Full and final payments

[holly14]

How do they work out final payments on an IVA if you want to end it early?

[pbeck]

To take an example. If you're paying £500 per month and you have 3 years to go, that would be £18,000 of payments you still have to make, a third party could offer £15,000 lump sum to release you now on the basis that this would be similar to today's discounted value of the rest of the payments, also creditors should save because the annual running fees of the arrangement will be reduced, on the other hand, creditors would be releasing you from the obligation to declare windfalls, bonuses, pay rises for the rest of the IVA so that would compensate for the fee reduction.

If you try to offer much less than that your IP may advise you to improve the offer rather than risk rejection you as they would have to call a meeting to vary the terms of the IVA and they're not going to want to do that unless they think the variation would be approved.

[holly14]

I have 50 months left making payments of £150 a month this would £7,500.00 in total. What sort of offer should it be started from??

[pbeck]

Seems you're only 10 months into your IVA. I don't know how IPs can run an IVA on £150 per month but that's another matter.

Many creditors are not happy about variations being put forward to IVAs until at least 2 years have elapsed and put forward modifications banning variations before then, you need to check with your IP whether this is so in your case.

You'll need to talk to your IP about why you want to settle your IVA with a lump sum so early in the arrangement, I think there'd have to be a good reason for it (other than just you want to get rid of the IVA).

[MelanieGiles]

The main way of calculating a settlement figure is to work out how much would be required to effect the dividend originally pledged. Your IP ought to be able to work out a figure for you, but you will need to confirm the source of funding and the reasons why you need to put forward such offer.