What are the costs of an IVA?

IVA costs and fees

We receive a lot of calls and emails from the public asking; "What are the costs of an IVA?".

Please note that for consumers considering an Individual Voluntary Arrangement (IVA); that the licensed insolvency practitioner’s clients are referred or forwarded to by Money Advice Direct for an IVA to process, charge a nominee, supervisor and initial administration fee. This fee structure covers the payments consumers make as well as the Licensed Insolvency Practitioner's fee for preparing, nominating and supervising the IVA. At the outset of the contract or service for an IVA the nominee fee is combined with the supervisory.

Please note that there is also an initial administration fee. Please note that if the IVA fails then the client will be entitled to a refund of the initial administration fee. This IVA fee structure ultimately means there are no extra fees requested apart from the initial administration fee, nominee’s fee and supervisor’s fee. Please beware of other commercial debt advice providers being unclear on their charges. Please note that if a fee is payable at any stage (including nominee/upfront and supervisory/administration fees) this information should be stated prominently in the advertisement, on any website and in any promotional material.

Please note that were consumers are referred for debt management plans these services attract a fee. Finally, please note that your home may be repossessed if you do not keep up with repayments on a mortgage or secured loan.

 

IVA Fees

IVA fees are highly regulated and are always subject to approval by banks and other creditors. If you are referred to do an IVA via this service all IVA fees will be included within the monthly IVA payment. This IVA fee structure ultimately means there are no extra or upfront fees requested.

The IVA fees charged by the insolvency practitioner are illustrated clearly in the IVA proposal and are based on:

• The mount of unsecured debt owed
• The amount that is repaid into the IVA

The following is breakdown of typical payments and fees on an IVA for someone owing £30,000 in unsecured debts and paying £300 per month into an IVA

The IVA fees charged by the insolvency practitioner are illustrated clearly in the IVA proposal and are based on; the amount of unsecured debt owed and the amount that is repaid into the IVA The following is breakdown of typical payments and fees on an IVA for someone owing £30,000 in unsecured debts and paying £300 per month into an IVA; Initial administration fee: £300, Nominees Fee: £1,275, Supervisors Fee:(over 60 months): £45 per month, Expenses: £290 and IVA failure fees: If an IVA fails then the debtor has to pay back the rest of the debts and any IVA costs outstanding.

 

IVA costs explained

Please note that an IVA is an offer to the creditors to pay back part of the debts in full and final settlement. The costs of an IVA reduce the amount that the creditors actually receive. The creditors therefore prefer that the costs of an IVA are as low as possible.

Even though an IVA incurs costs, the overall costs of an IVA are far lower that bankruptcy. From the perspective of a bank an IVA is much preferred.

Costs Associated with an IVA

The nominee and supervisor costs associated with your IVA are taken from the payments you make in to it. We will fully inform you of our proposed fees before you commit yourself to an IVA.

At The UK Insolvency Helpline, we are committed to providing best advice to both the client and ther banks and credit card companies about the costs that may be incurred with an IVA.

Proposed changes to the costs of an IVA

The UK Insolvency Helpline welcomes proposals to reduce the costs of an IVA by streamlining IVA procedures as long as there is no impact on the service provided to consumers. There is wide variation in the costs of an IVA.  This suggests that the IVA market is not working as well as it should be as increasing competition has not substantially driven down the cost of an IVA. This variation of IVA costs is very confusing to the public.

We receive 1000’s of calls from the public who have looked at several IVA firm websites, but could find no mention of the costs associated with the IVA.  The wording on some websites makes it seem as though there is a single fee regime set by the credit industry. Others mention that there is ‘no cost’ to the debtor as the creditor pays their fees. This type of practice has actually led to many IVA firms being reported to the Advertising Standards Authority (ASA).

When advising a client on an IVA full disclosure of IVA costs and fees need to be clear, transparent and disclosed prior to the client signing up to the IVA. Especially when there is a property asset involved.

Homeowners taking out an IVA – The Cost of an IVA

We receive 1000’s of calls from clients who are homeowners looking to take out an IVA. The clients are often being missold an IVA by important facts being deliberately ignored.

There needs to be a consistent, transparent process for dealing with equity in IVA clients properties, as exists in bankruptcy and IVA clients should be made fully aware of the impact of an IVA on their home and any costs associated with this ’before’ entering into the IVA.  This would stop 1000’s of IVA clients feeling badly advised. The savings that will become apparent will be seem relatively small in comparison in relation to the costs associated with an IVA. 

The UK Insolvency Helpline welcomes proposals to reduce the costs associated with IVAs by streamlining procedures where there is no impact on the service to consumers. A simplified IVA should reduce the administrative costs of an IVA and therefore reduce costs to the public.

For more information about the costs associated with an IVA please call us on freephone 0800 074 6918.

If you wish to discuss the Individual Voluntary Arrangement (IVA) procedure and understand how it can help you please complete the following form or telephone freephone 0800 074 6918.

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IVA Guide

• What does it mean if my IVA is not approved?
• What are my options if my IVA is not approved?
• My IVA has been approved, what do I do next?
• My IVA has been approved subject to modification – what does this mean?
• How do I make my IVA contributions?
• My IVA proposal included the provision that I had to sell/realise other assets – what do I need to do?
• I am receiving letters and emails from companies offering me a better solution than an IVA - what are these solutions?
• What do I do if my monthly IVA contribution will be late?
• How do I deal with my creditors once I’m in an IVA?
• How do I deal with additional creditors now that the IVA has been approved?
• What happens if I miss an IVA payment?
• The bank has not transferred my IVA payment - what do I do?
• What happens if I do not inform my IVA supervisor that I can’t make the contribution?
• I'm struggling to make the monthly IVA payment what should I do?
• I've received a 'Notice of Breach' from my IVA supervisor - what does this mean?
• What happens if I’ve missed IVA payments or received a notice of breach and there is no solution?
• Is it possible to finish or settle my IVA early?
• How do I settle my IVA early?
• What is the process involved when offering an early IVA settlement?
• Why would I vary the terms of my IVA?
• What does the IVA variation process involve?
• What happens when the IVA variation process has been approved by creditors?
• What happens when the IVA variation process has been rejected by creditors?
• How does an IVA end?
• Will I receive any correspondence when my IVA has completed?
• If one of my debts has been excluded from the IVA, am I liable to pay the debt after the IVA has completed?
• When does a creditor debt claim have to be received by when completing an IVA?
• What happens if any additional debt claims is received during the IVA closure process?
• How do my creditors get their money in an IVA and what are the IVA dividends?
• Does the money in my IVA account earn interest and if so where does that interest go to?
• Do I get a report or certificate stating the IVA has been completed?
• How does an IVA fail?
• What is the effect of IVA failure or an IVA failing?
• What happens after an IVA fails?
• What are the costs of an IVA?
• Who pays for my IVA?
• What is the IVA process?
• Who takes care of my creditors?
• Will an IVA make me debt free?
• How an IVA benefits my creditors
• Lifestyle changes during an IVA
• Advice on living with an IVA
• Will creditors contact me?
• Will I my IVA fail?
• Completing an IVA
• Getting credit after an IVA
• Can an IVA make me debt free?
• How to boost my credit rating after an IVA?
• IVA vs debt management
• IVA vs bankruptcy
• IVA vs debt consolidation
• IVA vs administration orders
• IVA pros and cons
• IVA definition
• What is an IVA?
• Why choose an IVA?
• Who is suitable for an IVA?
• IVA benefits
• IVA stages
• False IVA adverts
• IVA compared to Bankruptcy
• IVA compared to debt management
• IVA compared to debt consolidation
• IVA compared to administration orders
• How the IVA got so popular and famous
• Things you should know and do before you start an IVA
• Will an IVA make creditor phone calls stop?