This page contains information about debt solutions available in England, Wales and Northern Ireland. Debt advice in Scotland involves similar but different solutions. Before considering an IVA as a debt solution, please make sure you fully understand the risks involved when entering an IVA.
We’ve probably all heard of IVAs (individual voluntary arrangements). You can’t go on the internet or turn on the telly without seeing or hearing about how you can get a large percentage of your debt written off.
Many of us know that IVAs last between five and six years and if you’ve got a property there is a possibility that you’ll have to re-mortgage. But what about the lesser-spotted IVA – the lump sum IVA?
It’s pretty obvious, but first of all you’ll need a lump sum to qualify for a lump sum IVA. This can be money from a third party such as a friend or relative. The money could also come from other sources such as redundancy money, or the cashing in of a joint endowment policy.
The important thing is that you must have enough money to be able to cover all of your outgoings but not enough to cover all the contractual payments to your creditors. You can then use the lump sum to offer your creditors a one-off payment in full and final satisfaction of the debt through a formal insolvency agreement.
How do creditors look at lump sum IVAs?
Creditors are generally very accepting of these arrangements. They often find that creditors will accept low returns in exchange for a chunk of cash now.
How long does it take?
It usually takes around 2 months to get your IVA up and running, and a lump sum IVA is generally completed 6 months after this. Having said that, in the past StepChange Voluntary Arrangements had a lump sum IVA approved by creditors and completed within 10 days.
Of course this doesn’t take into account the length of time it took to draft the proposal and present it to creditors but it shows the speed of which things can be wrapped up. The exact timescales depend on your situation, but we’ll always keep you updated and make sure you know what to expect.
Once your IVAs completed, your debts will be classed as settled, however it will remain on your credit file for 6 years after the date of approval.
This article does not cover all of the benefits, risks and considerations of lump-sum IVA. We would always recommend you seek expert advice by using our online Debt Remedy tool or speaking to us to see if this is a suitable solution.