Full And Final IVA - Debt Free In 3 Months

A Full and Final Settlement IVA is a legally binding arrangement you make with your creditors by which you can clear your debts by repaying a proportion of them in a single lump sum. Normally, this money would either come from a remortgage on your property, or be provided by relatives, but if you are over retirement age, it may be possible to arrange an equity release scheme.

It is an ideal solution if you are able to raise a significant sum of money, but do not have any surplus income.

Your creditors will be likely to agree to a Full and Final Settlement IVA if it can be shown that, by doing so, they stand to receive more than they would if you were made bankrupt.

You start by deciding how much you are able to raise as a payment. (Your advisors will be able to guide you as to what your creditors are likely to find acceptable.) This forms the basis of the IVA proposals document, which is presented to the creditors. A copy is also lodged with the court. If your creditors are already taking action against you, your advisors can apply to the court for an Interim Order, preventing them from pursuing you or your assets without the court's agreement.

The next stage is for a meeting of your creditors to be held at which they will vote on whether to accept, alter or reject your IVA proposals. They are likely to accept as long as you are able to demonstrate a genuine desire to repay as much of your debt as you can afford.

Once a Full and Final Settlement IVA is approved, all interest and charges on your unsecured debt are frozen. And as long as you keep to the agreed terms, the remaining balance of your debt will be written off.

To qualify for a full and final IVA you will have to have 25% of the amount of your debt plus another £5,000 for fees. For example: Debt = £30,000 x 25% = £7,500 Plus license practitioner’s fee £5,000 Total repayment = £12,500 And the creditor wipes off £17,500.

You need to raise the necessary amount in one go, which could be done by remortgaging – we can help with this by ensuring you don’t incur any unnecessary broker’s charges – or by borrowing the money from a partner, family member or employer. (You can’t receive the money in the form of an unsecured loan in your own name.) The person you borrow from will become your sole creditor and, in theory, any monthly disposable income would therefore go to them, leaving nothing to pay to your original creditors or to the licensed practitioner. The advantage of this method is that a large chunk of your debt is wiped off, leaving only a manageable amount to deal with.

The term of the full and final settlement is: 3 months to get the agreements into place and 1-2 months to arrange the money if necessary.

You then pass the money to the licensed practitioner who distributes the lump sum amongst your creditors -- minus his/her fee.

28 days after the money is transferred you will receive a notice of satisfaction against the debt, which you pass to the credit reference agencies Experian and Equifax.

And after a further 12 months you‘ll be able to re-establish and re-build your credit rating. Everybody's situation is different, so for advice that is tailored to your individual circumstances, please click here.

And for free detailed advice on all the debt options we’ve outlined, If you feel you wish to speak to someone confidentially, please call our debt free helpline on 0161 244 5649