IVA early settlement - A lump sum amount to the creditors

If a debtor who is a party to an IVA wants an early settlement then he can do so by offering a lump sum amount his creditors as the final payment.

This payment could not be the full amount of the outstanding debts but it should be so much that the creditors are satisfied.
Usually, the creditors are keen to accept an earlier settlement rather than dragging the process for too long, even if they are not getting the full amount.

There are three ways through which an early settlement can be made possible:

The first one is when any friend or relative of the debtor agrees to lend him money for the purpose. A large percentage of this equity can be offered to the creditors who are most likely to accept the offer.

The second way is to sell the property. Appreciation in the value of property during the IVA leaves the debtor with extra funds. Again, the creditors will also be happy to have their share of the equity.

The third and the last way to early settlement is by remortgaging the property. But this option should be considered only when the debtor has understood the conditions of the mortgage and is prepared to make the payments for the new mortgage.

The debtor should disclose to his creditors about the true source of the funds for an IVA early settlement that he repays them and should also produce a financial statement regarding the same. Also, the time period for the final payment has to be fixed beforehand.

In any case the best is to consult your IVA supervisor, which will offer you appropriate guidance.

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