If you are lucky enough to come into some money or someone is generous enough to pay the debt for you while the IVA is in place, then the option to get out of it early may be appealing to you. Your debts will be written off earlier, you can get a head start on rebuilding your credit score, and you will be free of the restrictions that are imposed on you during the IVA.
The IVA will still show on your credit file for six years regardless of whether it is paid up early or not, but early repayment also means that you are free to apply for small amounts of credit again. This could help you increase your disposable income and give you a bit more freedom.
So, how do you get out of an IVA early? Essentially you are going to need a lump sum of money that is enough to satisfy your creditors requirements to the point where they no longer require regular monthly payments from you. They will also need to know where the money has come from.
If you believe that getting out of an IVA earlier is going to be advantageous to you then you need to speak to your Insolvency Practitioner about your potential offer. They will advise you on if they think the creditors will accept it before arranging a meeting with them.
Work Out IVA Settlement Figure
When it comes to working out your IVA settlement figure each case is completely individual. Technically speaking, the creditors have already given you a discount by agreeing to reduced payments and freezing your interest.
This means that your lump sum offer is probably going to have to be very close to what you would be paying if you completed your 60 monthly payments with the IVA. Remember that they are under no legal obligation to accept a lump sum offer.
The first thing you should do, then, is to work out how much you have left to pay if the IVA were to run its full course. To work this out just take your current monthly payment amount and multiply it by the remaining months.
So for example, if your monthly payments are £150 per month and you still have 24 months remaining on your IVA, you would still owe £3,600 (£150 x 24 months). Your proposed settlement figure would need to be around this figure. If the offer is too low, it will be rejected by the creditors.
If the offer IS rejected by the creditors then the good news is that the IVA can carry on as before. There should be no adverse effects from offering the early settlement figure.