Full and final IVAs

This might be suitable for you if you can’t afford to make your contractual monthly debt repayments in full but you have a lump sum of money that covers some of what you owe.

In this guide, we’ll run through everything you need to know about full and final IVAs.

A full and final IVA involves offering one lump sum payment to your creditors to settle your unsecured debts. The amount you offer will need to cover a reasonable proportion of your debts for your creditors to give it serious consideration.

If you’re unable to make your contractual monthly debt repayments, a full and final IVA may be an attractive option for your creditors as it means they will receive a good proportion of the money you owe them quicker than they were expecting.

When they receive your proposal for a full and final IVA, they’ll compare the suggested payment with the financial return they would be likely to get if they pursued other options e.g. bankruptcy.

If the IVA payment compares favourably, they may approve it.

As with any IVA, creditors representing at least 75% of the debt value must agree to it.

Despite allowing you to settle your debts quicker, a full and final IVA will stay on your credit file for six years like any IVA. You’re likely to find it harder to borrow from mainstream lenders during this time.

If you’ve come into some money and would like to find out if a full and final IVA is an option for you, the first thing to do is get debt advice.

A professional debt adviser will be able to tell you whether the amount of money you have is sufficient to make an offer, talk you through your other options and then set out your next steps.