Notwithstanding the idea of who your IVA Supervisor is, there are specific fees associated when entering an IVA. The nature of the IVA and setup process makes the inclusion of such additional How much does it cost for an IVA and IVA Fees.
Like any other service, the Individual Voluntary Arrangement (IVA) is also a debt service, which is why you must require to pay whatever IVA fees and costs are involved. On another thought, individuals entering into IVA already have financial concerns going on. So, if paying the additional IVA costs and fees might add to your financial struggles, it would be best if you choose another debt solution. Or, you can just contact an IVA administrator for Stepchange IVA advice.
How much does an IVA cost?
For any IVA-related concerns like the IVA costs and fees, you can seek IVA help. Anyhow, your assigned Insolvency Practitioner (IP) will explain to you everything about the IVA fees, and other related costs, if any. However minimal the IVA fees maybe, you have to pay for it to propose your IVA, set up your IVA, and its administration costs.
There is no prescribed limit of how much IVA costs should be. It depends on the Insolvency Practitioner’s charges and all the necessary work involved. Regardless, there should be an agreement between you (the debtor) and the creditors on how much the IVA costs should be. These IVA costs are applicable throughout the IVA plan.
What do IVA costs cover?
IVA costs usually consist of two fees category. One is the Nominee’s fee; another is Supervisor’s fee. A brief of them is given below.
IVA Nominee’s fee
The first IVA cost is the Nominee’s fee. This fee covers the Nominee’s time and expertise while assisting the debtor with the IVA proposal to IVA setup. It covers the hard work spent estimating the debtor’s assets and liabilities, income, and expenditure to prepare a satisfactory IVA proposal.
The Nominee or the Insolvency Practitioner themselves act as a Nominee on your behalf and represent you to the creditors. From initiation of the IVA proposal to its approval by the court, the Nominee acts as your representative. And after the IVA is approved, the Nominee takes on the role of a Supervisor.
The average Nominee fee generally stands for about £1,000 to £2,220, depending on the consent of the creditors. While the Nominee’s fee is decided before the IVA proposal and setup, creditors also get the right to amend the Nominee’s fee later. The Nominee fee has to be set up during the first year (preferably within the initial five months) of the IVA arrangement.
IVA Supervisor’s fee
Following the IVA proposal’s approval and the role of an IVA Supervisor is taken up, a monthly Supervisor fee will be initiated with the agreed IVA payments. These IVA fees cover the Supervisor’s specialist work that will apply over the entire IVA term (not more than six years). It also ensures that the IVA will be managed appropriately by the Supervisor. Suppose any noticeable and significant change in the debtor’s financial situation could affect the monthly IVA contributions. The Supervisor has to address such changes and manage the debtor’s account as needed.
It is the Supervisor’s responsibility to perform annual reviews of the debtor’s payment and the creditor’s receipt of the same until the IVA is in motion. The average Supervisor’s fee is limited to not more than 18% of the total IVA contributions made by the debtor over the IVA’s duration. The Supervisor’s fee is to be paid only after paying the entire Nominee’s fee.
Disbursements are not directly included in the IVA costs. Instead, these are the payments to be made to the third parties; whoever involved sets up the IVA. This payment covers external expenses like the IVA registration fee.
How and when to pay the IVA fees and costs?
Amidst all the various IVA service providers, there is a slight variation in the IVA fee structure. There is also a tiny chance that IVA companies may ask you upfront to pay the necessary IVA fees and other related costs. But for a bit of IVA advice, you should refrain from paying upfront IVA fees.
The reason why paying upfront IVA fees is not advisable is because not every IVA service provider asks for that from their customers. Furthermore, after your IVA is set up and has obtained the court’s approval, your monthly IVA payments will include all the other IVA costs.
Now, you might think that the inclusion of additional IVA fees and costs will increase the agreed monthly IVA payments. However, that is not the case, and you will receive crucial IVA advice before the approval of your IVA proposal.
The monthly IVA payment amount will not increase even after adding IVA fees. The creditors must consent to lower your regular repayment amount to cover the other IVA costs. To sum it up, you will still end up paying the same agreed monthly amount as per your IVA proposal.
Are you still confused about How much does it cost for an IVA and monthly IVA payments work? Your IVA administrator will be there to give you any IVA help. So what literally happens is your Insolvency Practitioner (IP) will break up the agreed IVA amount to cover both the creditors’ repayment money and the IVA fees. So, if there are any additional IVA costs, you will still end up paying the same amount each month.
If you want to enter into an individual Voluntary Arrangement (IVA), you have to bear all the additional expenses in the form of IVA fees and costs to set up your IVA. You should consult a number of Insolvency Practitioners for IVA advice and IVA quotes. Prior knowledge of the IVA estimates and IVA costs will help you better compare IVAs. However, know that there is no legal aid for IVA set up.
All in all, the IVA fees and costs are paid to the Insolvency Practitioner for IVA set up and its management throughout the specified timeline.