The Guardian’s “diary of a debtor” blog story has brought up an interesting option for some people in debt – a full and final IVA. We look in more depth at how these work and what’s involved in clearing your debt using this method.
I’ve been reading The Guardian’s “Diary of Debtor” blog series with great interest. It’s not often that people are open and willing to talk about their debt problems, even anonymously via a blog.
In the latest instalment, the anonymous debtor was considering an IVA and then almost out of nowhere a rich relative appeared offering a lump sum of money, amounting to around 30% of their debts, to offer to creditors by way of a full and final IVA settlement.
Full and final IVAs are generally quite rare and I’m sure some of you reading this may be scratching your heads and wondering – why and how? Here’s what you need to know about full and final IVAs!
A full and final IVA can be proposed when the person in debt has access to a lump sum of money, such as from a relative or remortgage, but they do not have any other ongoing disposable income which could be used towards monthly debt repayments, unless the full and final offer was such as to pay creditors in full. The offer of a full and final IVA settlement can be made at the initial IVA proposal stage or at any point during the IVA to bring it to an early conclusion.
For anybody already in an IVA, they would need to speak to their IVA supervisor who would make this offer to creditors on their behalf.
If you are already in an IVA, you will need to speak to your IVA supervisor about changing the terms of your agreement by way of variation.
Like all repayment offers in an IVA, you would need 75% of your creditors (by value of the debt) to agree.
One important point about full and final IVAs is that the debtor is not allowed to take on more debt, in the form on an unsecured loan, in order to raise the money for this type of IVA proposal. Additionally, any arrangement of money from family or friends would require written confirmation that the money will not need to be repaid.
If you’re considering an IVA whether it be a standard IVA or a full and final settlement, it’s worth taking the ClearDebt online debt analyser to find out if an IVA right for you and if you have any other options. Take the debt analyser now or call one of our experienced advisors on 0800 019 2095.