How to end an IVA early
As more and more people have entered into IVA's over the last 7 or 8 years, it was inevitable that sooner or later there would be increase numbers of people looking for information on how to end an IVA early.
Communication Is Key
Well, it is possible to end an IVA early, but it is important to go about the process in the correct manner - and, without doubt, first thing you should do is have a chat with your Insolvency Practitioner.
Introducing your own funds
There are a number of potential occurrences which could help to end an IVA early, such as receiving a redundancy payment, receiving an inheritance or even winning the lottery, each of which could provide the perfect opportunity to settle the IVA early.
Each of these examples involves the introduction of money from within your ownership and, therefore, would normally fall into the windfall clause of your IVA. So understanding how your IP will view your 'windfall' will be crucial to understanding how the IVA might be brought to an early end.
Receiving a redundancy payment is particularly relevant at the moment, as thousands of people are being made redundant every day. If you are made redundant and you receive a large enough redundancy package you may be able to use some or all of the redundancy payment to offer a full and final settlement to your creditors. Even if the amount you've received is less than your IVA contributions would have generated had the IVA continued.
This is due to the important fact that your income has been severely affected - which in turn would suggest the IVA payments will no longer be affordable to you.
Your Insolvency Practitioner will approach your creditors for you via a variation meeting and put forward your offer to bring the IVA to an early end.
Things are not quite so straight forward with the example of the inheritance or a lottery win.
Obviously these are unexpected funds which have no impact on your ability to earn your income so, as a result, your creditors will not only expect 100% of the unexpected windfall to be introduced into the IVA fund, but they'll also expect you to continue paying your IVA contributions too.
Sometimes the windfall will be large enough to make an offer of settlement that creditors will find acceptable, yet still provides some original debt write-off as creditors might recognise the potential saving to be made on the IP's supervisory fees should the IVA end early.
Introducing 3rd party funds
Another opportunity to end an IVA early could come through the introduction of 3rd party funds.
3rd party funds is the name given to money offered by someone who is not associated with the IVA or the original debts.
3rd party funds are generally welcomed by creditors as they represent funds they would otherwise not be entitled to. 3rd party funds are by far the most common reason an IVA is ended early. Creditors love the idea of being given money by someone else, after all, it saves them from having to wait years to be repaid and they love it.
Re-mortgaging a property can also generate a large enough lump sum to offer creditors and, so long as creditors weren't entitled to receive the equity the property as part of the agreement, it can be a great way to raise sufficient money to pay an IVA off early.
Read this article for more information regarding how to calculate full and final settlement figures needed to end an IVA early.
If your questions about how to end an IVA early are not answered here call 0800 088 7503 and speak to one of our advisers or, if you prefer, complete this form and we'll call you back.