When shopping around for a company that can help you set up and administrate an individual voluntary arrangement (IVA), you will discover quickly that there is a cost associated with an IVA.
You may find companies that say they can set up an IVA for you fee-free, but this is a red flag. There are a number of expenses involved with creating and maintaining an individual voluntary arrangement. If a company claims they do not charge you any fees, they have no intention of providing you with a real IVA—or they will look for another way to charge you money.
You should only ever do business with a company that is upfront about the fees that they charge for your IVA.
There are two more issues you should be aware of, and that is the cost of the IVA and when that cost is charged to you.
Average Costs for IVAs
Fees for IVA can vary, but you generally can expect the nominee fee to be around £2,500, and the annual supervisor fee to come out to around £1,000. The nominee fee is a setup fee, and the annual supervisor fee is a maintenance fee. Along with these two fees, there are also additional costs known as disbursements. These are costs you’ll owe to third parties in association with your IVA, for example the registration fee you’ll pay to the Insolvency Service.
Knowing these numbers is important because it gives you a ballpark estimate for what you should expect to pay for your IVA. Again, you can and should expect some variance from company to company, but if a company is charging substantially more or less, you should probably go somewhere else. Just as there are companies that charge too little or nothing (and thus cannot be offering you anything real), there are also companies that charge customers exorbitant fees.
When Do I Have to Pay My IVA Fees?
When you pay your IVA fees is something which may vary from company to company. There are companies which charge all the fees for the IVA upfront. This of course would be a significant financial burden (or even an impossible one in some cases), but it is something you can easily avoid. Simply steer clear of these companies and choose to do business with an insolvency practitioner (IP) that will let you pay your IVA fees as part of your monthly payments.
How your IVA fee payments are structured depends on the company you are working with, but commonly, the first five payments you make toward your IVA will go toward paying your IVA setup fees. From that point forward, there is a split percentage-wise between your creditors and your IP. Usually 15% of the lump sum monthly payment you make goes toward your IP and the maintenance of your IVA, while the remaining 85% is divided amongst your creditors.
This system works out for everyone. The IP gets what they need to set up and maintain the IVA. Your creditors get the payments they have agreed upon. You get to pay a monthly amount you can afford without worrying about paying fees on top of that amount; it is all integrated so that you can move forward with your life immediately after the creditors accept your IVA proposal.
Basically, this means that even though your IVA has a cost, it is less money which will be going to your creditors every month for the duration of the plan. In that sense, so long as your IVA is successful, you will not really be losing anything.
How IVA Plan Handles IVA Fees
If you decide to contact IVA Plan to set up an individual voluntary arrangement for you, here is what you can expect:
- The fees we charge for your IVA will be in line with industry standards.
- The fees will be packaged into the monthly lump sum which you pay, not charged upfront. This means you do not need to worry about whether you can afford our services.
On top of that, we offer a free initial consultation. This consultation is confidential and there are no strings attached; you are under no obligation to commit to an IVA.
If you schedule a consultation, you will have a chance to meet with one of our licensed insolvency practitioners. At the meeting we will discuss your financial situation in-depth and review your income, monthly bills, and debts. We will figure out which of your debts may be eligible for inclusion in an IVA and whether an IVA will be the best fit for you with your job and assets.
If we determine that an IVA would be the right choice for you and you are comfortable going forward, we will draft up a proposal to present to your creditors. If we discover another debt solution may be a better fit for your situation, we will make additional recommendations to set you up on the path toward financial recovery.
Full details about our fees can be found here.