am I able to offer a full settlement?

[fionaj]

My total IVA payments are set to be 29,940 (including IP fees). For debts of 39,000. If a relative was able to lend me £20,000 do you think I would be able to offer this as a a full settlement offer. I am not entirely sure how this works? Thankyou

[iva_squirrel]

Hello,



A Full and Final settlement IVA is a legally binding arrangement with your creditors which allows you to repay a proportion of your debt in a one off lump sum payment.

Normally the lump sum is raised by remortgaging your property or introducing a lump sum from relatives. .

This is an ideal solution for individuals who are able to raise a sum of money, but after providing for their reasonable costs of living including their increased mortgage payment, do not have any surplus income.

Creditors are likely to accept your full and final settlement if we can demonstrate that this offers a better return than bankruptcy.

You need to contact your IP regarding the amount you are able to offer but £20000 sounds reasonable.


Kind regards,



Julia



For more information about IVAs, please visit my website:
www.supersonicsquirrel.net

[Oliver]

Hello FJH

Yes this may well be an option. A Full and Final IVA is a one off payment which will "Open and then Close" your IVA. For this to be acceptable to the creditors you would have to (i) Put them in a better position than they would be in if you were to go bankrupt (ii)Offer them the minimum dividend that they require (this is usually a 25p in the £ return after the IP costs have been deducted, but can vary from creditor to creditor) (iii) Show your creditors that any Disposable Income (your total income less all your reasonable living costs) will be used in full after the IVA to pay your relative back for the money they lent you (i.e. the money won't be available to you after the IVA).

Talk to your IP about this possibility.


Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[MelanieGiles]

Hi fjh

On paper this certainly looks like a viable option, as creditors will be repaid earlier without the risk of you defaulting on payments over a five year period.

If I were presenting this on your behalf, I would look at the outcome under three scenarios as follows:-

1) Outcome in bankruptcy (likely to be worst option for creditors)
2) Outcome if you were to pay over 5 years (costs will be higher in terms of IP fees)
3) Outcome with lump sum offer.

Providing option 3 gives more money than option 2, I see no reason why an IVA on this basis will not be approved. Ask your IP to work out some figures for you on this basis.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk