An Individual Voluntary Agreement (IVA) is a formal, legal contract for a set period, usually five or six years.
To finish your IVA sooner and have the remainder of your debts written off, you need to talk to your IVA firm, say how much you are offering and where the money is coming from. Your creditors will need to approve this offer.
How much you should offer as a Full and Final (F&F) settlement depends on your situation and why you want to end your IVA early.
Contents
How do you settle an IVA early
This approach is like making a full and final settlement offer on debts outside an IVA, but the procedure is more formal:
- you tell your IVA firm what you want to offer;
- your IVA firm puts your proposal to your creditors as a “variation” to your existing agreement;
- the same offer is made to all your creditors and they vote whether to accept it.
Because these offers take time and require a formal vote, you can’t try offering 40% and then increase it to 50% and then to 75%. You have to assume you can only make one offer, so get it right the first time.
Also remember that your credit record is not going to improve if you settle the IVA early. The IVA marker remains on your credit record for 6 years, during which time you will find it very hard to get a new tenancy, take out credit or get a mortgage.
Get your figures together
The first thing is to work out how much you would pay into your IVA if you carry on making the monthly payments. So, how many months are left until your IVA finishes, times your current payment (or the amount it is likely to go up to if you have just had a big pay rise)?
If you have a house, it is unlikely in the present market that you will be able to remortgage to release equity. If you have the usual “12 month extension” clause in your IVA, you need to either add on the extra months, or convince the creditors that there is unlikely to be enough equity for this to be relevant.
For Example – say you are 28 months into a 5 year IVA, so there are 32 months remaining and you pay £200 a month. You have a house and a 12 month extension clause. If your IVA continues to the end, you will be paying in either 32 x £200 = £6,400 (if there is little equity) or 44 x £200 = £8,800 (if there is a lot of equity).
Case 1 – you are struggling with your IVA payments
If your IVA is in danger of failing, perhaps due to illness, splitting up with your partner or reduced income, then your creditors may be prepared to accept a lower offer to complete your IVA early. In this case, you should stress to your IVA firm that if the offer is not accepted, you are going to be unable to continue with the IVA. Here your creditors have a choice between accepting your IVA settlement offer and the IVA failing.
The creditors will be interested in whether your problems could be temporary and if your IVA could realistically continue. Evidence of the mitigating circumstances may help get your offer accepted – a letter from your doctor or a hospital appointment letter, copy of recent payslips etc. A recent estate agent’s valuation showing there is little or no equity in your house can also clarify the position.
With these mitigating circumstances, your creditors may agree to accept a lower full and final settlement than your remaining monthly payments.
What might be acceptable depends not just on how much there is still to pay into your IVA – the total amount of your debts is also relevant. If your IVA was only offering a low return to your creditors, then they may be reluctant to agree to this being reduced much.
NB If you are close to the end of your IVA and you lose your job or have a major health problem, it may be possible to get your creditors to agree to your IVA being completed without you making any additional payments at all.
This is called “completing your IVA on the basis of payments made to date“. Talk to your IVA firm about this if you think it could apply to you..
Case 2 – you just want the IVA ended
If you aren’t struggling, you probably have to offer close to the total of the remaining IVA payments.
Here the reasons why you want to end the agreement early don’t really matter – you may want to emigrate, retrain for a different career, move in with a new partner or just be sick of the whole thing and want to start with a clean slate.
But from your creditors’ point of view this is all pretty irrelevant: they simply have to choose between taking your offer of £x,000 now or you carrying on with the monthly payments.
So on the example given above, they would be unlikely to accept £3,000, may be prepared to take £5,000 immediately and would be very likely to accept £6,000. If there was some equity in your house, then you would probably have to offer more to get it accepted.
Case 3 – you have a windfall payment you can use
Lump sums need to be discussed with your IVA firm. There is normally a clause in your IVA which means that windfalls over £500 have to be paid into your IVA.
Here you don’t have a choice. This isn’t an early settlement offer because the money has to go into your IVA:
- when the amount that will be paid into your IVA is more than the total of the debts in the IVA plus the IVA fees plus statutory interest on the debts, your IVA will be completed early.
- if it isn’t large enough for that, your creditors will expect you to carry on with the normal monthly payments.
More unusually, sometimes a windfall payment doesn’t have to be paid into your IVA – this could, for example, be compensation for a personal injury. Here it is your choice what you want to do with it, so you can make an offer to settle the IVA early if you want. Or you could just let your IVA continue and keep the money.
Or it could be your partner who is getting the lump sum – that doesn’t have to go into your IVA. You could just carry on making the normal payments or you could offer to settle the IVA early, probably having to pay close to the remaining monthly payments as in Case 2.
Case 4 – your IVA firms suggests you take a loan
If you are more than halfway through your IVA you may get an email from your IVA firm saying you may be able to get an “early exit loan”. You need to think carefully about this offer, as the loan may be expensive (eg about 30% interest) and it prolongs the time you are in debt.
See IVA early exit loans for details, including the alternative, cheaper ways of improving your credit record after an IVA.
IVA settlements are unpredictable
It’s impossible to say for certain whether your creditors will accept an offer. Someone with a lot of experience will sometimes have been astonished when a good offer was refused. Other times they will have seen surprisingly low offers agreed.
If you don’t mind putting details of your situation on the internet, then the forum at www.iva.co.uk can help. You can post anonymously and get replies from people who work for IVA firms or who have had an IVA.
Where is the money coming from?
Your IVA firm will want to see evidence about the source of the money you are putting forward. It won’t matter if this is coming from a relative or a friend.
The person offering the money should write a letter saying they are prepared to offer your £x,000 if this will enable you to complete your IVA. They should say this is a gift, not a loan. It should also give a timescale e.g. “This offer will remain open until dd/mm/yy. I will be able to make the payment within x weeks of being informed that my offer has been accepted.”
Your IVA firm may ask for evidence about the identity of the donor, perhaps a copy of their passport or driving licence, and proof that they have the money, such as a copy of a bank statement.
If you were just given £5,000 by your dad as a generous Christmas present, then you could pay this into your IVA and still carry on with the normal monthly payments. So it’s important to say you will only get this lump sum if your proposal to settle the IVA early is accepted.
Be careful! And check the details!
There are two situations where you have to be very careful and get the settlement agreed first:
- you must NOT take any money out of your pension until you have confirmation that your creditors have accepted your offer. If you take it out before this, it could be claimed as a windfall payment and you would still have to carry on with the IVA! See IVAs and Pensions for more information.
- if the money is going to come from selling your house, make sure you read Sell my house to end my IVA early. You need to get the settlement amount agreed BEFORE you start to sell your house.
If your IVA firm agrees to put forward your proposal, you should make sure you know the exact details of what is being proposed.
Ask about things you feel could be relevant to your situation. What about potential refunds from PPI or other complaints? What will happen if I get a redundancy payment or inherit money before my completion certificate arrives?
What if the offer is refused?
If your creditors reject the proposal, you have to carry on with the normal monthly payments.
You could talk to your IVA firm about whether a higher IVA settlement offer might be acceptable now. Or if you could make the same offer in another six months or a year, which will give your creditors more money as they will have had the additional payments.
If you simply can’t carry on with the payments, then it may be that your IVA has to fail.
Unfortunately, this will often happen if you are having big problems early in an IVA and it’s not possible to offer a large enough full and final settlement, see What Happens if You Can’t Afford IVA Payments.
“My IVA firm won’t put my F&F offer to my creditors”
If you only have a few months to go, it’s not worth doing this. It usually takes 2-3 months to get it all organised and approved by your creditors. If you are near the end, your IVA firm just saying it’s simpler to make the remaining payments.
Make sure you have set out in writing exactly what you are proposing and why. If your IVA firm says it can’t be done or the offer isn’t enough, ask them to explain why. Insist on having this in writing.
If you think your offer is a sensible one and your firm is being unreasonable, put in a formal complaint.
Should I sell my house to end my IVA?
A Guide to IVAs – what you need to know
More than a third of IVAs fail
Neil says
I have, it says the supervisor has the discretion to increase for 12 months but doesn’t really identify on what grounds, I’m guessing for payment breaks etc…
I’m hoping they accept the 12 months.
Hindsight is a wonderful thing…
SG says
Hi Sara
Happy New Year
I started an IVA in January 2019.. after twelve months payplan extended the term by 12 months as the monthly payments were reduced for 6 months due to income changes.
For past 2 years normal monthly payments have been made.
I am now able to access funds from my personal pension.
In August 2021 I owed £8400 in my IVA.. I have offered £8000 to settle the IVA early.. payplan are still to present my offer to the creditors ( the balance would be slightly less than £8000 now)..
What if any is the best way to expedite the offer to the creditors as Payplan are now increasing my monthly payments after the annual review
Sara (Debt Camel) says
when did you present the offer to Payplan?
do you feel the increase in monthly payments is affordable? does it take account of the fact that your energy bills will be going up? and National Insurance and council tax in April?
SG says
Hi Sara
So finally settled my IVA after 3 years with Payplan
Very confused
HMRC we’re in the IVA ( it was a joint debt)…
No payment was made from payplan to HMRC
HMRC have now moved the debt in full to CCCS
Is this usual for HMRC or have Payplan mislead me
Sara (Debt Camel) says
I think you need to ask Payplan what is happening, I am reluctant to guess but would be interested to know what the answer is.
Angeldust12 says
I am having the exact issue my IVA was settled in January and I keep calling to see what’s happening to be told they are waiting on department of work and pensions as we owed them money. My IVA company issued them with a 28 day deadline which ceased on the 16th March and they still haven’t responded. I phoned IVA company back up after the deadline to be told they had extended it because if they close the account without a response from DWP they will then chase the money owed to them which I’m completely confused at as they where part of the IVA. I have now been told they have 6 months to respond so no chance of getting my certificate till at least June and the IVA company have the settlement money in their account waiting to pay creditors.
Ashley says
Hi, I have 20 months left of my iva paying 330 per month. I have a family member offering to clear my iva. I don’t own my property. What do you think the likely hood of creditors accepting 6600 to get my iva cleared? Or any suggestions what would likely be accepted? Thanks
Sara (Debt Camel) says
Can you afford the £330 payments or are they too high?
Ashley says
I can afford the payments. I just want out of my iva so I can save for a deposit for a mortgage. I also want to do more hours at work but I don’t see the point while in an iva as they will just take 50 percent of any extra earnings.
Sara (Debt Camel) says
ok if the 330 wasnt affordable it is better to try to get that down. But as it is , then 6600 may well be acceptable – talk to your IVA firm
Ashley says
Hi Sarah. Do you know if I offer 6600 and it’s accepted. Do they add on any fees on top of this? Or would the total final amount be 6600? Thanks
Sara (Debt Camel) says
That depends on your IVA firm – they should explain this.
Angeldust12 says
An update on my IVA. I started my IVA last May 21 and was paying £150 a month. My rent was increased in November by £100 a month and a friend offered to pay £8000 to finish the IVA. The company I’m with for the IVA called a creditors meeting to either accept the £8000 or lower my monthly payments to £50. They have just accepted the £8000 which was paid yesterday so now I am debt free I am so relieved.
Ashley says
That’s amazing. Can I ask how long was the process from you making to the offer and it being accepted and your iva finalised?
Angeldust12 says
I made offer end of November and had creditors meeting 4th January they accepted the offer and friend made payment on 6th January and just had a phone call to say they are just draughting final report and should get certificate in 6 to 8 weeks
Ashley says
Did your friend have to send proof that they have the funds in their account? I just find it strange they are asking for a print out of my friends bank statement?
Angeldust12 says
Yes they had to send a bank statement and proof of ID and a letter stating why they wanted to pay our IVA off.
amy says
Hi
My total debts for Iva was £17,000. It got reduced to £12,000 but because I had an unexpected payment I understood that I had to pay the whole £17,000. The payment I received was for £24,000 and I was already 3 years into Iva and had paid £9,000. So in total I have paid £34,000. I thought this would be more than enough to pay my creditors in full and any fees but I have just been told that I am short by £2,000. So the fees have cost me £19,000. More than double my original debt. How can this be. Does this seem right? It seems very excessive. I’m with credit fix. I have asked them to explain it to me but I just don’t understand it.
Sara (Debt Camel) says
It got reduced to £12,000
How? Do you mean you made £5000 of payments? or that a debt was cancelled / reduced?
because I had an unexpected payment I understood that I had to pay the whole £17,000
what sort of payment was this?
Amy says
No the £12,000 was what I was going to pay back as reduced offer before I had the payment. Then when i received the payment I had to pay back the whole debt of £17,000.
I had made £9,000 of monthly repayments then I received £24,000 from provident ( one of my debtors) for compensation for misselling loans when I couldn’t afford it.
Sara (Debt Camel) says
was the 12k agreed with Creditfix/your creditors?
Amy says
Yes that was the amount agreed. It was agreed I would pay £215 for 4 years. I received this unexpected money in April last year so made final payment for closure. I was told closure would take up to 6 months. It’s now been 9 months. I rang them on Friday to see how much longer it was going to take and then that’s when I got told that it’s in the final stages but im £2000 short because they took their fees and also a company took £9000 to look for ppi, which there wasn’t any
Sara (Debt Camel) says
also a company took £9000 to look for ppi, which there wasn’t any
huh?
That is outrageous.
I suggest you send in a formal written complaint (email complaints@creditfix.co.uk) saying you want a breakdown of all the amounts relating to your IVA final settlement.
Amy says
Ok i will do that. It doesn’t sound right to me but I didn’t know what to do about it. Thank you for suggesting that.
Angeldust12 says
Surely you should never have to pay more than your debts?
Sara (Debt Camel) says
plus the IVA fees which can be high, but not that high… and sometimes 8% interest on the debts as well.
IVAs can turn into seriously expensive options for some people.
Arsalan says
I am on IVA of £120 a month for 50 months, i am a home owner, rest left £6000. My friend is going to help me as a gift of £5000 in mid august. Do you think they are accepting lump sump or its totally a luck.
Thanks
Sara (Debt Camel) says
are the £120 payments affordable at the moment?
the 50 months – does this include the extra years of payments if you can not remortgage?
Arsalan says
No i didnt add any extra year at the moment. Yes £120 is affordable at the moment but my job contract expires in end of April and plus i have other job since october and pay is nearly same only 200 more. My wife she was helping me before but she is not helping me anymore so tight budget.
Sara (Debt Camel) says
“£120 is affordable at the moment but my job contract expires in end of April and plus i have other job since october and pay is nearly same only 200 more.”
I am confused. Do you have two jobs at the moment and one is ending? Come April will you have a job and will it pay more than the one you had at the start of the IVA?
How large were the debts that went into your IVA?
Who is the kind friend that will give you £5000? Will you have to repay this? with interest?
Arsalan says
No i only have one job, previously i was working in care home and since October 2021 i changed the job and i have only one job at the moment.
My IVA started in June 2021 for 60 months at £120 in total £7250. Next renewal would be around in June 2022. By then i would have paid 12 months and rest left 48 months at £120.
I am thinking to pay £5000 lump sump my close friend wants to gift me as paying of clearing debts.
Sara (Debt Camel) says
So the best thing is to wait until mid august and not think too much about this now. Before then you are likely to lose your job and will have to find another one. Your energy bills and council tax are likely to be going up in April As will National Insurance for when you find a new job.
It may be that £120 a month isn’t affordable bel and you need to ask for this to be reduced. That would then mean your friend probably has to pay less.
If after 6 months break you can’t find another job, or it is at a lot less money so you cant afford anything, then your creditors may be prepared to accept less than £5000 as otherwise your IVA will fail.
Angeldust12 says
Pretty similar situation to mine. I just wanted the IVA finished as I had a rent increase, plus gas and electricity increase the company I’m with gave 2 options to the creditors accept £8000 as full and final payment or lower monthly payments to £50. They chose to take the £8,000 happy days so all in all it cost £9000 as I’d already paid £1000.
Arsalan says
Thanks so i will need to wait and pay them until august.. my renewal is due in june as i started iva in june 2021 might be 2 months earlier they will renew lets see ..
Sara (Debt Camel) says
well first see what happens if you lose your job – tell them then and they should let you have a pause for 6 months to let you get a new job.
Ashleigh says
Hi! I have been in my IVA since October 2019 I have 32 months left and £3072 left to pay. I really want out of my IVA as I am fearful that I won’t be able to keep up with the monthly payments. My grandparents have offered to take out a loan of £2000 to settle the IVA. Is this likely to be accepted and will the IVA company care if the money gifted is from a loan?
Sara (Debt Camel) says
Can you say some more about your current situation? Are you renting or buying? Do you have a car, if so how much is it worth?
Ashleigh says
Hi Sara! I am a private tenant and I do have a car worth about £4-5k. It was agreed that my car wouldn’t need to be sold at the start of my agreement as I need it for work. The cost of living has increased so much since I started the IVA, however the company I am with are never forthcoming to reduce monthly payments, but are always quick to increase them at my annual review even though evidence shows that I can’t do it.
Sara (Debt Camel) says
I think your first move should be to make a complaint and ask for your monthly payments to be reduced.
I don’t like the idea of grandparents who are not well off having to take out a loan to setle your IVA. And £2000 is less than your remeining payments, so it would be more likely to be acceopted if your monthly payments were reduced.
Who is your IVA firm?
Ashleigh says
The firm is CreditFix
Sara (Debt Camel) says
ok, then put a complaint in writing, email is fine. Say that your expenses increases have not been taken into account at your annual reviews and that the monthly payments are unaffordable.
Hannah says
I have exactly 1 year left of my IVA, my parents have offered to pay a settlement fee so I can get a headstart on saving for a mortgage one day.
My remaining payments for the final year equal £5500 I was advised by my IVA firm that I would need to offer more than this to make my creditors more inclined to accept. The most my parents would pay is £6500, I was advised this would be a good offer.
Can you advise if its worth me settling it early? As it will cost more. Am I free to open savings accounts etc? I also have a help to buy account open from years ago prior to IVA but its empty. Am I free to start using it to save if I settle early? Will it benefit me is the overall question? Thanks.
Sara (Debt Camel) says
I don’t see that you will gain anything by this. Your nice parents can just give you the £6500 as a gift after the IVA has been completed.
You should NOT be saving up large amounts while you are in an IVA. Once your IVA has completed you can – open new accounts or use the LISA.
As a matter of practicality it will often take 2-3 months to get a settlement offer agreed and then the IVA firm has to close it down whioch can take a bit longer. This isn’t really going to save you much time at all. I can’t see it is worth £1000!
Also if your expenses for the year go up (energy bills, National insurance, council tax etc – all in April) you can also ask for your IVA payments to be reduced.
Hannah says
Ok thanks for your advice.
So just to confirm my last payment will be Feb 2023. Then the iva will still appear on my credit file for another year (6 years intotal) so, when can I start saving? And open savings accounts? After my last payment 2023 or when the iva drops off my file 2024?
Thanks
Sara (Debt Camel) says
you can start making serious savings as soon as you have the IVA completion certificate. Depending on the efficiency of your IVA firm and how simple your case is, this can be 1-6 months after it ends.
Some banks may not let you open an account with the IVA showing. But this isn’t normally a problem people encounter.
Also read https://debtcamel.co.uk/repair-credit-record-iva/ about cleaning up yopur credit record when an IVA has finished.
PS well done – the end is in sight!
Hannah says
Thanks so much.
After hearing your advice I agree settling early for an extra £1K but not gaining much time isn’t worth it. I think I’ll stick it out paying monthly for one more year then start saving for the future as soon as I recieve my completion letter.
Shall I need to let my IVA firm know I won’t be submitting a final settlement offer after all? And I’d like to continue paying monthly for the remaining one year?
Will they chase me for the settlement offer as I’ve discussed it with them etc. ? I am worried now as I’ve come so far I do not want my iva to be failed.
Thanks.
Sara (Debt Camel) says
I suggest you tell them having talked to your parents you don’t think they can afford £6500 so you will just carry on paying. They can’t chase you for money you don’t have if you are making the repayments.
Jason says
Hi, I’ve been on my IVA program for nearly 2 years now, paying £201 a month, the duration is 5 years, starting with a £18k debt and will be settled if I stick to the 5 years with a total of £12k being paid and the rest written off. We’re currently renting but my fiancé is desperate to get on the property ladder, she has £25k in savings, I have saved in 2 years £6k. We can save between us a month £1.5k. She wants me to end the IVA so we can get on and try to get a property, she is willing to top up my £6k to what we think is remaining currently on the debt to creditors about £14k. How likely are creditors going to take an early setttlement and would they be willing to take less? What would happen if I went direct to the creditors and not through Iva to settle this? And what fees would Iva.org likely to add for early settlement? Thank you
Sara (Debt Camel) says
So to answer your questions first, and then explain why it may not matter…
What would happen if I went direct to the creditors and not through Iva to settle this?
You can’t do this.
How likely are creditors going to take an early setttlement and would they be willing to take less?
If you say you want to end our IVA early, that would mean paying the debts in full, plus possibly 8% statutory interest for two years, plus the IVA firm’s fees which would be a lot more than the minimum of £3500 in this case.
Instead you can say that your girlfriend is making an offer in full and final settlement of your IVA if it is accepted by your creditors. She could offer the full amount of your remaining payments.
That would very often be enough. HOWEVER how have you managed to save up 6k? What happened at your first IVA review? Have you had a large pay increase? It may be that you should be paying more at the moment and your next review will say this… Offering a settlement now will not stop your next review – it will probably mean it is done right away.
BUT the even bigger problem is, even after your IVA is settled and the debts are repaid in full, you will still be unable to get a mortgage from a high street lender until the 6 years is up and the IVA drops off your record. The only mortgage you could get would be from a bad credit lender at a high rate of interest and would need a significant deposit.
Shelley says
My Iva balance is £13,000 but original owed was £19,000,if I received inheritance of 20,000 would they take the 19,000 off me
Sara (Debt Camel) says
If you inherit that much you have to repay all your debts in the IVA in full, plus possibly 8% per year interest on those debts plus your IVA firms fees which are likely to be much more than £3,000
Danielle says
Hi myself and my husband entered into a joint iva august 2019 we have made x27 payments at £192 and then it was increased to £210 which we’ve made 3payments my sister is getting married in July and she has said what is left she is happy to give to us to use to make a full and final payment I don’t understand how this works I’ve worked out we have £6300 left to pay and by august there should be £4830 left to pay I don’t want to waste time so what would be best amount to offer if she has anything left after her wedding?
Sara (Debt Camel) says
can you afford the £210 payments? With energy bills and national insurance and council tax all going up in April?
If you can’t, then your best option will be to try to get the payments reduced now or in April. This will reduce the amount that you may have to offer in settlement.
Angeldust12 says
So what we did as our rent was increasing in December we contacted the iva company explained the rent was going to be going up by £100 a month but our friend had offered to give us £8000 to end the iva so they arranged a creditors meeting and gave them 2 options take the £8000 or drop the iva by £100 a month and they accepted the £8000.
Sharon says
I’ve been paying £638 since Jan 2018 and will soon hit month 54 so I’m going through the necessary faff of looking at releasing funds through remortgaging my home. I’ve got £80,000 equity in my home but obviously nobody is going to lend. A broker has scoured the market and nobody is interested, so her will be writing a report to the IVA practitioners to notify them.
I’m keen to bring the IVA to a close ASAP and plan to offer £5655 to settle, rather than do an extra months.
Month 54 is June 2022, and I’ll offering the settle to figure then
My extra 12 months would start on Jan 2023
Do I still make payments July 2022-December 2022, if the settlement is accepted?
Sara (Debt Camel) says
Are your current payments of 638 affordable? With your energy bills and other expenses going up?
At month 54, you would normally have to offer about 18 months to settle – the 6 remaiming months plus 12 months in lieu of releasing equity.
Unless there is reason you can argue the current payments are too high, it’s pretty unlikely an offer of about 9 months would be accepted.
Sharon says
Yes, my offer would be for £5655 for the 12 months PLUS the remaining months of the year.
What’s your view on this?
Sara (Debt Camel) says
So that is about 2k less for the 12 month extension – these things can never be guaranteed, but I don’t see why your creditors would want to accept it unless you can show you can’t afford the current payments.
Sharon says
Would the sharp rise in energy costs, and a faultless record of payments for the duration of 5 years not count for a good enough reason? Im a single mum, and my payments were set pre-Covid, pre-Brexit when life was less costly and complicated. Is there no benefit to the creditors to have it all in one sum, and guaranteed?
Sara (Debt Camel) says
I can’t say what your creditors would approve and what they would reject. All i can do is make comments about what may happen. Sometimes there are very odd decisions in IVA early settlement – good offers are rejected, bad ones are turned down.
But here, for what it is worth, are my thoughts on your questions:
“Would the sharp rise in energy costs, and a faultless record of payments for the duration of 5 years not count for a good enough reason?”
A rise in energy costs is a very good reason why the current payments may not be affordable. That is what I suggest you should concentrate on now, because if you could get the payments reduced by £100 a month, then you have to then pay less to settle the rest.
A faultless record of payments – sorry that is what your creditors expected would happen. It’s the norm. It isn’t a reason to accept a lower settlement amount.
Im a single mum, and my payments were set pre-Covid, pre-Brexit when life was less costly and complicated.
Does that mean they have been hard to manage? It is a pity you have not gone back and asked for them to be reduced before.
Is there no benefit to the creditors to have it all in one sum, and guaranteed?
yes, but with only 18 months to go, the benefit is not large. If you were making the payments offer after a year or two, then the benefit of a guaranteed lump sum is much greater.
SO what I am saying is, have a look at how affordable the current payments are. because that is your best reason to get a low settlement accepted, and if the offer is rejected you need the payments to drop.
If the current payments are affordable, and will remain so after April’s hike in energy bills, council tax, national insurance etc, then the offer you are thinking off looks low to me. But talk to your IVA firm about it.
Pam says
I have an IVA which should finish in August. Now they want me to release equity which there will be equity to release. My IP has said they want £15000. My debt was only just over £18000 and I have paid over £9000 back. Can you tell me if they have a right to ask for this amount.
Sara (Debt Camel) says
They are entitled to ask for an amount that will repay all your debts in full – possibly plus 8% interest per year, it depends on the terms of your IVA – and their own fees.
Of course this is very unfair as you would probably never have agreed to the IVA at the beginning if you would have thought this could happen… the point of the IVA was to get you out of debts, not add a big chunk of secured debt.
So what can you do to challenge this… how much are your IVA payments at the moment? Are these affordable with energy bills, petroil, broadband, mobiles, food prices etc all going up?
How old are you and how long does your mortgage have to run?
Pam says
At the moment just about affordable but new gas and electric payments not known yet. Payment is £278 a month. I’m 53 and mortgage has 17 months left. My partner never signed an RX1 form either. Should I has for a copy to see what they do.
Sara (Debt Camel) says
When you started the IVA , did the IVA firm talk to your husband at all? Did they tell you it was likely or unlikely that you would have to remortgage?
What have you been asked to do – get a quote for a remortgage? or talk to a firm who give secured loans?
It’s important that you have a good go now at working out how much your IVA payments needs to be reduced to to be affordable. Because any remortgage can only cost half as much in a month as your IVA payments are, so if you can get the rest of your IVA payments down. you decrease what you may have to may to any mortgage/secured loans of for the next 12 months if your IVA is extended instead.
So sit down and work out how much all your bills are going up this month. How much has your food shop gone up? Petrol?
If your mortgage is a variable rate, that will have gone up.
Then talk to National Debtline on 0808 808 4000 and explain that you need to work out an income & expenditure form to show your IVA firm.
PS sorry I missed your reply until now.
Pam says
The mortgage we have now is fixed. I did a expenditure form a month or dso ago and only had around £20 left. So at the moment don’t know what my gas and electric will be.
Sara (Debt Camel) says
Are you on a variable rate energy tariff? What is your current direct debit and have they suggested you increase it?
Apart from energy, most people are seeing increases this month to their mobile, broadband, water, council tax contracts. If you have a car, then petrol must have gone up. And food a bit.
Pam says
Yes they are on a variable rate and hoping to find out in next couple of days what they will be. The other bills have not gone up too much but will use the £20 that’s left.
Sara (Debt Camel) says
what is your current monthly energy payment?
Pam says
Electric £49 and gas £69.
Sara (Debt Camel) says
Then very roughly that is likely to go up £60-65 a month because of the April price rises.
I do think you should talk to National Debtine to get them to work through your I&E with you.
then you should ask your IVA firm to immediately reduce your IVA payments by this amount.
And at the moment the expected rise in October is about 30% so another £55 a month. That would have to be taken into account when looking at what you could afford from them on. Point that out to the IVA firm as well.
Luke says
So I wouldn’t ever get an iva and I am in kne for another 32 months. If you get one be prepared to never get a pay rise as they take that and also double your debt if you get a better salary. My total debt before my iva was £6879 I got told today after paying for 2.5yrs its 14k??? How tf is that possible as they claim to reduce debt! Absolute mugged off
Sara (Debt Camel) says
Have you asked why the debt has gone up?
An IVA for as little as £6879 was probably a big mistake. Else if you expect your salary to rise.
Lucy says
I had £6.2k worth of debt to 6 creditors consolidated. Total including Creditfix fees was £9.8k. I am paying ~£170 pcm and have 31 months remaining (approx £5376 left). My partner would like to offer the creditors £4.2k (savings) to clear the IVA. Is this likely to be accepted?
Sara (Debt Camel) says
is the £170 a month affordable at the moment? This changes your options.
Lucy says
.Yes it is, but I’m concerned as I have received a pay increase so I am aware they will dramatically increase my monthly payment. None of my debt was written off at the start and I will end up paying almost double the amount of my original debt.
Sara (Debt Camel) says
The offer may be accepted but usually the IVA firm will do a final review before they close the IVA and that may well turn up that you should have been making larger payments.
Arsalan says
I am on IVA and i have 48 months remaining of £120. I have a review this mo nth, recently wife lost job and i am on 1
£19600 salary a year. Which is hard to survive with all the rising bills, now looks like IVA payments are going to be hard for me in future months, my mother in law is happy to help me paying gift to IVA as a lump sump of £5000. But not sure if they are going to accept it or not.
Sara (Debt Camel) says
Do you have a house with equity to protect? or any other assets?
arsalan says
yes house on mortgage.
Sara (Debt Camel) says
then getting a lump sum accepted is likely to be your best option.
(If you didn’t have any assets, then it would probably have been better to let the IVA fail and opt for another debt solution such as a Debt Releief order.)
Have you looked at whether you can get any help through benefits? I’m suggesting this istead of settling the IVA, but it sounds as though things will be very difficult for you even if the IVA is settled.
arsalan says
Thanks i have email them my documents and they will review it and let me know wheater to lower my monthly payments or accept the £5000 full and final. Will keep you posted the matter.