IVA Early Settlement — Is It Worth It?

IVA Early Settlement — Is It Worth It?

An Individual Voluntary Arrangement (IVA) remains a vital tool for debt resolution in the UK. Over a fixed term, typically five years, individuals can repay a portion of unsecured debt through manageable monthly installments.

Upon IVA completion residual debt is written off, and a certificate of completion is issued. While the prospect of settling an IVA early exists, careful consideration of the pros and cons is essential in the current financial landscape.

Pros and Cons of Settling an IVA Early:


  • Liberation from IVA constraints, no annual income proof required.
  • Retention of pay increases or windfalls post-settlement.
  • Initiation of credit score rebuilding, offering a head start before IVA removal from credit reports.


  • Despite early settlement, the IVA stays on the credit report for six years.
  • Potential impact on immediate credit access, especially for substantial amounts like mortgages.

Navigating Early Settlement:

Proposing a lump sum to creditors for early settlement necessitates their agreement to waive further monthly payments. The process involves communicating your intent to the Insolvency Practitioner (IP), who assesses the offer’s viability and arranges a variation meeting if needed. A 75% creditor approval is crucial for the lump-sum offer to proceed.

Factors Influencing Settlement:

Clear reasons for early settlement, coupled with transparent funding sources, are imperative for creditor acceptance. Typically, a third-party gift, such as an inheritance, facilitates early completion. The IP requires detailed information from the benefactor before presenting the variation to creditors.

Determining Settlement Amount:

The unique nature of each IVA makes predicting a settlement figure challenging. The amount required depends on the remaining balance, with offering an amount close to what is owed recommended. Transparent communication with creditors is key to successful negotiations.

Utilising Funds for Settlement:

Gifts from family or friends commonly fund early settlement, but post-three years, considering a loan is an option. Caution is advised, and independent advice should be sought to ensure a loan aligns with the initial goal of regaining financial control.

Windfalls during an IVA typically must be paid in full. While extra funds don’t automatically reduce the agreement’s length, a substantial lump sum may expedite the process, leading to completion without the need for a variation.

Homeownership Considerations:

For homeowners with equity, potential remortgaging obligations arise six months before IVA completion. Equity under £5,000 may exempt remortgaging, while amounts exceeding £5,000 might require additional monthly payments, extending the term by 12 months.

Looking Ahead:

If you’re contemplating early settlement or exploring IVA as a debt solution, reach out to Debt Movement. Our knowledgeable guides are ready to offer friendly, professional assistance tailored to your unique financial circumstances.”


At Debt Movement we provide professional debt guidance and solutions that help you move out of debt. We offer non-judgemental financial guidance to relieve the burden of financial strain and offer support on your journey to financial freedom. Request a free call back today.