Individual Voluntary Arrangements (IVAs) are a popular solution for people in the UK who are struggling with significant debt problems. In certain circumstances a full and final IVA is an option.
What is a Full & Final IVA?
A full and final IVA is a type of individual voluntary arrangement that is completed with a one off lump sum payment rather than the more common series of payments spread over 60 months. Full and final IVAs are sometimes known as single payment IVAs. In this type of arrangement you ask your creditors to accept an immediate lump sum that is lower than the amount you owe. In return your creditors agree to write off the remaining unpaid debt.
When is a Single Payment IVA appropriate?
For a regular IVA to be accepted you need to be able to demonstrate that you will be able to keep up with the payments for the full length of the arrangement. If you do not have any regular income that could contribute to the payments but you do have access to a lump sum then a full and final IVA can be proposed. Common occasions where this type of IVA is the best option is if you have retired or if you are planning to live abroad. Typically the lump sum will be from an inheritance, remortgaging or the sale of other assets.
How will a Full & Final IVA affect my credit rating?
Being a one off payment this type of IVA ends as soon as the lump sum payment has been received. However as with a regular IVA a record of the agreement will be placed on your personal credit file for a period of six years. Although your credit rating will be affected you will at least become debt free immediately and will be able to start improving it right away.
How do I arrange a Full & Final IVA?
The offer of a lump sum can be made at the initial IVA proposal stage or at any point during an already ongoing IVA. If you are already in an IVA then to arrange a single payment IVA you will need to speak to your IVA supervisor. Your supervisor will put the new proposal to your creditors. As with a regular IVA you will need at least 75% of your creditors to agree to the proposal for it to proceed. In this case the IVA will simply be brought to an early conclusion.
