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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.

What is an IVA?
Is an IVA for me?
Can it stop creditors?
IVA pros & cons

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.

Income ContributionsNilNil
Balance of Redundancy Funds£11,000£11,000
Estimated total Costs £11,000+ £2,265
Dividend to CreditorsNil 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 IVADebt ManagementBankruptcyDebt 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.

Is an IVA suitable for me?

An IVA could be appropriate for you if you are struggling to make the monthly payments that creditors expect. The most compelling benefit of an IVA is that you pay monthly affordable payments for a 5 or 6 year period with the unpaid balance being written off when the IVA is successfully completed.

The starting point for working out whether an IVA is appropriate is working out an “affordable” monthly payment would be and also how much you owe to your unsecured creditors. Examples of unsecured creditors whose debt can be included in an IVA are:

  • Credit cards and loans
  • Debts owed by you and someone else “jointly owed”
  • Monies owed to individuals including friends and family
  • Debts due to HMR & C including overpaid benefits, self assessment tax, VAT
    Arrears of council tax and utilities
  • Trade creditors who supply you if you trade as self employed
  • Shortfall once a property has been repossessed

The debts that cannot be included in an IVA include:

  • Matrimonial debt – monies owed to an ex-husband or wife which a court has decided should be paid
  • Student debt
  • Court fines or fines for traffic violations

Our debt calculator will help you work out how your “affordable” monthly payment compares with the amount creditors want.

For full debt advice and whether an IVA would be your best option, you can also speak to one of our advisors.

Can an IVA stop action by creditors?

Yes but it depends on the action and how far it is has gone. We can apply for an “interim order” which prevents creditors from starting or continuing action against you. This includes writs, judgments, charging orders, liability orders and petitions for bankruptcy. It is vital if you are facing action to get in touch immediately. If you leave it too late, we might not have enough time to help you obtain an interim order before the debt becomes charged on your property or you end up bankrupt.

If you are made bankrupt and you have assets that are risk of being sold by your Trustee in Bankruptcy, it is possible to propose an IVA and if this is agreed by your creditors, your bankruptcy can be cancelled. You will need specialist debt advice on whether this is possible.

IVA – Advantages and Disadvantages

Finding the right solution is only possible if a clear picture is available of the short term and long term advantages and disadvantages of an Individual Voluntary Arrangement. An IVA is aimed at getting your unsecured debts paid off in a manner that is affordable but it is a formal and legally binding solution. An IVA is not easy and requires discipline. The Advantages and Disadvantages explained below can help you decide if an IVA is right for you.


  • You make affordable monthly payments usually for 5 or 6 years. (If you have a lump sum it is possible to offer a full and final IVA)
  • Unsecured debts remaining after an IVA is successfully completed are written off.
  • An IVA can protect your residential property.
  • An IVA prevents creditors from taking action or continuing from adding further interest or charges to their debt.
  • Protocol Compliant IVA’s give your Supervisor the power to allow payment breaks and extend the arrangement if there are missed payments.


  • Protocol compliant IVA’s provide that you must look to refinance your residential property in year 5 and if this is not possible, you can introduce a lump sum or pay 12 extra contributions instead.
  • Certain assets may not be protected such as windfalls, investment properties and savings
  • The IVA can fail if you do not adhere to the terms of the arrangement. Creditors will then pursue you for the balance and can even petition for your Bankruptcy if you owe them more than £5,000
  • An IVA requires creditors to vote on whether to accept, alter or reject the arrangement and any debts incurred after the date of approval cannot be included into the solution
  • An IVA means you have to live within an agreed budget for the period of the IVA and you cannot take on new credit without your Supervisor’s consent.
  • Any debt excluded from the IVA will remain outstanding.
  • Your credit rating will be affected for 6 years and details of your arrangement are added to the insolvency register.

The Debt Advisor Ltd is regulated by The Financial Conduct Authority. This means we are able to offer debt advice and deliver both formal and informal solutions. IVA’s do need to be carefully considered and you must take independent debt advice.  Your credit rating will be affected for up to 6 years after the IVA is approved. Please be aware that all IVA’s come with a fee and a breakdown of these fees will be clearly explained to you before entering into the solution. We hope that the information and debt advice on this site including Frequently Asked Questions, will help inform you.

There are sources of free debt advice and services. You can find out more by contacting the Money Helper Service on 0800 138 7777 or by visiting their website.

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All debt solutions should be very carefully considered. Please note, if you are struggling with debt issues and need advice on your options, we’ll take a look at your financial situation and explain the available options. If it is appropriate to refer you to one of our trusted providers for a solution, we may get a fee for introducing you, or for the preparatory work we complete. Fees are payable if ongoing services are provided.

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