Full and final IVA settlements

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.

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  1. You have explained the IVA process very well. Generally, people are not willing to talk about their debt problems but for those who want to come out of debt by paying a lump sum, a full and final IVA settlement would be the best option.

    I am in an IVA and have been in mine for 4 years and 1 month so only have 11 to go my husband had a coach crash and is fine but dvla have taken 5 months so far investigating if he can drive but in the mean time he can drive but insurance wont insure him until they have made there final decision. we have been awarded a large sum of money from a ppi we want to use this as a full and final settlement as we are in an agreed breach for 6 months because our joint income is not even enough to pay all our bills let alone food. this ppi is from a loan that was repaid 4 years before we entered the iva I think that the money should be used as a full and final settlement as this amounts to more then the last 11 payments that we still owe. pay plan are saying that the money must got to the debt as extra and we can then offer the 8% interest as a full and final settlement can they do this as we have other ppi’s that will go to the debt as the company’s are included in the iva I don’t have a problem with that. as my income has dropped drastically due to my daughter leaving further education we will never be able to pay the monthly instalments as when the iva was taken out I told them our income would come down drastically when she leaves school and they were not interested so from the start of my iva they new I was going to fail

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