Your creditors may include the following:
Secured creditors - such as your mortgage provider or any creditor whose debt is secured on your home and/or any other assets;
Landlords - if you are tenant or rent a workshop, offices etc;
The Crown - typically tax owed to the HM Revenue & Customs;
Unsecured creditors - creditors without any security for their debts, such as credit cards, store cards, personal loans and bank overdrafts (if unsecured), amounts due to utility and phone companies, council tax. If you are in business it would also include most trade creditors;
Finance creditors - those creditors who provide assets on hire purchase or finance leases, for instance motor vehicles;
However, not all the above types of creditor are eligible for inclusion in an IVA proposal.
Which Debts Can Be Included in an IVA?
Normally any unsecured debts can be included within an IVA. The following are examples of unsecured debts normally included as part of an IVA agreement:
- Business loans for which you are personally liable
- Catalogues
- Credit cards
- Outstanding balances after repossession of your home or vehicle
- Bank overdrafts
- Personal loans
- Store cards
- Personal debts due to the HM Revenue & Customs can be included.
Which Debts Can’t Be Included in an IVA?
Some debts cannot be included within an IVA. These include:
- Secured debts, (vehicle hire purchase agreements, mortgage or other loans secured on your property and related arrears)
- Rent and rent arrears
- Fines such as parking offences, speeding tickets
- Magistrates Court fines
- Debts incurred through fraudulent activity
- Child maintenance/Child Support Agency payments
The above will normally have to be paid, but provision for the repayment of these debts will be taken into consideration when calculating your monthly disposable income.
The more information you can provide the insolvency practitioner or debt advisor about your creditors, the better. You should try to provide the following details:
- The name and address of the creditor
- What type of creditor they are (see above) and how the debt was incurred
- Any account or reference numbers
- The amount owed to the creditor and the rate of interest being charged, if any
- The current monthly repayment
Other information required to be able to advise you properly includes:
- Details of any legal action that has or is due to be taken, particularly, if the creditor has obtained a county court judgement or is taking steps to bankrupt you
- Details of any arrears, this is particularly important if the creditor has security or is a landlord or finance creditor
One final point …
It is important that you tell the insolvency practitioner or debt adviser about all relevant debts. Bank overdrafts are commonly overlooked. Although you may be “in the red”, your wages/salary are paid into your bank account and you use it regularly to meet your normal living expenditure, therefore many people don’t think of their overdraft as a debt. If your account is overdrawn, it still represents a debt.
On the approval of your voluntary arrangement, all unsecured debts “crystallise”, freezing the balances at their current levels and preventing further interest and charges being incurred. This means that your bank overdraft will also be frozen and your bank will probably stop you from using this account.
You should remember that an IVA proposal may contain a clause which states that “in the event that any creditor has inadvertently failed to be notified of the Arrangement owing to a honest omission or oversight, then provided the claims of any such creditor or creditors in aggregate, will not reduce the likely dividend to ordinary unsecured creditors by more than 10%, then these claims may be admitted. If such claims exceed 10%, the Supervisor must convene a general meeting of creditors to consider whether the said claims should be admitted”. If the likely dividend to creditors is adversely affected so that it reduces by more than 10% this can potentially lead to the failure of your IVA.
No comments:
Post a Comment