For UK citizens grappling with financial challenges, the Individual Voluntary Arrangement (IVA) has long been a lifeline. A lesser-known but highly beneficial variation of this arrangement is the Partial Settlement IVA, which offers a tailored solution to resolve financial stress while maintaining financial stability.
If you’re considering whether a Partial Settlement IVA is the right choice for you, this blog will explain its key features, benefits, and how it compares to other options like bankruptcy.
What is a Partial Settlement IVA?
A Partial Settlement IVA allows you to settle your debt by paying a lump sum that’s less than the total amount owed. This is particularly helpful for individuals with access to a significant but finite sum of money, such as an inheritance, redundancy payment, or support from family and friends.
Once the agreed payment is made, creditors will write off the remaining debt, giving you a clean financial slate.
Who Can Benefit from a Partial Settlement IVA?
A Partial Settlement IVA may be the right choice if:
- You’re facing overwhelming debt but can access a one-off payment.
- You want to avoid the long-term commitment of monthly IVA payments.
- You prefer an alternative to bankruptcy to protect your financial reputation and assets.
It’s an ideal solution for UK citizens aiming to resolve financial stress quickly and regain control over their finances.
How Does a Partial Settlement IVA Work?
- Initial Assessment: An Insolvency Practitioner (IP) will evaluate your financial situation to determine if this option suits you.
- Proposal Preparation: The IP drafts a repayment proposal for your creditors, outlining the lump sum payment and settlement terms.
- Creditor Approval: Creditors vote on the proposal. Approval requires at least 75% (by value) of creditors who vote to agree.
- Debt Settlement: Once approved, you make the agreed lump sum payment, and the remaining debt is legally written off.
Advantages of a Partial Settlement IVA
- Quick Debt Resolution: Pay off your debts faster than with a standard IVA.
- Maintained Financial Stability: Avoid the long-term burden of monthly repayments.
- Asset Protection: Often a better option than bankruptcy for preserving assets.
- Legal Protection: Creditors cannot pursue you for payments after the IVA is approved.
Is a Partial Settlement IVA Right for You?
While a Partial Settlement IVA offers significant benefits, it’s not suitable for everyone. Factors such as your financial circumstances, the amount you owe, and available resources should be carefully evaluated.
Seeking advice from an experienced professional can help you make an informed decision tailored to your needs.
How We Can Help
At Apply for IVA, we specialise in guiding UK citizens through the IVA process, including Partial Settlement IVAs. Our team is dedicated to helping you resolve financial stress, avoid bankruptcy, and regain financial stability.
Let us help you explore your options and take the first step toward a debt-free future.
Take Action Today
Don’t let debt weigh you down. Contact Apply for IVA today for personalised advice and support. Together, we can determine if a Partial Settlement IVA is the right solution for you.