Full and Final Settlement IVA

Full and Final Settlement IVA

A Full and Final Settlement IVA (also known as a lump sum payment IVA) is possible if you cannot afford monthly payments. The Arrangement is completed with the payment of a single cash lump sum.

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What is a Full and Final Settlement IVA?

A full and final settlement IVA does not require ongoing payments. Instead a single cash sum is paid after which the Arrangement is completed and outstanding debt written off.

This solution is ideal if you want to do and IVA but cannot afford to make monthly payments towards your debts. There are also circumstances when it can be used even if you have a surplus income.

Once your creditors accept the Arrangement you are legally protected from them. They can no longer to take action against you to recover their debt even if the lump sum is not due to be paid immediately.

Depending on your circumstances the amount of debt written off could be more if you us a full and final settlement compared to a monthly payment arrangement.

How much do you have to pay in a Full and Final Settlement IVA?

There is no set amount that has to be offered to your creditors for them to accept this type of IVA. It depends on your circumstances. They will access each offer on its individual merits.

If you cannot afford monthly payments and have no assets creditors may be prepared to receive a relatively small sum. This could be as little as 10%-20% of your outstanding debt. However, the minimum amount payable to make this type of solution viable is normally £6000-£8000. As such it is not generally suitable for debts of less than £10,000.

If you are a home owner with equity in your property a larger amount will probably be required. This is because the offer you make has to be better than what they might receive if you want Bankrupt.

Your creditors will compare your full and final settlement offer to what they would get if you went Bankrupt. If it is more, they are likely to accept your proposal.

Who can pay the required cash sum?

The cash required for a full and final settlement IVA can come from you or a third party. If for example you have savings or have recently received a redundancy payment you could use these funds.

If you are a home owner you might be able to raise a lump sum by releasing equity from your property. Although if considering this option you must not actually remortgage until your proposal is agreed.

Where you do not have access to your own funds the lump sum could come from a friend or family member. They will not be involved in your IVA in any way but will need to prove their identity and the source of the funds.

If the cash comes from a third party a full and final settlement IVA is possible even if you could afford monthly payments. These are not available as they are required to repay the lump sum.

When does a Full and Final Settlement IVA have to be paid?

The cash lump sum required for this type of IVA does not have to be paid as soon as the Arrangement is accepted. The agreement can be based on an amount which will be handed over at a later date.

This means the solution can be used even if the lump sum will take some time to raise. For example if you are proposing to release equity from your property or a third party needs time to get the money together.

The advantage of this is the Arrangement can start straight away. As such you get immediate legal protection from your creditors. No ongoing monthly payments are required unless you can afford these in the mean time.

If the cash required is not available immediately you will need to provide evidence that it can be accessed within the agreed timescales.

2 thoughts on “Full and Final Settlement IVA

    Hina says:

    I have debts of £9000 and would like to know how much i need to pay for a lum sum iva

      Hi Hina

      Generally speaking it is not possible to do a lump sum IVA for an amount less than £7000-8000.

      Given your total debt is £9000, using this solution would not really give you much of a saving. If you can afford to pay a minimum of £100/mth you might be better with a monthly payment IVA.

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