IVA Cost & Fees

How Much Does An IVA Cost?

An IVA (individual voluntary arrangement) is not free. Legally you cannot set up your own IVA. The insolvency practitioner who will set up your IVA will charge a fee.

This fee is normally taken as regular installments from the payments you make towards your IVA (debts). The fee is to cover the cost of the advice offered by the insolvency practitioner, the time spent putting together the legal aspects of the IVA and negotiating with your creditors, also managing the IVA once it is set up.

Is there an IVA application set up cost

When you are choosing which insolvency practitioner to work with be sure to choose an insolvency practitioner who does not charge upfront fees. We are one of the many companies that offer free debt advice and choose not to charge you upfront for our service

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"People entered an IVA (Individual Voluntary Arrangement) in 2020"

How Much Does An IVA Cost Each Month

The monthly payment you have to make into an IVA is based on your disposable (or surplus) income. This is calculated by completing your household income and expenditure.

For example, your total income may be £1,500 per month (including benefits) and your total expenditure is £1,400 therefore your disposable income (IVA payment) will be calculated at £100 per month (£1,500 less £1,400 = £100).

You have to pay 100% of your disposable income into your IVA, make sure that your budget includes all your living expenses including all regular expenditures either weekly, monthly, or annually e.g car insurance or council tax

IVA monthly payments

Generally speaking, you cannot dictate a low monthly IVA repayment but this is clarified from your income and expenditure. If your disposable income is not sufficient to make the level of repayment needed then you may need to consider alternative options

You may be able to get support from either your spouse or partner to make the required contributions on your behalf, this is particularly for people who have no income of their own.

Alternatively, you or a third party may be able to make a cash lump sum payment (full and final IVA), this type of arrangement does not require monthly payments into the IVA.

Will my IVA payments ever change?

Your IVA payment is not fixed. It can go up or down during the term of the IVA. If your income rises permanently your disposable income may also increase. In this situation, your payment will also go up.

If your income falls it may be possible to reduce your payments as long as the IVA remains viable. However, in return, you usually have to extend the Arrangement.

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    IVA Cost and Fees Breakdown

    IVA Nominee Fee

    A nominee fee is charged as a cost to help set up your IVA, This cost includes preparing your IVA proposal and holding your creditors meeting to get your IVA approved. Depending on whether your creditors agree your insolvency practitioner can charge on average your first five monthly contributions or between £1,200 to £2,000 as a fee.

    Your IVA can be rejected by your creditors on this occasion they may ask your Insolvency Practitioner to reduce the nominee fee before an IVA is approved

    IVA Supervisor Fee

    Once your IVA is approved, a monthly supervisors fee of 15% will be charged on all future realisations. The supervisor fee covers all ongoing costs of your IVA.

    An Insolvency Practitioner will supervise your IVA for the duration of an IVA normally a 5 year period, act as a go-between making sure your IVA is sustainable, and are there to help you with any potential changes in your personal circumstances

    You will normally have a personal supervisor who will manage the day to day running of your IVA, furthermore, your supervisor will conduct a yearly review once a year throughout the term of your IVA

    IVA Disbursement Cost

    Disbursement costs are paid to third parties, the cost covers essentials such as insurance, software, and regulatory fees. 

    These expenses incurred are re-charged directly to the IVA case, below is a list of the typical disbursements incurred in Individual Voluntary Arrangements:

    Fee when referred for an IVA by courts

    If the courts have referred you for an IVA during bankruptcy proceedings, you will have to pay a fee of £335 from your bankruptcy petition deposit to your insolvency practitioner. You cannot get Legal Aid to help with setting up an IVA.

    Can you get help with IVA fees

    You cannot get legal aid or grants to help set up an IVA

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    What is an IVA?

    An IVA (Individual Voluntary Arrangement) is a formal agreement made between the person in debt and their creditors. Once you enter into an IVA your creditors can no longer take further action against you to recover any outstanding debts, All interest and charges associated with your debts are frozen.

    All IVAs are set up and managed by an Insolvency Practitioner (IP), An IVA is a form of insolvency that can potentially right off up to 90% of your debts and is also an alternative to bankruptcy.

    In an IVA a single payment is agreed with your financial situation taken into consideration, The payment is then divided between the unsecured creditors over a set period of time (usually five years), after which any remaining debts are written off.

    Once you enter into an IVA (individual voluntary arrangement) your creditors are legally bound by the terms and conditions imposed by an IVA, These include stopping to take any further action or contacting you directly.

    Whilst there are no legal maximum or minimum amounts you must owe to get an IVA, Usually, you must owe at least £5,000 to get your creditors to agree to the IVA. You can owe this amount across more than one debt, with more than one creditor.

    At the end of your IVA, Any debt remaining will be written off and you will become debt-free.

    An IVA is open to residents of England, Wales and Northern Ireland. Scottish residents can find support in the form of a (PTD) Trust Deed or also known as a Protected Trust Deed.

    Who can get an IVA?

    An IVA (individual voluntary arrangement) is normally only suitable for people who are struggling to maintain payments to their current debts and have a regular income.

    In order to get an IVA, you must have spare income after you have met your essential living costs each month.

    Your creditors will be obliged to agree to an IVA if you meet the other criteria needed to get an IVA plan. Your insolvency practitioner will be able to offer you more specific advice once they know your circumstances.

    In order to qualify for an IVA, you must reside in England, Wales or Northern Ireland. You will also need the minimum requirements:

    ▪️ Have £5,000 or More of unsecured debt

    ▪️ Owe money to two or more creditors

    ▪️Live in England, Wales or Northern Ireland

    ▪️ Maintain a payment of a minimum of £70 per month

    Debts included in an IVA

    ▪️Credit cards

    ▪️Unsecured loans

    ▪️Payday loans

    ▪️Catalogue debts

    ▪️Store card debts

    ▪️Personal loans

    ▪️Overdrafts

    ▪️Utility bills

    ▪️Tax credit

    ▪️Benefit overpayments

    ▪️Debts to family and friends

    ▪️Other outstanding bills

    Debts not included in an IVA

    ▪️Mortgages

    ▪️Hire purchase agreements

    ▪️Debts incurred through fraud

    ▪️Court fines

    ▪️TV licence arrears

    ▪️Student loans

    ▪️Child support arrears

    ▪️Other secured loans

    How does our IVA calculator work?

    ▪️Based on the details you provide, the IVA calculator will determine whether you qualify for an IVA or not

    ▪️It will also calculate the amount of debt you can write off with an IVA

    ▪️Our IVA calculator will send your results to your dedicated adviser

    ▪️We do not charge any setup fees

    IVA FAQs

    Who can get an IVA?

    An IVA (individual voluntary arrangement) is normally only suitable for people who are struggling to maintain payments to their current debts and have a regular income.

    In order to get an IVA, you must have spare income after you have met your essential living costs each month.

    Your creditors will be obliged to agree to an IVA if you meet the other criteria needed to get an IVA plan. Your insolvency practitioner will be able to offer you more specific advice once they know your circumstances.

    In order to qualify for an IVA, you must reside in England, Wales or Northern Ireland. You will also need the minimum requirements:

    Have £5,000 or More of unsecured debt

    Owe money to two or more creditors

    Live in England, Wales or Northern Ireland

    Maintain a payment of a minimum of £70 per month

    Which debts can be included in an IVA?

    All unsecured debts can go into an IVA. Here are some examples of the debts you can include:

    Credit cards – Here are a few examples: Vanquis, Barclays, Natwest, Lloyds, HSBC, Tesco, Capital One

    Unsecured loans – Barclays, Lloyds, Tesco, Wonga, Adverse Credit Loans Apply now

    Payday Loans – Wonga, Lending Stream, Amigo, Satsuma, QuickQuid

    Catalogue and store card debts

    Credit Cards

    Personal Loans

    Overdrafts

    Gas, electricity, and water bill arrears

    Tax credit/ benefit overpayments

    Debts to family and friends

    Other outstanding bills

    What are the pros and cons of an IVA?

    Pros of an IVA:

    ▪️ No upfront fees.

    ▪️ It’s affordable. You only pay back what you can afford and that is normally only an agreed percentage of your debts.

    ▪️ You only make a single payment each month and that payment is distributed to creditors on your behalf.

    ▪️ You can be debt free, usually after 5 years.

    ▪️ All creditors must agree to the terms and conditions of the IVA, once approved. You are protected by the rules and regulations of the agreement.

    ▪️ By law, all interest and charges are frozen as long as you maintain your payments.

    ▪️ Creditors will not be able to excessively pressure you while they are under the influence of the legally binding IVA.

    ▪️ You won’t be forced to sell your home. Your home is a protected asset in an IVA.

    Cons of an IVA:

    ▪️ IVAs can be refused. Your creditors can refuse your IVA proposal but, in most cases, we can negotiate with your creditors to get your IVA approved.

    ▪️ An IVA is a formal agreement. You need to make sure you comply with the terms and conditions attached to an IVA.

    ▪️ Your monthly repayments may leave you with a tight budget while your debts are being repaid.

    ▪️ It will affect your credit score. IVAs remain on your credit file for 6 years from the day they starts. Some IVAs can last longer, however, and this will show on your credit file for longer.

    ▪️ Not all debts can be included in an IVA. Some examples of these debts include student loans, child support and maintenance, magistrate court fines, and social fund loans. However, an allowance can be given to enable you to continue repaying these specific debts.

    ▪️ If you fail to make the payments due under the terms of your IVA then your arrangement could fail.

    What is the process of an IVA?

    An IVA (Individual Voluntary Arrangement) was introduced as part of The Insolvency Act 1986 to help debtors come to an arrangement to pay debts over a set period of time as an alternative to bankruptcy.

    An IVA is a legally binding agreement made between a debtor and his/her creditors, due to the legality and regulations imposed on Insolvency Practitioners there is a set process each IVA application must follow:

    ▪️Complete A Review & Budget

    ▪️Prepare Your Proposal

    ▪️Meeting of Creditors (MOC)

    What's the cost of an IVA?

    An IVA (individual voluntary arrangement) is not free. Legally you cannot set up your own IVA. The insolvency practitioner who will set up your IVA will charge a fee.

    This fee is normally taken as regular instalments from the payments you make towards your IVA (debts). The fee is to cover the cost of the advice offered by the insolvency practitioner, the time spent putting together the legal aspects of the IVA and negotiating with your creditors, also managing the IVA once it is set up.

    What if I miss an IVA payment?

    Missing your IVA payment can be very risky, At all times you must keep your insolvency practitioner up to date with your current financial situation. Late payments may be acceptable if you have a good enough reason to why this has happened

    Once you have missed 3 payments or equivalent then your practitioner will send you a ‘Notice of Breach’, Normally you will be allowed between one and three months to correct the problem explaining the missed payments and paying as soon as possible. Once you do this, no more action will be taken against you

    Talk to your practitioner as the terms of your arrangement may be changeable but they can also terminate your IVA or apply to the court to make you bankrupt

    You should always speak to your IVA provider as they will be able to help you in such a situation

    Is my house protected in an IVA?

    If you own your home, you will almost certainly be asked to get a valuation on your house in the last year of your IVA. If remortgaging the house would raise more than £5,000, you will be asked to remortgage it and any money raised will be put towards paying back your debts. You will not have to sell your home. If remortgaging would extend the mortgage beyond its existing term, or put you beyond the state retirement age when it ends, you will not be expected to remortgage the property.

    If you can’t remortgage your house for any reason (refusal by the bank, or complications with a jointly owned property, for example), you will have to pay your usual monthly payments under the terms of the IVA for an additional year.

    It is possible but unlikely that you will be able to keep your home out of the IVA and thus avoid remortgaging it. If your insolvency practitioner feels that you will be able to pay back enough of your debts without including your house in your IVA, they may propose that it be excluded from the IVA when negotiating with your creditors, but this rarely happens.

    An IVA is a preferred option by many homeowners as your asset is protected whereas the alternative of bankruptcy you would in most cases be asked to sell you home.

    If you rent your home, nothing will happen as long as you keep paying your rent but we would always advise for you to check your tenancy agreement before entering any agreement.