A Full and Final IVA is, quite simply, an IVA where a single payment is made as a Full & Final settlement to a serious debt problem.
It is fair to say that majority of IVAs are taken over a period of 5 years, meaning full and final IVA’s are much less common, so getting to understand the requirements of the Full & Final IVA is very important if you believe it could be the correct solution for you.
In fact, the money for a Full and Final IVA settlement can be provided by a third party, where a Lump Sum is gifted to the debtor.
However, the principle thing to remember about Full and Final IVA’s is that they are very very rare.
By this we mean the circumstances in which a Full and final IVA is the best offer a debtor can make to his creditors are few and far between.
It stands to reason that for a Full and Final IVA to stand a good chance of acceptance, the debtor must offer his creditors a higher return to that they would otherwise expect from either his Bankruptcy (and in turn from the Official Receiver, who would take control over the whole of the debtor’s estate and liquidate the debtor’s assets as part of normal bankruptcy proceedings) or a 5 year IVA, which would normally require monthly contributions to be paid for the duration of the IVA’s 5 year term.
The Full and Final IVA option really only works if the debtor has available a sizable lump sum to give to creditors, and is also:
a) Intending to leave the country for the long term.
b) Heading into retirement.
c) Taking a sizeable income reduction, removing the ability to make monthly contributions.
d) Expecting a sizeable increase in expenditure, removing the ability to make monthly contributions.
e) Unable to make monthly contributions into an IVA.
In any of the above circumstances the creditor would realise that prolonging the IVA for the 5 year term would cease to be of any advantage, as it is not likely the debtor will have enough resources to make monthly contributions into the IVA, and there would still be monthly costs to the IVA that the creditors would still have to pay for.
It should also be understood that creditors will analyse a debtor’s expenditure in such circumstances as requesting a Full and Final Settlement IVA, and they will be looking for opportunities to reduce the expenditure that has been put forward by the debtor. Any legitimate savings creditors make on the listed expenditure will increase the ability of the debtor to make monthly contributions into a 5 year IVA.
Therefore excessive expenditure will be noted by creditors and is likely to be brought into question as being unreasonable, and therefore unacceptable. If this happens, it is highly likely the Full and Final IVA proposal will be rejected.
If the debtor intends to sell their property to raise the funds for the Full and Final IVA, the debtor will probably not be able to raise significantly more money than the Official Receiver would generate by the same action in a bankruptcy.
However, because the Official Receiver will take a handsome fee from the proceeds of the sale of the property to pay for his time and services, there will be a significant reduction in what a creditor can expect to receive from the bankruptcy’s dividend, and this is where the debtor gains an advantage.
By not having to bear those costs, more of the money will be left in the pot to offer to the creditors through the Full and Final IVA, hopefully making the Full and Final IVA a better option to the creditors
So, where all the variables line up to show that the Full and Final IVA is the best offer the creditors can expect to receive from the debtor, the Full and Final IVA will work a treat.
My IVA Adviser specialise in providing people with Full and Final IVAs.
Call us now on 0800 088 7503 and ask us to calculate how much you will need to offer your creditors as part of a Full and Final IVA.
The Consultation is free and confidential, and may help you to become DEBT FREE after just 1 payment - so call now.
0800 088 7503
Call 0800 088 7503 to see if you qualify for an IVA and to find out whether a Full and Final settlement IVA is suitable for you, or leave your details at our quick contact form and we’ll call you.
Related Articles: