Before your individual voluntary arrangement is approved, the companies you owe money to must accept your IVA proposal. To do this, they will vote at what is called a meeting of creditors (MOC).
If you have an upcoming meeting of creditors (MOC) for your pending IVA, it’s important to know what to expect.
This article will tell you everything you need to know about your IVA creditors meeting, and what to expect before, during and after the meeting.
What is a meeting of creditors?
Nowadays the meeting of creditors date is more of a deadline for objections to the IVA proposal to be lodged.
In the past, all creditors were invited to a meeting where they could vote on whether to accept or reject the IVA proposal. This is now very rare.
Once the creditor’s meeting has been held, the IVA proposal is either accepted or rejected.
If it’s accepted, the IVA goes ahead. If it’s rejected, the IVA fails and we’ll assist you in exploring other debt solutions.
What happens at a creditors meeting?
The meeting of creditors is a chance for your creditors to raise any objections to your IVA proposal.
They can either accept, reject or request amendments (known as modifications) to your proposal.
If they do request amendments such as higher IVA repayments, we will always discuss these changes with you first to ensure you still wish to proceed with the arrangement.
For an IVA to be accepted you need 75% of voting creditors to agree to your proposal. Please note this is voting creditors and is not based on your total debt amount.
For example, you could have £20,000 of unsecured debt being owed to 5 creditors.
If only 4 of these creditors decide not to vote and only 1 exercise their right, then the IVA will be approved, even if their debt amount is only a tiny fraction of the total debt.
Do I need to attend the meeting of creditors?
No, you do not need to attend the meeting of creditors.
Your insolvency practitioner (IP) will represent you and answer any questions creditors may have.
You will however have to make yourself available for a brief call on the day of the meeting.
This will be to inform you whether your creditors have accepted or rejected the proposal and for you to confirm you wish to proceed with the IVA.
How likely is an IVA to be accepted?
Most IVAs are accepted by creditors.
Typically most creditors prefer to accept, as they see a formal solution like an IVA as being in their best interests, rather than you defaulting on your debts and becoming bankrupt.
Of course, there are always exceptions to the rule and some creditors may choose to reject your IVA proposal. Even if a few creditors vote against your IVA, it can still be approved since you only need the support of 75% of them.
What happens if the IVA is rejected?
Our experience knowing what creditors wish to see in an IVA proposal means that it’s very rare for an IVA to be rejected.
If your IVA proposal is rejected, we’ll work with you to see if there is an alternative debt solution available that suits your financial circumstances.
This might include an informal arrangement such as a Debt Management Plan (DMP), or even more formal solutions like Bankruptcy.
A rejected IVA is not the end of the road and we’ll be with you every step of the way to ensure you get the correct debt advice you need.
Why would creditors reject an IVA at the meeting?
There are many reasons why creditors might choose to reject an IVA proposal at the MOC.
The most common reason is that they feel the repayments offered are too low, or that the length of the IVA term is too long for them to receive a return.
Our IVA team will be in regular contact with the majority of UK creditors, and understand their usual voting habits. If you are unsure of how your creditors will vote, our insolvency practitioners can give you an indication before the meeting takes place.
We always want the best for our clients, and if we do not feel an IVA proposal is strong enough to be accepted, we will work with you to try and improve it.
What happens after the meeting of creditors?
If your proposal is accepted, then you are officially entered into the IVA. You are now officially protected from any further legal action being taken by your creditors.
You will make the agreed monthly repayments to the insolvency practitioner, who will then distribute this money among your creditors.
Interest and charges are now frozen and as long as you maintain the terms of your agreement, you will be debt-free at the end of the IVA term.
If your proposal is rejected, then we’ll work with you to see if there is an alternative debt solution available that suits your financial circumstances.
If you have any questions about what to expect at a meeting of creditors or want to discuss your IVA proposal before it is put to a vote, please get in touch.
We’re here to help.
IVA creditors meeting – Conclusion
An IVA creditors meeting is a chance for your creditors to ask questions and vote on your IVA proposal.
You do not need to attend the meeting, but you will need to be available for a brief call on the day of the meeting.
Most IVAs are accepted by creditors, but if yours is rejected, we’ll work with you to find an alternative debt solution.
