When you think of IVA as a primary solution to your financial problems, you must also know that:

• Generally, and in most of the cases going through an IVA means that you will have to pay a fixed monthly amount towards your debts, for a period of five years. After the term is up, and you have kept up with all the scheduled repayments, you can call yourself debt-free
  
  
• There is also another alternative, that of the full & final IVA. This means, that you have decided to pay off in full your creditors with one lump sum. It is a less usual form individuals choose, and it usually involves that you release equity from your home in order to be able to pay back the creditor (or even selling the property could be an option, depending on how much you owe).

The full and final IVA is a form of repayment which will have you debt free by paying only one lump sum. But there are always certain requirements in order for you to get eligible for this type of repayment through your IVA program. Basically, this is the solution undertaken by individuals who cannot make a stable proof of income, but are struggling with debts. If the respective person is a rightful owner of a property, he will simply release equity which is existent in the home in order to make the payment.

Alternatively, a debtor can also ask for that required amount from the family. Creditors usually want to recuperate as much from their loss as they possibly can. At the creditor’s meeting they will usually inspect the proposal the debtor has handed in (proposal where the monthly amount the debtor is wiling to pay is displayed), and they will accept or reject the proposal. If the majority of the creditors agree to that repayment schedule, the proposal is accepted.

But when creditors strongly disagree upon the proposed repayment schedule, then, the best option is a full and final settlement to be undertaken. If the debtor can release equity from their home, or can borrow that specific amount from family/friends, the debt issue will be much quicker solved.

Before you actually want to decide for a full and final settlement, it is beat if you contact your Insolvency practitioner. He is the professional who will be able to redirect you towards the best option for you. Also, he can tell you whether you can qualify for a full and final settlement, given your present financial status (income, ownership, possibility to borrow the needed amount, and so on).

Here is how a full and final settlement works in theory:

• For example, you have a debt of £25,000.
  
  
• You have to talk to your IVA supervisor (a licensed Insolvency Practitioner usually) about what your options are.
  
  
• Then, you logically have three possibilities: offering a part of your equity, borrowing from friends/family, or if you are a businessman, from your business partner
  
  
• The minimum amount needed in order to get eligible for a full and final settlement is 25% of your total debt. (In this case, 25,000 X 25% =£ 6,250).
  
  
• To this amount, you must also add the charge of the Insolvency Practitioner. If that fee is £5,000, it means you will actually have to pay £11,250
  
  
• So, you creditor will actually wipe off the remainder of £13,750.
  
  
• The whole procedure lasts no more than 3 months, starting from the time you have signed the documents.
  
  
• If you successfully go through a full and final IVA settlement, you are debt free

As seen, you are required to pay at least 25% of your debts as a lump sum, in order to have your debt written off. Certainly, the higher the amount of your debt, the higher the more difficult it will be to raise the amount needed. But, after you have finished (the IP is the one who will distribute the amount among your creditors), you can start working on re-building your credit rating. In the meantime, you will also receive a certificate of satisfaction, which you may forwards to the credit agency in order to change your record statements. It takes one full year until the IVA is being totally removed from your records.