IVA Early Settlement
I remember the first time I met my boss and he described his vision to lend money to people in an IVA. The purpose of this loan was to allow them to exit their IVA early and get back on track with their finances. I don't mind telling you as someone who has spent 90% of his career in regulated financial services it took every fibre of my professional being to not laugh in his face. Yes, I thought he was absolutely bonkers.
Good Reasons for Insolvency
Like many people, I had a very stereotypical view of people who were insolvent. I thought people got themselves into debt, lived beyond their means and had no one else but themselves to blame for finding themselves insolvent. I fully admit that I was naive and uneducated on the subject.
The reality is people find themselves in an IVA for a whole host of reasons or specific life circumstances. People who have unexpectedly lost their jobs and needed to borrow to put food on the table. People who have lost their husband or wife and seen their household income more than half whilst their bills remain the same. People who have divorced or taken sick. In other words, it is very rare that there isn't a specific life circumstance that has necessitated the need for an IVA.
IVA restrictions
An IVA typically runs for 5 or 6 years during which time the client is expected to adhere to very strict spending limits and must review their financial activity with the provider on an annual basis.
What about the client that had to go into an IVA because he unexpectedly lost his job? 3 years down the line he has a new job, has met all his monthly payments into the IVA, got his finances back on track but is still restricted in what he can and can't do because he is in the IVA. Why should he be forced to remain in the IVA if his finances are under control and he wants to take back full control of his life?
Settle an IVA Early
That's where we come in, we offer a product called the Early Settlement Loan. This loan is specifically for the purposes of proposing an offer to creditors to settle the IVA early typically after the 3rd year. We have very strict criteria for the loan and will typically only lend to clients who have an almost perfect payment history in their IVA and have a specific reason for wanting to exit early such as wanting to get on the property market.
Early Settlement
The offer we put forward equates to 85% of the remaining contributions into the IVA. We feel the IVA provider and creditors should be willing to take a little less as they are receiving their money 2 to 3 years early in a lump sum and don't have to pay any more ongoing management costs for the remaining years. At 85% from a client perspective it allows us to keep the monthly payments affordable in line with their current IVA payment.
From a client perspective the loan is recorded on their credit file so if they make the payments on time each month this will start to leave a positive footprint each month although we don’t claim to be a magic pill for overnight improvement of credit scores.
Once the loan is in place funds are paid directly to the IVA provider who will then initiate their closure process.
We have helped many people with this product and receive regularly positive feedback.
Hopefully having explained a little about the product you don't think we are bonkers!
REPRESENTATIVE EXAMPLE:
Borrowing £2,000 over 24 months at a Representative Annual Percentage Rate (APR) of 39.9% with an interest rate of 39.9% per year will mean fixed monthly repayments of £116.15 and a total amount payable of £2,787.50