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Tackling your debts

Are full and final settlements always accepted?

Posted 18 April 2013

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If you are lucky enough to come into a lump sum of money while you're on an IVA, you could offer an early settlement to your lenders.

 

Most IVAs last five years. This can be worrying for some people, because it can seem like a long time, but it's there to make sure you can get out of debt at a comfortable pace. If you're lucky enough to come into a windfall or lump sum payment from a family member or friend during your IVA, it is possible to end it early.

 

This is called a 'full and final settlement' on an IVA. You can read a more detailed definition of a full and final settlement here.

 

The vast majority of our full and final settlements are accepted. Lenders would need a really good reason not to accept. We just need to demonstrate that it's in both of your best interests. You can find out more about how we do this below.

Full and final settlement circumstances

If you're on an IVA and you have a lump sum available, lenders are generally very reasonable because they have already accepted that they will receive a reduced payment.


Your income and expenditure is very important for a full and final settlement. If we can demonstrate that you have little to no disposable income every month, and that your settlement is the best offer they will get, your lenders are more likely to accept.


For example, you could offer a full and final IVA if your income and expenditure is very low, and it's highly unlikely your circumstances will improve, and, you can offer a lump sum.

If we can demonstrate that the only alternative is bankruptcy, then lenders would need a very good reason not to accept your settlement offer.


However, your lump sum ideally should be as near as possible to the amount they would have received if the IVA ran its course. The longer you have been on an IVA, the more you will have already paid into it. This could be an advantage when it comes to making a full and final settlement offer.

 

No lump sum available

Even if you don't have a lump sum available, we could still complete an IVA early - if we can show your lenders that you've repaid as much as you can realistically afford. We'd need to show that your disposable income is very low and that it's unlikely they'd receive any more money. When the only alternative is bankruptcy, lenders would need a very good reason to turn down a full and final settlement on an IVA.

See the differences between IVA and Bankruptcy here.

We would only recommend a full and final settlement if we thought that lenders would accept it, because lenders do not have to accept full and final settlement offers. The vast majority of our full and final settlement offers are accepted.

 

by Shelley Bowers

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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.