Can I Settle an IVA Early?

IVA (Individual Voluntary arrangements) is a more agreeable solution than filing for bankruptcy. It replaces all your existing payments into one consolidated monthly payment, which is paid over a period of 5 years. After the stipulated period of five years, any debt you might still have is written off. These monthly payments can be as low as £150. If you are in debt, have unsecured debts (type of debt this is not collateralized) of at the least £12,000 and live in the United Kingdom (Wales, England and Northern Ireland) this is a more profitable debt control measure than bankruptcy. You must also have a disposable income of £150/ month to be eligible for an IVA.

An IVA will help you keep your property and other assets unlike bankruptcy and the court proceedings will be also be sealed and kept private. Once the creditors have agreed to the terms and conditions of the IVA, they cannot back out of it or approach you for more money. Better yet, they cannot take any legal action against you either. From your side, you must make sure that you do not default on your monthly payments; else the IVA could become null and void. Then the only other option for you could be bankruptcy, which is not a favorable option when it comes to debt help.

Upon completion of the stipulated term of your IVA, you will get a certificate from your Insolvency Practitioner (IP) showing that you have completed your IVA successfully. In the event that you would like to settle your IVA earlier than the stipulated time schedule agreed upon with the creditors, you must talk to your IP and come to consensus. For although it is an option that is feasible, there are a lot of clauses that come into play.

Settlement of the IVA in advance is beneficial to all the parties involved as you become debt free and tension free that much sooner and your creditors get paid quicker than they expect. Now although this sounds like a perfect win-win situation, the creditors might think otherwise as they might get lesser money than what they would have received with interest over the period of 5years. So when paying off the IVA with a lump sum, the amount must be beneficial to both you and your creditors. Your IP will help you in this regard and a decision should be made after careful consideration.

The source of the money is not a matter of concern while paying off your IVA early unless it is a one-off like money from a lottery win or inheritance. You can use that money to put into your IVA account to help increase the return to your creditors. If you receive a gift or a loan of a lump sum to settle your IVA, then you should do it as soon as possible. This is beneficial as, if you settle early, you ultimately pay back less to your creditors.

A major point of consideration should be that if settled earlier, you must realize that there will be changes made in the amount of money to be given back as interest will be calculated in a manner where no party is at the losing end.