When in debt, and you are using either an IVA or a Debt Management Plan to help you repay your debts, its natural to dream of a large windfall payment coming your way.
We all hope that one day our numbers will come up on the National Lottery so that all our financial problems could be solved. This of course is not very likely to happen with the odds of a large win at 14 million to 1, and unfortunately the more common £10 win for three numbers wouldn’t be enough to settle your Individual Voluntary Arrangement or Debt Management Plan.
There are of course other routes to a win of some sort, probably with not such big pay-outs but definitely more likely.
In reality though, most people are only ever going to receive a large windfall through more somber circumstances, such as a redundancy payment, a critical illness insurance policy payout, or through inheritance - as a beneficiary of a will.
If you receive a windfall, such as an inheritance, whilst you are in an informal arrangement like a Debt Management Plan, then the action you decide to take is up to you, because the informal arrangement does not oblige you to inform your creditors of your windfall.
However, paying your debt either in part or in full, would be the most sensible option. This is because you would immediately be saving any late payment charges and interest payments being added to the debt.
In an IVA however, the choice would almost certainly not be open to you. The reason being, almost without exception, each IVA proposal contains a standard clause which legally obliges you to pay any windfall into your IVA fund. Your obligation to your creditors is to repay as much of your debt as possible, even in circumstances where you have benefited from a windfall payment, irrespective of the reason, so long as it is during the IVA.
This of course is what most people in an IVA want to do any way because, if the windfall is large enough, the possibility of finishing their Individual Voluntary Arrangement early is usually welcomed with open arms.
If you have a debt problem and you would like to discuss it with an experienced IVA adviser call 0800 088 7503.
Alternatively why not visit My IVA Adviser and download one of our many IVA guides, designed to help you decide what debt solution is best for you.
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- IVA : Which Is Best - An Individual Voluntary Arrangement or a Loan?
- IVA : How Does An Individual Voluntary Arrangement Work ?