The rule of thumb
IVA specialists give the same starting point: your monthly contribution times the months left. iva.org gives £200 a month with 36 months left as about £7,200.00, and PayPlan gives £250 for 20 months as £5,000.00. They describe it as a starting point, not an exact science, and it works best when payments do not change and the money is not from releasing equity.
Debt Camel adds about 12 months for a homeowner with equity, because the IVA would probably be extended: £200 for 32 months is £6,400.00, or £8,800.00 with the extra 12 months. That 12 months is Debt Camel's example, not a rule of the IVA Protocol, so treat it as an estimate.
Worked example: £200 a month, 36 months left
The payments left come to £7,200.00, or £9,600.00 with the homeowner estimate. An offer of £6,000 is 16.67% below the payments left. Funding it with a loan at 39.9% APR over 24 months costs £348.11 a month and £8,354.67 in total, of which £2,354.67 is interest. That is £1,154.67 more than simply finishing the IVA, and the loan payment is above the £200 you pay into the IVA now, so the loan only makes sense if being free of the IVA matters more than the extra cost.
A published loan example
Sprout Loans publishes a £2,000 loan over 24 months at 39.9% representative APR as £116.06 a month and £2,785.50 in total. Under the UK effective-APR convention, the default here, the same loan is £116.04 a month and £2,784.89 in total, a difference of a few pence a month. Choosing APR divided by 12 in the loan APR convention field gives £122.27 a month and £2,934.42 in total, because at 39.9% the two conventions are far apart. Debt Camel describes early exit loans as expensive, around 30% interest in its example, so enter the APR you are actually quoted.
What decides whether creditors accept
There is no standard discount. Creditors compare your offer with what they would probably receive if the IVA continued, and PayPlan says a variation needs agreement from 75% of creditors by value voting. A lower offer generally needs evidence of hardship, which a calculator cannot judge. Offers should come from you, not your supervisor, who must stay impartial.
If your offer is above the payments left, creditors would receive more than by waiting: an offer of £9,000 against £7,200.00 left is £1,800.00 above. Paying creditors in full is a different, early-completion route in the IVA Protocol.
Things to check before you offer
Ask your supervisor for a written settlement calculation, and ask about variation and completion fees, which may apply. The Protocol treats an asset, windfall or inheritance worth more than £500 as something that normally belongs in the IVA. Settling does not remove the IVA from your credit file, which keeps it for six years from approval. Do not release equity or sell a home until the offer is agreed, and avoid offering in the last year of the IVA.
To work out the payment on an ordinary loan, use the debt consolidation loan calculator.
To plan paying a debt off faster, use the debt loan payoff calculator.
UK only
IVAs are a UK insolvency procedure used in England, Wales and Northern Ireland, so this calculator has no US version. The nearest US route, a Chapter 13 plan payoff, is a different calculation. Scotland uses Trust Deeds, which settle differently and are not covered here.
Inputs for the IVA early settlement loan calculator
Loan APR convention
Sets how the loan APR becomes a monthly rate. Effective APR (FCA) is the default and follows the FCA APR rule. APR divided by 12 is how many UK sites work and gives a slightly higher monthly rate.
Monthly IVA payment
What you pay into the IVA each month now.
Months left in the IVA
Payments still to make. A 60-month IVA with 24 paid has 36 left.
Settlement offer
The lump sum you would offer creditors to end the IVA.
Money you already have for it
Savings or a gift towards the offer. The loan covers the rest.
Loan APR and term
The APR on the loan that would fund the rest, and how many months you would take to repay it.
CALCULATOR QUESTIONS
UK IVA early settlement loan calculator questions
How much should I offer to settle my IVA early?
A common starting point is your monthly payment times the months left. For £200 a month with 36 months left that is £7,200.00. Lower offers need evidence of hardship and creditor approval.
Is there a standard discount on an early IVA settlement?
No. IVA Online says there is no standard discount or percentage, and PayPlan says creditors are unlikely to offer further discounts.
What does an IVA settlement loan cost?
A £2,000 loan over 24 months at 39.9% APR costs £116.04 a month and £2,784.89 in total on the effective-APR convention, or £122.27 a month and £2,934.42 in total with the APR divided by 12.
Can a homeowner expect to pay more?
Debt Camel suggests adding about 12 months for a homeowner with equity: £8,800.00 instead of £6,400.00 in its example. Treat that as an estimate.
Will settling early clear my credit file?
No. The IVA stays on your credit file for six years from approval even after you settle it.