How much does an IVA cost? IVA FAQ
Summary: How much does an IVA cost? Those considering an IVA (Individual Voluntary Arrangement) will want to have a clear indication of the set up and running costs of an IVA, and this article seeks to provide such information
There are many sources of information offered by debt advisors to enable a debtor to understand the pros and cons of each potential debt solution. It is important that such advice is given impartially and the debtor given time to evaluate the information received. Pressure to make a quick decision is almost certainly unhelpful and suggests the advisor has another agenda.
Setting up costs
There are many companies that will offer to prepare an IVA for the debtor without any charge or fee. Only an Insolvency Practitioner (IP) can formally propose an IVA to the creditors, but either an IP or a debt solutions company can provide the groundwork. Although some may charge an initial fee for preparing an IVA there is no need to pay anything towards the IVA process until the IVA is actually accepted by creditors.
When an IVA is presented to creditors by an IP, there needs to be a clear explanation to creditors and debtor, of the fees involved in the IVA that the IP will keep from the monthly payments made by the debtor. Broadly these fees fall into 2 categories - the nominee fee and the supervisor's fee.
The IP acts as a nominee before the IVA is accepted (they are nominated by the debtor to act on their behalf). The IP puts forward a figure that they need to be paid to cover all setting up costs from within the IVA payments.
Once an IVA is accepted the IP role changes from that of a nominee to that of a supervisor. Their role now is to administer the IVA. Amongst their duties, an IVA supervisor will hold and distribute payments, deal with any creditor correspondence or concerns (creditors are not allowed to contact the debtor once an IVA has been agreed), deal with assets involved in the IVA and deal with any changes (variations) to the IVA caused by changing circumstances.
Costs to the debtor
All fees paid to the IP within an IVA come from the monthly payment that the debtor makes. The principle behind the IVA is that the debtor is already paying as much as they can reasonably afford to the IVA, so there is no question of paying extra monies to cover fees.