A Guide To Lump Sum IVAs

When you start thinking about a Lump Sum Individual Voluntary Arrangement, there are many factors to consider. This is one of the things that people will do as a way of working with their creditors, but it is not for everyone. In fact, Lump Sum IVAs are difficult to bring to your creditor because the circumstances required for them are relatively rare among most people with standard personal debt. With that in mind, what are some things that might qualify for a Lump Sum IVA?

How Do I Qualify For A Lump Sum IVA?

The most pressing requirement when it comes to putting forth an IVA proposal is that the debtor has to make it clear to creditors the nature of the arrangement. What that means is that the IVA has to be the best possible offer that a debtor can make to the creditor and showing this can sometimes be markedly difficult.

The standard form of IVA would be paid out over the course of five years, with a payment being made each and every month. Likewise, the person with the debt would need to take all of their available equity that they might get through an additional mortgage. For creditors, these five year agreements are excellent, because they statistically provide the optimum return. Sometimes, this is not a good option, though. Some customers just don’t have the ability to make that monthly IVA payment, in which case other means of paying off the debt have to come into play.

In cases where a Lump Sum IVA is approved, there is generally a circumstance where the debtor can get his or her hands on a large amount of money quickly. This might be through an inheritance or some other sort of benefactor. Additionally, property could be sold or a second mortgage could be undertaken to get a large amount of equity out of the home. These things can provide a large enough lump sum that it will it entice creditors to take a look at the offer. In many cases, this will give them a chance to get lots of value back on the loan without having to wait 60 months.

So when are these Lump Sum IVAs most popular? It usually happens when a debtor just can’t make solid income regularly. In order to make the typical monthly payments, you need steady income to be flowing in. This isn’t possible for a lot of people. For instance, if a person is about to retire and they won’t have their usual means of income, they might use their severance package to make a large lump sum payment right at the beginning.

Likewise, there are many instances where people use other people’s resources in order to make it work. Many parents will help their kids in this way by taking out a second mortgage on their home. This is something that can provide advantages to all parties in the deal. For the creditors, it is a way of getting something right away and taking away the risk associated with a long-term agreement. For debtors, this is a way of reducing some of the fees that will add up when you go with a typical five-year IVA.

When the circumstances are right for a Lump Sum IVA, many people choose to go with bankruptcy instead, because it provides a lower cost. This is one of the reasons why these agreements have been somewhat uncommon, though they do offer their advantages to people with the means to make them work.