The traditional five year IVA payment period can be avoided and a debt problem resolved immediately if a cash lump sum is made available. A traditional individual voluntary arrangement (IVA) allows someone who is struggling with repayments to settle their debt over a five year period. A single affordable monthly payment is made during each month of the plan while interest and further charges are frozen.
At the end of the arrangement, any outstanding debt is written off by creditors and the individual is left debt free.
Unfortunately, many people do not qualify for a traditional IVA because they are unable to pay a minimum amount per month to meet the repayment required by their creditors. This may be because the payment required is too high or they cannot prove that their income will sustain such payments.
IVA available to those with no sustainable income
A solution to this problem does exist called a full and final settlement IVA. This solution is less well publicised than a traditional IVA. It involves the individual in debt producing a lump sum which is used to pay an IVA as a one off single payment.
Once the lump sum is received, it is distributed to creditors immediately, any remaining debt is written off and the arrangement comes to an end. Such a lump sum could be raised through the re-mortgage of a property, or from a third party - normally family or friend.
A lump sum may not be available immediately on starting an IVA. Where an individual is part way through their traditional monthly payment IVA and a lump sum becomes available, it is possible to settle the remaining amount outstanding at that time, in effect ending the IVA early.
The advantages of undertaking a full and final settlement IVA are considerable. No ongoing IVA payments are required meaning that an IVA can be implemented without having to prove a sustainable income. As such, this solution can be used by people who could not otherwise afford to make traditional IVA contributions.
Debt free immediately
A full and final individual voluntary arrangement ends as soon as the lump sum has been paid. A record of the IVA having existed will still be placed on the individual's credit file and will remain there for 6 years.
This will of course affect the individual's credit rating. However, unlike a traditional IVA, the individual will be debt free immediately and the debt marked as settled on their credit file. They therefore have the opportunity to start improving their credit rating immediately.
If the person in debt is a home owner, the implementation of a full and final settlement IVA will mean that any future increase in equity is protected. Unlike a traditional IVA, they will not have to revalue their property in 5 years and release available at that time.
Of course, the difficulty with a full and final settlement IVA is that a lump sum has to be made available. Many individuals will not be able to release equity from their home and do not have any other source of lump sum. However, if a lump sum is available, ether immediately or part way through a traditional IVA, a full and final IVA can be an extremely good way of solving a serious debt problem without the need for ongoing payments.
Steve Jackson is a debt adviser from BeatMyDebt.com in the UK. For more quality and unbiased information on Individual Voluntary Arrangements, visit our website at [http://www.beatmydebt.com].
At the end of the arrangement, any outstanding debt is written off by creditors and the individual is left debt free.
Unfortunately, many people do not qualify for a traditional IVA because they are unable to pay a minimum amount per month to meet the repayment required by their creditors. This may be because the payment required is too high or they cannot prove that their income will sustain such payments.
IVA available to those with no sustainable income
A solution to this problem does exist called a full and final settlement IVA. This solution is less well publicised than a traditional IVA. It involves the individual in debt producing a lump sum which is used to pay an IVA as a one off single payment.
Once the lump sum is received, it is distributed to creditors immediately, any remaining debt is written off and the arrangement comes to an end. Such a lump sum could be raised through the re-mortgage of a property, or from a third party - normally family or friend.
A lump sum may not be available immediately on starting an IVA. Where an individual is part way through their traditional monthly payment IVA and a lump sum becomes available, it is possible to settle the remaining amount outstanding at that time, in effect ending the IVA early.
The advantages of undertaking a full and final settlement IVA are considerable. No ongoing IVA payments are required meaning that an IVA can be implemented without having to prove a sustainable income. As such, this solution can be used by people who could not otherwise afford to make traditional IVA contributions.
Debt free immediately
A full and final individual voluntary arrangement ends as soon as the lump sum has been paid. A record of the IVA having existed will still be placed on the individual's credit file and will remain there for 6 years.
This will of course affect the individual's credit rating. However, unlike a traditional IVA, the individual will be debt free immediately and the debt marked as settled on their credit file. They therefore have the opportunity to start improving their credit rating immediately.
If the person in debt is a home owner, the implementation of a full and final settlement IVA will mean that any future increase in equity is protected. Unlike a traditional IVA, they will not have to revalue their property in 5 years and release available at that time.
Of course, the difficulty with a full and final settlement IVA is that a lump sum has to be made available. Many individuals will not be able to release equity from their home and do not have any other source of lump sum. However, if a lump sum is available, ether immediately or part way through a traditional IVA, a full and final IVA can be an extremely good way of solving a serious debt problem without the need for ongoing payments.
Steve Jackson is a debt adviser from BeatMyDebt.com in the UK. For more quality and unbiased information on Individual Voluntary Arrangements, visit our website at [http://www.beatmydebt.com].
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