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 most cases the money for a Full and Final IVA settlement will be provided by a third party, where a Lump Sum is gifted to the applicant.
Whilst this does not have always to be the case, it is usually seen as the cleanest way to make an offer of a Full and Final IVA, as creditors find the introduction of 3rd party funds is very tempting. The main thing to remember though, is that they are extremely rare in any guise.
By this we mean the circumstances in which a Full and final IVA is the best offer an applicant 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 applicant must offer his creditors a similar or higher return to that they would otherwise expect from either his Bankruptcy (through the Official Receiver, who would take control over the whole of the applicant’s estate and liquidate the applicant’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 applicant 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 creditors would realise that prolonging the IVA for the 5 year term would hold no advantage, with it being unlikely an applicant would have enough resources to make monthly contributions into the agreement. What’s more, there would still be monthly costs incurred for supervising the IVA which creditors would still have to meet, making the 5 year IVA less cost effective.
It should also be understood that creditors will analyse an applicant’s expenditure as part of the Full and Final Settlement IVA process, and they will be looking for opportunities to reduce any expenditure that has been put forward by the applicant. Any legitimate savings creditors make on the listed expenditure will increase the ability of the applicant 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.
As mentioned earlier, the introduction of 3rd party funds is the cleanest way of making a Full and Final offer, but obviously, this isn’t always possible, so other ways of raising the necessary funds should be explored.
N.B.If you are considering proposing a Full and Final IVA, it is important to take professional advice at the earliest opportunity to ensure that you fully understand and appreciate what steps you need to take in gathering the funds and, more importantly, the chronological order in which you will need to take these steps, before you take any action. Call 0800 088 7503 now.
Are you exploring the option of selling a property to release funds for a Full and Final IVA?
Any property with equity will be vulnerable to being sold for the benefit of creditors under a Bankruptcy Order. Therefore, as an option to avoid being made bankrupt, it may be considered preferable to voluntarily sell the property and offer the released equity under a Full and Final IVA. This is most viable when the equity released is still not sufficient to clear the outstanding unsecured debts in full.
And, whilst a private sale may not raise significantly more money than would be generated by a forced sale under a Bankruptcy Order, this action may still hold the advantage. For, in a bankruptcy the Official Receiver would retain a handsome fee from the proceeds of the sale to cover his time and services, creating a significant reduction in what creditors receive from the bankruptcy’s dividend.
By not having to bear those bankruptcy costs, more money will be available to offer creditors through the Full and Final IVA, hopefully making the Full and Final IVA a better option to them than your Bankruptcy.
So, when it can be shown that the Full and Final IVA is the best offer your creditors can expect to receive, the Full and Final IVA works 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 comes with no obligations and is completely confidentialand 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.
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