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.
Well, it is possible to end an IVA early, i.e. before the usual 5 years have elapsed, but it is important to go about the process in the correct manner - and that is to consult with your Insolvency Practitioner.
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 the Insolvency Practitioner will view your ‘windfall’ will be crutial 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 is less than your outstanding IVA contributions would have provided 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 and put forward an offer to bring the IVA to an early end.
Things are not quite so straight forward with the example of the inheritance and lottery win. Obviously these are unexpected lump sums which arrive without any disturbance to your income, and therefore your creditors will expect to benefit from the windfall and expect you to continue paying into the IVA. but when the wins are large enough, it may be possible to offer a settlement which creditors will find agreeable, and still benefit from some debt write-off. This will be due to the potentially large saving that a creditor will make on the Insolvency Practitioners supervisory fees should the IVA end early.
Another opportunity to end an IVA early could come through the introduction of 3rd party monies. This is the name given to funds offered by someone who is not associated with the debt, and therefore providing money to the creditors which they would not normally be entitled to. This is 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 for their money, and they love it.
Refinancing a property can also generate a large enough lump sum to offer creditors, and so long as the creditors were not entitled to receive the proceeds of 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 call 0800 088 7503 and speak to one of our advisers about how to end an IVA early or leave your details on our quick contact form so that we can call you back.
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