One-off payment IVA's
Whilst they're not as common as standard IVA's, one-off payment plans can be an excellent way of clearing your debts. This is especially true when you only have sufficient funds to clear a small proportion of your outstanding debt and, for whatever reason, a contribution-based IVA is out of your reach. This might be due to the fact that you have pending unemployment, for example, or other viable reason why you can't commit to IVA long-term.
Otherwise referred to as 'full and final settlement' IVA's, this type of arrangement has certain qualifying criteria:
1. You must have access to a reasonable lump sum to offer to your creditors.
2. You must be able to prove that you can't commit to a full IVA term (and this will need to be evidenced as clearly as possible, depending on your individual circumstances).
3. The offer being proposed must be comparable to the return your creditors could expect if you were to be made bankrupt i.e. it must be reasonable and tempting enough for them to accept it.
If you're thinking about a full and final settlement IVA, then it's important to discuss the implications of it with your chosen insolvency practitioner.
Other alternatives: Third-party funds
Many people choose to raise funds for a one-off payment IVA through third party funds. This is basically the name given to money being introduced by someone who is not party to the debt - for example, a family member or friend, who may be able to offer some financial assistance. Things may be different when looking at a Scottish IVA, or Trust Deed.
In order for this arrangement to be accepted, the third party must be prepared to offer money on condition that the debt is considered fully settled once the funds have been transferred over. Your insolvency practitioner will most likely require that relevant paperwork be drawn up to reflect this arrangement and as such, ensure it is legally binding on all parties. In essence, however, generating funds in this way can help to simplify the situation and puts daylight between the IVA and bankruptcy returns.
What are the benefits of a one-off payment IVA?
There are two key benefits of entering into this type of agreement:
1. You're not committed to a normal IVA term (which is usually between 4 and 5 years) - hence you can start to rebuild your financial future sooner, rather than later.
2. Your creditors don't have to wait the same period of time for their payment. Instead, it's simply paid and finalised within a very short processing time.
One-off payment IVA's can certainly be very useful but it's important to discuss your own personal circumstances with your insolvency practitioner before you decide to commit to one. You also, of course, need to consider the management cost, which will be payable to your practitioner and will need to be repaid once the arrangement has taken place. Prices vary massively between different providers so it's advisable to do a bit of homework, ask the relevant questions and ensure you're happy with the arrangement before you sign on the dotted line.