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.

The Guardian’s “Diary of Debtor” blog series really interests me. It’s not often that people are happy to talk about their debt problems, even anonymously.

In this blog, the writer was considering an IVA. Then, almost out of nowhere, a rich relative  appeared. They offered a lump sum of around a third of their debts, to use in a full and final IVA.

Full and final IVAs are still quite rare and some readers may be scratching their heads and wondering – why and how? Here’s what you need to know!

How do “full and final” IVAs work?

A full and final IVA can be proposed when the person in debt has access to a lump sum of money. It could be a gift from a relative or a remortgage, for example. Often they do not have any other ongoing disposable income which could be used towards monthly debt repayments. unless the full and final offer is big enough 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.

Anybody already in an IVA should speak to their supervisor, who would make this offer to creditors for them.

If you are already in an IVA, you will need to speak to your IVA supervisor about changing the terms of your agreement.

Like all IVA repayment offers, 75% of your creditors (by value of the debt) need to agree.

You can’t take on another loan to raise the money for this type of IVA. Also, any offer from family or friends must have written confirmation that the money will not need to be repaid.

If you’re thinking about any sort of IVA, it’s worth taking a second to try the ClearDebtdebt calculator. It shows you, based on data from real IVAs, how much you could save every month in a ClearDebt IVA. 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

    1. Hi Tina. I am sure an advisor from the team at ClearDebt can help however I would recommend you copy and paste your query into a new question on http://ask.cleardebt.co.uk and that way all of them will get notified of it and you’ll receive the best attention.

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