Full and Final Settlement
Yes — it is possible to settle your IVA early through what is known as a full and final settlement (sometimes called a lump sum IVA). Instead of continuing with monthly payments, you offer to pay a single lump sum to your creditors in full and final settlement of all debts included in the IVA.
Where Does the Lump Sum Come From?
Common sources of a lump sum for early IVA settlement include:
- An inheritance
- A lottery or gambling win
- A legal compensation award
- A gift from a family member (often a parent)
- Selling a valuable asset
- Redundancy payment
Note: Your IVA terms may require you to disclose any windfall to your IP regardless. Trying to conceal a windfall to avoid paying it into the IVA could result in the IVA failing or even legal action. Always inform your IP of any unexpected funds.
How the Process Works
If you wish to settle your IVA early:
- Inform your IP of the funds available and their source
- Your IP will calculate a proposed settlement figure — which must be fair to creditors based on what they would otherwise have received
- A formal variation meeting is held where creditors vote on whether to accept the settlement
- If accepted (75% by value), the IVA is completed early and remaining debts are written off
Will Creditors Accept Less?
Creditors are likely to accept an early settlement if the lump sum represents good value compared to the remaining monthly payments. Your IP can advise on an appropriate offer. Creditors generally prefer a certain lump sum over the risk of continued monthly payments that could fail.
Free debt advice: For personal advice tailored to your situation, contact MoneyHelper (0800 138 7777), StepChange (0800 138 1111), or Citizens Advice — all free, all regulated.