The Approval Threshold
For an IVA to be approved, creditors holding at least 75% of the total debt value must vote in favour. If this threshold is not met, the IVA proposal is rejected. However, this does not mean you are out of options.
Why Creditors Might Reject
Creditors may reject a proposal for several reasons:
- The proposed monthly payment is considered too low
- The term (60 months) is seen as too short
- They believe your assets (such as equity in your home) could be better realised in bankruptcy
- They dispute the valuation of your assets or income assessment
Modifications — The Most Common Outcome
In practice, outright rejection is less common than conditional approval with modifications. Creditors often vote to approve the IVA subject to changes — for example, a higher monthly payment, an equity release clause, or a longer term. Your IP will negotiate these modifications on your behalf.
In reality: The vast majority of IVA proposals are either approved as submitted or approved with modifications. Experienced IPs have strong relationships with creditors and know how to structure proposals that will be accepted.
If the Proposal Is Rejected Outright
If the IVA is rejected outright:
- Your IP can revise the proposal and put it back to creditors with improved terms
- You can explore alternative debt solutions — bankruptcy, a DMP, or a DRO
- You are not automatically made bankrupt just because an IVA is rejected
Free debt advice: For personal advice tailored to your situation, contact MoneyHelper (0800 138 7777), StepChange (0800 138 1111), or Citizens Advice — all free, all regulated.