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Let’s be honest, no-one wants to be stuck in an IVA – an Individual Voluntary Arrangement to pay back debts. For starters, they damage your credit history and, of course, limit the amount of money you have access to on a monthly basis. But the good news is that you CAN end your IVA early if your personal circumstances change and in this article, we take a look at the most common examples of when this might happen.

·  In some cases, your IVA will contain what is known as a “windfall clause.” What is agreed around this aspect of your IVA may differ depending on your personal circumstances, but ultimately it means that if you come into any money during the term of your IVA, then you’ll be expected to pay it straight into the arrangement. If, for example, your IVA states that any windfall has to be introduced into the IVA then you might not get the chance to negotiate an early settlement, but do remember that all creditors will want to recoup as much as they, as quickly as possible.  For this reason, if you come into any sort of windfall (for example, inheritance, a successful compensation claim or even a lottery win), then you need to speak with your insolvency practitioner as soon as possible.

·  In other cases, funds may be raised for an alternative source such as friends or family. These are more commonly referred to as “third party funds.” As stated above, most creditors will be willing to settle the debt early so it may be that they’ll accept a lesser amount in full and final settlement of your IVA. Again, if a third party offers this option and it’s viable, then it’s certainly worth discussing with your insolvency practitioner.

·  If you own a property, then you might want to consider either re-mortgaging or selling it in order to release any equity you might have in it. This would then enable you to settle your IVA early. In some cases, your IVA may require that you re-mortgage your property during the last year of your IVA. This is usually the case if you have equity exceeding £5,000 (US$6,319). However, if the equity amount is less than this you may not be required to do so. This, however, is a very important consideration and you may need to seek good IVA advice from your insolvency practitioner from the outset.

How much will my creditors accept in full and final settlement?

This is a very difficult question to answer and much, of course, will depend on the outstanding amount as compared to the amount you are able to offer in settlement.

If you feel you might be in a position to settle your IVA early, then it’s certainly worth asking your practitioner to approach your creditors to see whether you can get a general feel for what might be acceptable. In order for your proposal to be considered you’ll need to provide evidence that you can pay the amount immediately, thus proving to your creditors that you’re serious about bringing matters to an end.

About the author 

Uday Tank has been working with writing challenged clients for over five years. His educational background in family science and journalism has given him a broad base from which to approach many topics. He especially enjoys writing content after researching and analyzing different resources whether they are books, articles or online stuff.

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