Full & Final Settlement

What is a Full and Final Settlement IVA?

A Full and Final Settlement IVA is an offer of partial repayment to your creditors in the form of a one-off lump sum payment in return for having the remainder of your debt written off. A Full and Final Settlement IVA could be a suitable strategy to clear your debts if you have access to a lump sum of money. This could be from:

  • The sale of assets such as property, investments, or works of art. It is important that any items you sell are not “essential items” such as a car if it is necessary for your work, or essential household items such as beds, cookers and fridges.
  • Savings
  • Remortgaging your home
  • An Equity release scheme
  • Third-party donation from your friends or family
  • Redundancy
  • An inheritance or Lottery win

Why would my Creditors accept a Full and Final Settlement IVA?

  • It avoids legal expenses. If a creditor were to make you bankrupt, a large portion of the lump sum would be swallowed in legal fees. Furthermore, any legal action would not guarantee repayment anyway.
  • Your creditor may prefer to receive one lump sum payment now, than smaller payments over a longer period.
  • Depending on your personal circumstances, your creditor may realise that you will be unable to pay any more than the lump sum offered.

What are the Advantages of a Full and Final Settlement IVA?

  • If your offer is accepted, it would mean that you would pay less than you would otherwise have to.
  • Your debt will be paid off sooner, and you can make a fresh start
  • Your creditors should then mark your debt as “Satisfied” so that future searches on your credit file will show that you have successfully dealt with your debt.

What are the Disadvantages of a Full and Final Settlement IVA?

  • You may need access to a lump sum which could be used for other purposes
  • Once your creditors know that you have access to a lump sum, they may demand full payment of your debt.
  • It is not guaranteed that your creditors will accept your offer, but McAlister & Co would not take your offer forward unless we were sure if had a very good chance of succeeding.
  • Clearing your debt will not remove any Default Notices or CCJs previously taken against you from your record. They will remain on your credit file for 6 years from their point of entry as will the record of your IVA

How do I make a Full and Final Settlement IVA?

You may have a lump sum that you need to divide up amongst several creditors. McAlister & Co can advise you on how to fairly divide this to creditors. We will act on your behalf and send your offers to all your creditors. No creditor will be paid unless the creditors accept your proposal at a meeting of your creditors.

What happens if a Creditor does not accept my Full and Final Settlement IVA?

McAlister & Co has years of experience in dealing and negotiating with creditors on our clients’ behalf. However, we cannot guarantee that your offer will be accepted. If this is the case, we will advise you on the next best course of action, depending on your circumstances.