IVA – full and final settlement by client

An Individual Voluntary Arrangement (IVA) can involve a one-off payment in full and final settlement of your unsecured debts. You get protection from your unsecured creditors and you may only pay back a proportion of your unsecured debts as the rest could get written off.

If you’re worried about your debts, PayPlan can help you. Call us now on 0800 280 2816 or, if you’d prefer, click the ‘Get advice now’ button to request a call back.

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PayPlan help people in debt

Over the last twenty years, PayPlan have helped hundreds of thousands of people who were having difficulty in paying their debts.

Everyone’s circumstances are unique, and our experienced advisers will be able to provide tailored debt advice and suggest next steps for you no matter what your financial situation.

This page outlines a very specific case study: where a client was able to avoid bankruptcy and then repay only a proportion of his unsecured debts after we recommended an IVA for him.

IVA case study – full and final settlement

We helped a factory worker who owed over £15,000 on loans, store cards and ‘payday loans’. He was paid a low wage and after taking into account his living costs, was unable to afford a monthly payment to his debts.

However, he had just received compensation of £5,000 following a successful claim relating to a mis-sold Payment Protection Insurance policy held with one of his creditors.

We recommended an IVA as the best debt solution for our customer. We then referred him to our associated company, PayPlan Partnership Limited who set up an IVA where he paid £5,000 of his compensation into his IVA in full and final settlement of his total unsecured debt. The IVA was completed within six months, with creditors agreeing to write off the remaining balance.

His IVA did not last five years as he was unable to make a monthly payment towards his debts, and instead he was debt-free within just six months.

An IVA may help you if you’re able to offer a ‘full and final settlement’

If you’re struggling with your debts and can’t afford to meet your required monthly payments, but know you will soon be in receipt of a lump sum of money, a full and final IVA could be the right solution for you.

A full and final IVA is where a one-off payment is offered to creditors in full and final settlement of your total unsecured debts.  The one-off payment can be from a third party, or from your own money.  A full and final IVA needs to be approved in the same way as a normal five year IVA but usually it won’t last longer than 12 months. 

An example of where a lump sum IVA could be possible:

Your employers make you redundant and you are entitled to £3,000.00 redundancy pay.

As you are no longer working your available monthly surplus would likely reduce meaning you have no available funds to pay your creditors.

PayPlan could then help you present a full and final settlement offer of £3,000.00 to your creditors.

If your creditors approve your IVA, you make your proposed payment and the IVA completes with any remaining balance being written off by the creditors included in your IVA.

Benefits of a full and final IVA:

  • They only usually last for a maximum of 12 months, as opposed to the usual five year period for a normal IVA. Some could be satisfied in as little as 3 months.
  • You are bound by the IVA terms and conditions for a much shorter time and will not face the continued restrictions that an IVA would usually place over you.
  • Creditor’s will expect to see details of your property, however the usual “equity clause” does not apply to full and final IVAs so you will not be expected to attempt to remortgage.

Want to avoid bankruptcy? Think an IVA could help you manage your debts more affordably? Many people choose to call us on 0800 280 2816 for free no-obligation debt advice, while others prefer to fill in our online Debt Help form so we can call them back.