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Full and Final Settlement IVA – 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 although we would recommend you only consider Equity Release Schemes after taking advice from FCA regulated pension advisor.

Full and Final Settlement IVA Example

Anthony had amassed £76,586 of debt having gone through a tough divorce. He had been made redundant from a well paid job and after settling his solicitors’ costs, he had £11,000 remaining. Anthony was looking to set up as a business consultant and at the time his income was erratic.

The TDA team helped put together an IVA proposal which offered £11,000 to settle his debts. Anthony also agreed that if he was entitled to any compensation from mis-sold PPI this would also come into the IVA.

Bankruptcy IVA
Income Contributions Nil Nil
Balance of Redundancy Funds £11,000 £11,000
Estimated total Costs  £11,000+  £2,265
Dividend to Creditors Nil  12.17p

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 alternatively, the settlement comes from a third party and this money would not be available in bankruptcy. Read our case studies for examples of how IVA’s have been used to deal with problem debt.

Creditors are likely to accept your full and final settlement if we can demonstrate that this offers a better return than bankruptcy. Also for people who have reached retirement age, it is possible to retain much of your equity and offer a lump sum (raised either from 3rd parties, or equity release or pension release) to settle your debts.

The process is much the same as for a normal IVA but usually last for 12 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.
Any charges for progression of an IVA are approved up front with yourself and your creditors. It’s vital that you can achieve the proposed terms as failure to do so is likely to mean your IVA will fail.

A failed IVA usually means that you are once again liable for the debt not settle by the IVA. Generally creditors do not want the Supervisor to petition for your bankruptcy but if you have HMR & C as a creditor they generally request the Supervisor petitions for your bankruptcy if the arrangement fails.

Fees payable for a Full and Final IVA

It takes around 6 – 8 weeks to set up an IVA. If you are offering a full and final settlement, it is likely that we will require that our Nominee’s fee is paid during this 6 – 8 week period. If your IVA terms are not approved, the Nominee’s fee is not refunded.  It is not in our interests to take a fee from you unless we are very confident your IVA terms will be accepted. If there is a danger creditors may not agree the terms, you will be advised of this in writing and we will want to you confirm in writing  if you want us to continue to help you put forward full and final terms for an IVA.

The Nominee’s fee will vary depending on the complexity of the IVA but typically are between £1,000 and £2,000 and as mentioned above, this is paid prior to approval of the IVA. The Supervisory fees are normally capped by creditors at between 15 and 20% of realisations.  The fees will be taken from the full and final sum and the balance will be distributed to creditors. All fees will be discussed in detail with you prior to any plan being put in place.

Effect on your 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.


All debt solutions should be very carefully considered. Our team will provide you with the most appropriate advice taking into account your circumstances. There are a range of options which include IVA, Debt Management, Bankruptcy, Debt Relief Order all of which are covered on this site.

The Insolvency Service website has helpful information on to support those who find themselves in financial difficulty during the recession.

 Important 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 your plan and maintain it – 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. You have the right to a cooling off period of 14 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. Calls to our free phone number from mobile phones and other networks may be charged.