The advantages of a Full & Final IVA over against a more normal fixed length of monthly payments IVA are fairly obvious. The 5 or 6 year IVA involves tight budgeting, regular reviews and any increase in net income likely to find its way to the IVA. A lump sum avoids all that. Once the IVA is signed off by the Insolvency Practitioner, the debtor is free of responsibilities for the remaining debts. They are written off. No annual reviews and no juggling funds to make sure the monthly payments are met. And of course, no further worries about changing circumstances that could cause issues for the continuation of the IVA.
But there are factors to consider carefully before considering such a route.
There are no fixed rules about the amount of the lump sum – but creditors will want to see that the debtor(s) is doing all they can to pay back as much as they can before they will agree to a Full& Final IVA. Generally speaking, it is not the debtor’s right to offer part of the lump sum. They have to do all they can. There are exceptions – notably in connection with redundancy. It is not unreasonable to keep back enough of the lump sum to last a number of months without a job. And of course, if family or friends are helping they will be limited in what they can provide. But if someone were to win the lottery, or release a pension fund, or reportage their property – they would need to be willing to offer the full amount to the lump sum IVA.
Furthermore, in a lump sum IVA, debtors still need to provide sufficient evidence about income and outgoings to demonstrate that they don’t have any available monthly monies to offer to the creditors. If someone had a lump sum and a monthly disposable income then creditors would understandably want both. This is part of the “doing the best you can” principle. So there are no real shortcuts in the paperwork required to make the proposal.
Finally, a lump sum IVA dies not clear the credit file any quicker than a monthly payment IVA. Both types stay on the credit file for 6 years from the start date.