Full & Final IVA's Debt Solution
Summary: A debt solution not always publicised as clearly as others, full & final (f&f) IVA's (Individual Voluntary Arrangement) represent a very good debt solution for some people.
Individual Voluntary Arrangements are debt solutions that involve paying as much as is affordable back on debts for a fixed period (usually 5 yrs). This enables the debtor to break the vicious circle of credit-dependency, make one affordable payment to cover all debts and to have a sure date in the future when they will be debt free. They may also heave to utilise assets they may own.
Full & Final
Alternatively, debtors can offer a lump sum settlement to clear the whole debt. For some people there is no available income to repay their debts with. All their income is needed simply to live on. However they do have access to a lump sum. This could be through releasing equity in a property or redundancy settlement. Creditors will take seriously such a lump sum offer if they feel that it's the best the debtor can do and the best they are likely to receive.
Some family members may be able to help with a gift or a loan to help the debtor offer a lump sum. In fact the available income the debtor was going to offer in a 5 year IVA may used to repay the family loan. E.g. someone owes £25000 in various debts. Contractual repayments of £700/mth are simply impossible. After a careful analysis of household finances it is concluded that the debtor can afford £200/mth towards all their debts. A 5 year IVA is a real possibility, but if there was a family member willing to lend the £12000 (or even slightly less) as a lump sum offer, then the £200/mth available income could be used to repay the loan, thus showing the debtor has a lump sum but no available monthly money to offer to creditors.
- If a lump sum was available and there was monthly available income, creditors are likely to want both!
- Although a full & final IVA is what it says - full and final - the record of the IVA still remains on the debtors credit file for the same period as a 5 year IVA.