to a dividend being that if he is the only voting creditor at your meeting and he approves the IVA then your IVA is classed as accepted by your creditors. The rules are slightly more complicated if someone non connected rejects the proposal.

[MelanieGiles]

Your partner is not an associated creditor within the meaning of the Insolvency Act, but as Ian highlights he may wish to waive his right to receive a dividend - in fact any creditor can opt to do this, in order to enhance the dividend payable to other creditors. Personally, I would leave him in and let him receive his dividend, as he could change his mind about being paid at some stage in the future.