How long does an IVA last?
Different Types Of IVAs
Technically, there is no fixed time limit for the duration of an IVA, but in the vast majority of cases your IVA will fall into one of two groups.
Either a ‘Contribution based IVA’ or a ‘Full and Final Settlement’ IVA.
Contribution based IVAs
The vast majority of IVAs are based on having a 5 year term, or 60 monthly contributions.
The size of the IVA contributions are determined before the IVA begins, as is the term of the IVA.
Once the IVA has reached the end of the pre-agreed term it will be concluded and any outstanding debt will be written-off.
Since the introduction of the IVA protocol in February 2008, there are some occasions where an IVA may have to be extended by a further 12 months, from 5 years to 6 years.
This extension would only be required if the IVA applicant was a homeowner who had equity greater than £5,000 in the value of their home which they were unable to release through a remortgage.
The extension of the IVA would be in lieu of the trapped equity and, once the 12 extra payments had been paid, the IVA would conclude as normal.
If you would like to learn more about the contribution based IVA option, click here.
For more information on the IVA equity clause, click here.
Full and Final IVAs
A Full and Final IVA can consist of just one payment.
It allows an IVA to begin and immediately conclude with the introduction of a lump sum payment, which creditors agree to accept the payment as a full and final settlement of all the outstanding debts.
The funds for the Full and Final IVA can be introduced by a 3rd party, or from the proceeds from the sale of the applicant’s own assets.
The Full and Final IVA benefits from the same legally binding terms and conditions as the contribution based IVA.
Namely, it freezes Interest, stops late payment charges and protects against creditors taking any legal action for the recover of the debts.
The IVA concludes after the introduction of the funds, with any remaining unpaid debt being written-off.
If you would like to learn more about the Full and Final IVA option, click here.
If you are considering entering an IVA and are looking for help and advice, call our helpline now on 0800 856 8569 and speak to one of our professional IVA advisers.