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A full and final Individual Voluntary Arrangement can solve personal debt problems for Self Employed and Sole TradersAn Individual Voluntary Arrangement (IVA) is a legal debt solution which enables debts to be settled through monthly payments of your agreed disposable income, usually over five years, and the remaining debt being wiped clear at the end of that time. For a Director, Sole Trader or someone who is self employed, if your business has failed, you may not be in a position to maintain monthly payments into an IVA. However, this does not mean that you will not be able to use an IVA as a solution to your personal debt problem. There is an alternative to the standard monthly payment Individual Voluntary Arrangement which is the full and final settlement IVA, more commonly known as a lump sum IVA A full and final settlement IVA is based on the debtor making an upfront lump sum payment to their creditors instead of monthly payments over sixty months. If a lump sum can be raised, possibly through personal reserves, home equity release or with the help of friends and family, then this can be used so settle the debt in a single payment. The creditors accept the lump sum as full and final settlement of the IVA and the arrangement is completed or satisfied immediately on receipt of the lump sum. How much will the lump sum need to be ? Each case is decided on its own merits and for this reason there is no magic formula that can be used for this calculation. Quite often creditors will accept a lump sum which is slightly less than the sum of the 60 monthly payments. This is because it is received up front therefore cutting out the risk of the debtor defaulting on their agreed payments. As the saying goes "a bird in the hand is worth two in the bush". The next question to be considered is why would creditors not accept a lump sum offer but still require sixty monthly disposable income payments to try and get more of their money back? The answer to this is that generally any available disposable income will be required to pay back the person who made the lump sum possible, or to fund the mortgage repayments if it was generated through equity release. Once creditors have agreed to accept a full and final settlement of an IVA, you will normally have 3-6 months to produce the agreed lump sum. During this time none of your creditors can reappear and demand further payments. However, if the lump sum is not produced within the agreed timescales, the IVA is likely to fail at this point probably leaving you worse off than before. If a lump sum can be made available, it can be seen that this form of IVA settlement has significant advantages for both creditors and debtors. Creditors receive the agreed funds straight away and debtors are released from the restrictions of the IVA and their debt immediately. Therefore a lump sum settlement IVA is often seen as an ideal personal debt solution, particularly for those whose business troubles leave no certainty of regular income. Where a sufficiently large lump sum can be made available, there is very little reason why creditors would not be inclined to accept this form of IVA proposal. Article Tags: Final Individual Voluntary, Individual Voluntary Arrangement, Solve Personal Debt, Personal Debt Problems, Final Individual, Individual Voluntary, Voluntary Arrangement, Solve Personal, Personal Debt, Debt Problems, Self Employed, Monthly Payments, Disposable Income, Final Settlement
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