Another explanation why this type of IVA is not suitable for all of us is the premise of IVA itself: an IVA has to be viable above everything. Let’s imagine ourselves Mr. Trusting, who has nothing else than a low income and a debt of 5 ciphers. He will go to the creditor and ask for a Lump Sum IVA. Obviously he is to be informed that he has no access to such tool because he has insufficient assets. He may fulfill all the minimum requirements of a standard IVA (having more than £15,000 as debt, owing to more than two creditors and being able to pay £200 per month) yet he is just short in something else.
Find out what exactly after reading the requirements of a Lump Sum IVA.
- Having more than £15,000 of unsecured debt, which altogether belongs to a minimum of 4 creditors.
- The debtor has to prove himself worthy of a minimum payment and somehow arrange for his daily expenditures (nobody is that lucky to live on pure air).
- Once again the debtor is in the center of attention: he had better know somebody who is willing to contribute with sufficient high lump sum or generate enough equity for the contract to be signed.
- Speaking of which, the lump sum must represent at least 25% of the overall debt and besides this, a debtor must always think of giving away something unexpected, such as excess costs towards creditors.
Standard IVA terms give creditors the upper hand and parallel to this better chances to obtain maximum returns. There is no doubt that 60 regular payments, paid each month during 5 years can generate much more profit than accepting the entire repayment in the form of one single payment. And still creditors are fond of knowing to have cashed in the entire debt within a stroke. There is nothing peculiar in all this: we are living hazardous times and it pays off accepting the entire sum than living with uncertainty.
Given the fact that our main topic is the Lump Sum IVA, there are high prospects of running into a benefactor or discovering a property. Both of them would provide almost the equivalent of what the creditors initially established. It will be much easier for creditors to accept all in one package than waiting for another 60 payments. It seems that the economical crisis has some benefits after all!
It wouldn’t be surprising to notice that 3rd party funds contribute to such a payment! Parents might use their equity to balance a debt generated by the offspring whenever they want. I am sure most of you have already witnessed such cases, or been a character in the case.
At this stage of your financial life all that you are interested in are probably the benefits of this money pressing apparatus. Among such we find a significant reduction in fees, which is determined by the reduced time during which one is forced to write off his/her debts. Instead of 5 years, your case will be supervised by an Insolvency Practitioner for only 1 year.
In connection with various other benefits - fancied by some freelancers - we have to underline that except the above feature, a Lump Sum IVA shares all the advantages of a standard IVA and nothing additional.
- You can keep your actual job without fearing for tomorrow.
- Unlike bankruptcy, IVA supplies the most confidential conditions.
- Taking an IVA is more cost efficient than going for bankruptcy.
- There is still a chance of restoring credit rating after surmounting an IVA, which is definitely not the case in case of a bankruptcy.
- Payments within an IVA will stop creditor and bailiff harassment for good.
Just like you cannot use scissors to cut metal, yet can easily adapt them to unscrew bolts, Lump Sum IVAs as well cannot be the answer to all of our questions. Surprisingly enough, when circumstances are fitting, it can be more than a tool.
