The Business Debt Advisor

Full and Final Settlement IVAs Explained

A Full and Final settlement IVA is a legally binding arrangement with your creditors which allows you to repay a proportion of your debt in a one off lump sum payment. Normally the lump sum is raised by remortgaging your property or introducing a lump sum from relatives. For individuals over retirement age, an equity release scheme may be possible.

Example IVA Explained
Ms Johnson had amassed £23,000 worth of debt, was pregnant and had little or no surplus income.  Her new husband (who had nothing to do with her debt) was prepared to introduce a lump sum of £15,000 to settle her debt which was agreed as shown below:-

This is an ideal solution for individuals who are able to raise a sum of money, but after providing for their reasonable costs of living including their increased mortgage payment, do not have any surplus income. Or as detailed above, the settlement comes from a third party and this money would not be available in bankruptcy.
Creditors are likely to accept your full and final settlement if we can demonstrate that this offers a better return than bankruptcy.

The process is much the same as for a normal IVA but usually last for 6 months or less.  If your assets are at risk because of action taken by creditors, we can apply to court for an Interim Order, which means that creditors cannot commence or continue with any action against you and your assets unless the Court permits them to do so.
A meeting of your creditors is held and creditors are able to vote on whether to accept, alter or reject your proposals. As long as you proposals demonstrate a genuine desire to repay as much of your debt as you can afford, it is likely that creditors will accept your IVA. It is our role to guide you on what creditors will find acceptable.

Once your IVA is approved all interest and charges on your unsecured debt is frozen. Also due to the fact that an IVA allows you to repay a proportion of your debt, then as long as you adhere to the agreed terms, the remaining balance of your debt will be written off.
To find out if you have any equity available in your property use our simple debt calculator.
 

*Any charges for progression of an IVA are approved up front with yourself and your creditors. Missed payments can bring your IVA to an end and could result in bankruptcy. Your home is at risk if your IVA fails.

How do the IVA fees get paid?

As soon as you decide to proceed with an IVA then your payments to creditors cease and contributions towards your IVA start. These will be set at a figure which you have agreed you can afford.

It takes around 6 - 8 weeks to set up an IVA and during this period you will commence your monthly contributions into your IVA.  It is likely that by the time the IVA is approved, you will have made one to two contributions which will be used as part payment of the Nominees fees.

(If creditors reject the IVA proposals we do not seek to recover the balance of the Nominee’s fee from you). The Nominee’s fee will vary depending on the complexity of the IVA but typically are between £1,000 and £2,000 plus VAT.  The Supervisory fees are normally capped by creditors at between 15 and 20% of realisations.  The Supervisory fees are drawn monthly from the monthly contributions. All fees will be discussed in detail with you prior to any plan being put in place.

Does an IVA affect my credit rating?

An IVA will be on your credit record for six years which is the same length of time that any other adverse credit is recorded. 

The Next Step

All debt solutions should be very carefully considered; we will always provide you with the best advice to ensure you get a soft landing away from the burden of debt. Simply forward your details on our Contact Form and we will contact you. Alternatively ring us on our FREEPHONE ADVICE LINE 0800 085 1825 to have a full consultation with our specially trained advisors.

The Insolvency Service has produced a guide: In Debt - Dealing with your creditors, to support those who find themselves in financial difficulty during the recession.

Financial Information

All debt solutions should be very carefully considered. Fees will be charged if a solution is taken in order for us to set up and maintain your plan - all fees will be outlined during your consultation. For further information on fees, please see the FAQ section of the different solutions available. Retained payment may place you further into arrears. The Debt Advisor complies with the Consumer Credit Act and you have a right to a cooling off period of 7 days. It is likely that your ability to obtain further credit in the short term will be affected and this may also be the case over the medium to long term.