Single Payment IVA

If funds accounting for around 35% of the debts owed can be raised via a third party, it may be possible for a proposal to be made to creditors to clear all debts in a single payment. Like the 5 year IVA, it is a court ratified document.

Strengths: All unsecured debts included in the proposal are cleared in one payment in a document that is legally binding. Interest is frozen; it will allow you to keep your home if you are able to make the mortgage repayments and there is no possibility of accessing any further equity in the property that may remain and your disposable income is insufficient for a 5 year IVA. Creditors will have to stop chasing debts if the arrangement is accepted by 75% of the monetary amount of the voting debt. This solution has a reasonably quick process taking as little as three to six months from start to finish.

Weaknesses: It requires a lump sum of normally around 35-40% of the total debt being available. Full disclosure of assets and finances are necessary. Creditors will have the opportunity of voting against the proposal; it will affect your credit rating; your name will be added to the government’s online Insolvency Register for the duration of one year following court ratification and payment.

Single Payment IVA - real life story

Mr B and Miss S debts grew beyond their control after Mr B fell ill and Miss S lost her job. After meeting with a debtDr consultant, Miss S spoke with family members who offered enough of a lump sum for them to do a Single Payment IVA settling their £41,000 in debts for around 25%. Whilst there were no guarantees on the proposal succeeding, most creditors voted in favour as the couple had no assets to speak of, had no equity in their property and their only other option would have been bankruptcy in which their creditors would have received nothing. Mr B and Miss S are happily now debt free and able to move on with their lives without the pressure of creditor phone calls and letters.

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