www.iva.co.uk

How much should be offered as an early settlement?

Hi. Do not use the term "settlement" --- that means pay the full debt and fees. What you are after is a "Full and Final Offer", which is based upon the number of payments left multiplied by the current monthly amount ( if there is equity to be addressed you might need to add in an extra 12 payments).

This will give you the base figure -- this can be rounded down slightly to allow for the savings in administration being made as well as the fact that they are getting their money early.

Received multiple questions from different pages
On behalf of Donna:

Hi,

I'm thinking of offering an early settlement figure for my IVA. I currently pay £155 per month and my IVA is due to end in May 2020. My creditors are expecting £4,917 if my IVA was to run for the full course and my circs stayed the same. Is an early settlement offer likely to be accepted? What would be considered a reasonable offer?

Would potential changes to my circumstances in the future have an impact on the decision - for example, my husband and I will be starting a family soon therefore this would have an impact on my monthly payments for the remainder of my IVA - would they consider themselves to be better off accepting a settlement figure now, than risk getting less than the current expected amount by the end of the IVA term?

Thanks!

Where they ask - what is the reason for the offer at this time? - what sort of thing would they consider to be reasonable?

A family member is considering whether to make a full and final offer as a gift so that I can start to repair my credit score so that we can look to buy our own house in a few years time. We'll also be looking to start a family soon and this will likely mean that my IVA payments would not continue at the current amount- I'd personally rather get the IVA over with to move forward. Is this something they would consider?

The amount they are currently expecting for the remainder of my IVA is just under 5k.

Foggy wrote:

Hi. Do not use the term "settlement" --- that means pay the full debt and fees. What you are after is a "Full and Final Offer", which is based upon the number of payments left multiplied by the current monthly amount ( if there is equity to be addressed you might need to add in an extra 12 payments).

This will give you the base figure -- this can be rounded down slightly to allow for the savings in administration being made as well as the fact that they are getting their money early.

Hi Donna. The strength of your reasons can dictate the amount you need to offer ( within reason). The wish to get on with your life and relieve the stresses an IVA is causing you is an acceptable reason and, if you are offering near the full amount of expected payments ( so the creditors are getting what they signed up for) the creditors would look at this seriously -- after all, they want out too !!

Coming out early will not improve your credit score to any great extent as the IVA will be on file for the full 6 years from the start, regardless and a mortgage while it is there would be problematical --- but, on the plus side, no IVA payments means you will be able to save more for deposits / furnishings etc.

Ok great, thank you. I've been sent 'Early Settlement' paperwork from my IVA company - should I ask for 'Full and Final Offer' paperwork instead - would it be different?

Foggy wrote:

Hi Donna. The strength of your reasons can dictate the amount you need to offer ( within reason). The wish to get on with your life and relieve the stresses an IVA is causing you is an acceptable reason and, if you are offering near the full amount of expected payments ( so the creditors are getting what they signed up for) the creditors would look at this seriously -- after all, they want out too !!

Coming out early will not improve your credit score to any great extent as the IVA will be on file for the full 6 years from the start, regardless and a mortgage while it is there would be problematical --- but, on the plus side, no IVA payments means you will be able to save more for deposits / furnishings etc.

Definitely full and final!

Donna29 wrote:

Ok great, thank you. I've been sent 'Early Settlement' paperwork from my IVA company - should I ask for 'Full and Final Offer' paperwork instead - would it be different?

Foggy wrote:

Hi Donna. The strength of your reasons can dictate the amount you need to offer ( within reason). The wish to get on with your life and relieve the stresses an IVA is causing you is an acceptable reason and, if you are offering near the full amount of expected payments ( so the creditors are getting what they signed up for) the creditors would look at this seriously -- after all, they want out too !!

Coming out early will not improve your credit score to any great extent as the IVA will be on file for the full 6 years from the start, regardless and a mortgage while it is there would be problematical --- but, on the plus side, no IVA payments means you will be able to save more for deposits / furnishings etc.

They could know what you actually intend, but, for the avoidance of doubt, make sure they understand that you wish to make a Full and Final offer. A settlement is usually taken to mean repayment, in full, of the original debt and fees and often includes statutory interest, which will be a lot more than the payments due under the terms of the IVA.

Hope you manage to get it sorted - keep us informed.

Hi, I'm still trying to figure out what a reasonable full and final offer would be. I've calculated that the amount expected for the remainder of the IVA is £4,470 (monthly repayments x months remaining). Would £3,500 be reasonable, or would you recommend going closer to £4,000?

Thanks

By the time the offer is processed and put forward you will only be shaving just over a year off of the term, and paid a further £500 (ish) off, so an offer of £3,500 would be reasonable. If you offer £4,000 include a condition that the offer amount will reduce by the amount of payments you make in the interim. This is assumimg that the time remaining takes account of equity release ( or there isn't an equity provision because you rent).

Hi,

Worth a shot - if they say it is too low you can always up the offer.

Hi everyone, just an update to say that my full and final offer was accepted, it's been paid so all done and dusted!

Just when I sent my paperwork, my IVA company switched everything over to Creditfix - this was in November and it had all been sorted with creditors by the end of January. Much quicker than I thought but Creditfix's communication with me has been terrible! I got no confirmation that my paperwork had been received, nothing to say that the meeting with creditors had been set, they didn't tell me that the offer had been accepted and I never received the paperwork they said they'd sent out - I only found out it was accepted when I phoned up to chase and I'm now waiting on closure paperwork which should be with me by next week.

Just thought I would share this just in case anyone else has had problems or is having problems with Creditfix!

Anyway, I'm so happy it's all been sorted - thank you so much for all your advice and help!!

Donna29 wrote:

Hi everyone, just an update to say that my full and final offer was accepted, it's been paid so all done and dusted!

Just when I sent my paperwork, my IVA company switched everything over to Creditfix - this was in November and it had all been sorted with creditors by the end of January. Much quicker than I thought but Creditfix's communication with me has been terrible! I got no confirmation that my paperwork had been received, nothing to say that the meeting with creditors had been set, they didn't tell me that the offer had been accepted and I never received the paperwork they said they'd sent out - I only found out it was accepted when I phoned up to chase and I'm now waiting on closure paperwork which should be with me by next week.

Just thought I would share this just in case anyone else has had problems or is having problems with Creditfix!

Anyway, I'm so happy it's all been sorted - thank you so much for all your advice and help!!

Congratulations Donna --- well done

Yes, CF are notorious with communication -- it is amazing how one company can loose so much in the post as well !!