Settling an IVA

Settling an IVA early can be achieved by settling an IVA's outstanding balance, which could be the result of a change in circumstances.

Typical changes in circumstances that may offer a person the chance to settle their IVA early would include a windfall being received during the IVAs normal 5 year term.

Settling With A Windfall

A windfall could be something as unlikely as a lottery win, or another type of large gain, resulting in the opportunity to make an offer of early settlement to your creditors.

But, in reality, it's likely to be received through an inheritance or an insurance payout.

Whatever event generated the windfall, it's advisable to first have a chat with your insolvency Practitioner. The windfall clause in your IVA could determine that the windfall is bound to be introduced into the IVA anyway, removing the chance to negotiate an early settlement.

3rd party funds

Other opportunities could arise to make early offers of settlement, such as 3rd party offers from friends or family.

Creditors tend to like the idea of receiving a lump sum settlement, rather than having to wait the full duration of the IVA to receive their money, especially if the funds are provided by a 3rd party.

Voluntary sale of an asset

Owning property can also result in the opportunity to finish an IVA early.

Being in a position to release equity from a property can sometimes generate sufficient funds to get an acceptable offer in front of creditors and should not be overlooked, even in this economic climate.

How much do you offer?

One thing that will always be difficult to answer is the question of how much to offer creditors as way of a settlement.

Whatever you offer it should be realistic and, depending on where the funds are being generated, it ought to be of a similar value to what the creditors would have expected to received over the IVA's full duration.

In accordance with the Financial Conduct Authority's guidance, please follow this link if you would like to read a free guide about In Debt - Dealing with your creditors
To find out more about managing your money and getting free debt advice, visit Money Advice Service , an independent service set up to help people manage their money.

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