IVA: Full and Final Settlement calculation
If you are in an IVA and considering making an offer of 'Full and Final Settlement' to your creditors, it is quite natural to try and calculate the amount needed to bring your IVA to an early close.
Your IP Is Impartial
Many Insolvency Practitioners won't want to provide settlement figures for fear of compromising their impartiality.
They have to be seen as acting in the best interests of both parties, both yours and your creditors.
With this in mind, any offer you want to make should come as a proposal from you, without any influence from your supervisor.
Surrounding factors
Other important factors need to be considered too, such as:
- The Reason. The changes in circumstances surrounding an early settlement offer will define the strength of the offer when compared to the agreement that's already in place.
- The Source. Where are the funds are going to be coming from is also very important. For instance, would creditors be entitled to those same funds under the windfall clause, such as in the case of redundancy monies or an inheritance.
- Expected Equity. Creditors may be expecting equity to be released as part of the original agreement.
- HP Payments. Creditors may be expecting payments to increase if an HP Agreement is due to complete before the end of your IVA.
Each of these points could have a bearing on the size of the offer you need to make so.
Settlement Calculation
As a general rule of thumb, in cases where there are no scheduled increases with HP agreements, where equity is not a factor and where the money being offered is coming from 3rd party funds (i.e. not your own money) you could use this calculation to estimate the figure you'll need.
Your Offer = (IVA contributions x IVA Months Remaining)
E.G :- If you've paid 24 payments of £200 into your 5 year IVA, then:
Your Offer = (£200 x 36)
Your Offer = approximately £7,200
Please Note, This is not an exact science but should give you an idea of where to start your discussions.
Please Note: This calculation does not take into account any scheduled changes to the IVA's contributions such as for an HP agreement, or the introduction of equity into the IVA that might have been agreed in the original IVA proposal. It should, therefore, be used for guidance purposes only.
