IVA - Full and Final Debt Settlement.

A Full and Final Settlement is where the client makes an offer of a one-off partial payment to a creditor in exchange of the full settlement of a debt.

A full and final settlement can either be an informal agreement, or as part of a formal IVA.

When Full & Final settlements are suitable.

Full and Final IVAs are suitable when the client has access to a lump sum of money, but insufficient reliable ongoing income to make continuous monthly payments. The lump sum needs to be at least 30% of the total debt.

A Full and Final settlement offer can be part of an IVA proposal, or made at any time during an IVA to bring it to an early conclusion.

Like all repayment offers in an IVA, approval by 75% of creditors (by value of the debt) is required. All creditors must be treated equally, so offers must be pro-rata; proportional to the amount owed to that individual creditor as a percentage of the total debt.

Full and Final IVA’s are rare. Creditors must be of the opinion this is advantages to them over the more common 5 year IVA, and bankruptcy.

Raising money to make Full and Final payment offer

Typical sources of capital to make a Full and Final offer include:

  • Sales of assets
  • Remortgage
  • Gift from family or friends
  • Inheritance or other windfalls

What you are not allowed to do is conventional borrow money. Any financial arrangement between family/friends would require written confirmation that the money does not need to be repaid.

Creditors welcome full and final offers as they get their money sooner and need not continue supervisor payments to the IVA company.

The only way to truly know if you qualify for an IVA is to get professional advice.
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