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What is a Full and Final IVA?

A full and final IVA plan is where you make a one-off payment to your creditors. It is normally designed for people who have a lump sum of money that can be paid towards any remaining unsecured debts. The full and final amount doesn’t need to equate to your full debt total but it will need to cover a large portion of your debt. It will mean that your IVA ends before five years and your debt will be cleared.

If 75% of creditors, in debt value terms, accept the proposal the IVA becomes legally binding on all creditors even those who voted against the proposal become legally bound by it.

If you pay a lump sum in one go then your creditors will write off the debt outstanding. This is because the lump sum is a much more time-efficient way for creditors to receive their repayment.

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Where can the Full and Final IVA funds come from?

You need a lump sum of money to go down the route of the full and final IVA plan. This could come from a variety of sources.

Remortgaging

Remortgaging could save you thousands of pounds over a year.

Equity release

Equity release allows you to unlock the value of your property and receive a lump cash sum for that. If your house has a lot of equity then there is a lot of monetary gain to be had.

Secured lending 

Secured lending is money that you borrow against an asset that you own, such as your house. Secured loans are used to borrow large amounts of money, usually exceeding £10,000.

Inheritance

You may receive a windfall following the death of a close relative.

Third-party contribution

When somebody outside of your IVA is able to offer you a large amount of cash. This could be a business or a particular individual.

Pension drawdown 

You may receive a cash injection through keeping your pension money invested in other activities, ordinarily the stock market. This means that the value of your retirement pot could increase or decrease, depending on your choice of investments.

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If you are unsure whether refinancing this pathway will be right for you, don’t hesitate in contacting us.

Call one of our compassionate experts at 0800 088 2142.

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Full and Final IVA FAQs

How long does it take to pay a Full and Final IVA?

It takes between 6 and 8 weeks to set up an IVA. If you are offering a full and final IVA, you will need to pay a nominee’s fee in that 6-8 week period.

The Nominee’s fee is not refunded if your IVA terms are not approved, however, it will not be in an organisation’s interests to accept your fee unless they are very confident that your IVA will be accepted. If creditors are unlikely to accept, you will be informed and their thought process will influence whether or not you decide do go down the Full and Final route.

The fee of the Nominee will depend on how complex the IVA is. Usually, it will sit between £1,000 and £2,000. and this will be paid before the approval of the IVA. All fees and regulations will be discussed with you before anything is put into place.

What would make me want to go into a Full and Final IVA?

There are three key situations that might push you into the direction of a Full and Final IVA solution: retirement, emigration and redundancy.

Nobody would want to go into retirement with debt to deal with. Settling on an IVA with a total one-off payment would be a good way of dealing with that situation.

If you want to settle in another country, a healthy financial state could go in your favour. It will depend on how the country judges prospective immigrants.

It can also be problematic to deal with debts if you have become redundant. In that way, if you have an IVA in place, you might prefer to pay a one-off lump sum to clear yourself of the problem.

Do I fund a Full and Final IVA myself?

If you are unable to make realistic monthly payments in an IVA then you might look for an alternative solution.

However, if you can manage to put a larger lump sum of money together, creditors might be inclined to cut you loose from the IVA strings.

For example, it you put £5,000 down outright, and you were making repayments of £250 a month for debts of £8,000, they might prefer the quick solution in the knowledge that you probably couldn’t make the full repayment.

Can I get third-party funds for a Full and Final settlement?

Yes. You do not have to make the repayments yourself. For example, if your friend wanted to give you money to pay off your debts, they could do that. That means they could offer a large sum to cover a Full and Final IVA.

If somebody offers you £8,000 in cash outright and you have repayments of £18,000, a creditor(s) might accept the £8,000 there and then if they do not believe you will be able to continue meeting your IVA repayments.

What type of funds can I use in a Full and Final IVA?

There are many funds that you can use. Money you have earned, money from a friend, inheritance or redundancy to name a few. You can also sell assets or release equity from your home.

You can hold onto certain funds, however, if you have come into a large amount of money then these funds could be fully requested from the creditors.

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