IVA Costs

Introduction to IVA Costs

As many people will be interested in taking out an IVA – Independent Voluntary Arrangement if they are very much in debt, there will be the relief of finding out there is a way out for them, but also the concern as to how much extra this procedure will add to the bill.

The person who makes the arrangements with your creditors is the person who you will be paying. You do not pay your creditors anything extra for being allowed to go through this process. The person you will be paying is called an insolvency practitioner and they are the person who goes through your finances and puts together the document that will be presented to your creditors. They will also chair that meeting and go through the proposals.

They will be with the account from beginning to end as long as they are still employed by the same company. They will also close the account once the 5 years is up and the agreed amount has been repaid. While the account is open they will be the person that the money is paid to and they will make sure that it is passed onto the correct creditors each month. Regardless of who you go to there will be a cost and all charges will be very much the same. It is not possible to set up an IVA without an IP.

Where Does the Money for IVA Costs Come From?

You will pay the fee but it will be decided with the creditors how much of your money goes to the IP. They will obviously want most of the money to go off the amount they are owed so they will be trying to keep the fees down. There is a reason why they are allowed to be involved in this and that is because there is the argument to say they are actually paying the fee. The reason is that the amount paid over the 5 years will very likely not pay off the full debt and anything that is still owed after 5 years will be written off. The creditors are therefore already losing out, but they do know that in the beginning and at least are being repaid something. Once the IPs fee is taken out of the monthly payments they are getting even less to take off the account. This however changes completely if the agreement fails. It is then the total responsibility of the debtor to make sure that the IP is paid. The creditors cannot make the IVA fail as they cannot veer from the original agreement so the only reason for failure will be non payment.

What Is The Cost of an IVA?

There are two levels of payment that the IP can take. Firstly there is the nominal fee and this can range from £1,000 to £1,500. This takes into account the time they spent putting your offer together and making sure that the figures added up. The second part is the supervisor fee and this covers the monthly work carried out making sure the payment gets to the creditors. This is much less and is usually between £400 and £800 per year. This may seem a lot but if it helps clear your debt it may be considered worth it.

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