Can I make a one-off payment?

[H-C]

Can I make a one-off payment at the start of the IVA, and settle it straight away, if my parents give me enough?

[iva_squirrel]

Hello H-C,

The Individual Voluntary Arrangement, otherwise known as IVA, is basically an alternative to bankruptcy and is governed by the Insolvency Act of 1986.

With an IVA you make a reduced payment each month to your creditors for a reasonable period of time, generally up to a maximum of 60 months.

In some cases, you can pay a one-off lump sum - this is called a Full and Final Settlement IVA. This is a legally binding arrangement with your creditors, which enables you to repay a proportion of your debt in a one off lump sum payment.

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

Kind regards,


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

[Oliver]

Hello H-C

The answer is yes you can. However you would have to show that (i) the money was enough to satisfy your creditors (this would normally be 25p in the £ plus the IP fees for doing this (usually £5-6k) and (ii) that any surplus monies that you currently have i.e Disposable income (your total income less your reasonable living costs) will then need to be used to repay your Parents for the money that they have loaned you. If you suggest that the money is a gift and you have a Disposable income your creditors may demand this as well.


Best Regards
Oliver

Thomas Charles Ltd: Experts in all things IVA
www.thomascharles.com

[MelanieGiles]

I do lots of these types of proposals. The creditors like them as it provides a fairly immediate dividend, rather than them having monies drip fed over a five year period.

Oliver makes a good point about the disposable income, and a monthly loan repayments is generally acceptable to creditors. You just need to make sure that your parents are providing you a pot of money which equates to more that the creditors would get if they were to seek five years worth of contributions.

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

[MAY2006]

Hi H-C
This is the type of IVA that I did although we re-mortagaged. My creditors received a one off payment of 39p in the £. The higher mortgage payment left no disposable income and the IVA was completed in 12 months. It should have been 6, but the inland revenue were involved and wanted another completed tax return.
As the forum experts state just make sure that its clear that this is a loan from your parents and that you are paying them back which will use up your disposable income.