Full and Final IVA Settlement

If you have access to a lump sum – either before starting an IVA or during an existing arrangement – you may be able to propose a Full and Final Settlement to clear your debts faster.

This type of IVA can reduce the length of your arrangement and help you move on financially – with the agreement of your creditors.

What is a Full and Final IVA?

A Full and Final IVA is a formal debt solution where you offer a one-off lump sum to your creditors instead of making regular monthly payments over five or six years.

The amount doesn’t need to cover your full debt, but it must offer creditors a reasonable return – often more than they would expect to receive through bankruptcy or continued payments.

Creditors benefit by receiving an immediate payment, while you become debt-free sooner.

How does it work?

Talk to a debt advisor

If you’re considering using a lump sum to clear your debts, speak to an IVA specialist first. They’ll help assess whether your offer is strong enough.

Proposal preparation

Your Insolvency Practitioner (IP) will draft a formal proposal and send it to your creditors for a vote.

Creditor vote

Just like a standard IVA, the offer needs to be approved by 75% (by debt value) of creditors who vote.

Settlement payment

If accepted, your lump sum will be paid into the IVA and your arrangement will be marked as ‘Completed’.

Your IVA will still remain on your credit file for six years from the date it was originally approved, even if settled early.

Where can the money come from?

Common sources of Full and Final Settlement funds include:

• Inheritance
• Redundancy payments (you may keep part for living expenses)
• Gift from family or friends
• Compensation or legal settlements
• Sale of assets
• Equity release from your home

You’ll need to provide proof of funds to your IP and be honest about any additional money available – creditors may decline if they believe you’re holding anything back.

When is a Full and Final Settlement a good option?

People often consider a Full and Final IVA when:

• They’re approaching retirement and want a fresh start
• They’re planning to emigrate
• They’ve been made redundant and received a payout
• Their income has reduced but they’ve accessed a lump sum
• They can’t commit to regular payments but want to avoid bankruptcy

Will creditors accept a Full and Final Settlement?

Creditors are more likely to accept a Full and Final Settlement if:

• The offer is fair and well-evidenced
• They would receive less through bankruptcy or ongoing payments
• The lump sum is the best offer available

Some creditors may propose modifications – such as asking for a small number of monthly payments in addition to the lump sum – before they approve.

Get expert advice first

Whether you’re considering a Full and Final IVA from the start or during an existing arrangement, it’s essential to speak with a debt expert. Call us free on 0800 316 1833, or fill in a form to start a chat a live chat or message us on WhatsApp.