Costs of Setting up an Individual Voluntary Arrangement (IVA)
As a form of insolvency and reduced payment plan an individual voluntary arrangement, or IVA, can be a great way to escape your debt based worries.
However, they do cost money to set up as you’ll need to pay for the services of an insolvency practitioner to manage your case. If you’re not careful, these costs can get pretty high so it’s important that you’re clued up on all of the relevant charges. We’ll go over exactly what you’ll be paying for when do you set up an IVA.
In this guide:
Does Setting up an IVA cost money?
In order to set up an IVA, you’ll need the services of a financial professional known as an insolvency practitioner, or IP. The IP will generally be either a lawyer or an accountant.
The IP’s services will cost money; though how exactly you will pay this money, and how much it will be, can vary greatly.
What am I paying for?
When an insolvency practitioner manages your IVA, they effectively take on three different but heavily related roles and you are paying for their services in each.
The three roles are as follows:
- Financial Advisor
One of the most basic roles taken on by the insolvency practitioner is as a general financial advisor. Throughout the course of your IVA they will guide you and aid you to make sure that you are managing your money wisely and keeping up with payments. They will also offer advice before you set up the arrangement to make sure that it is the right option for you.
- IVA Monitor
Your insolvency practitioner will be in charge of monitoring your progress once the IVA has been set up and agreed to by the courts and your creditors. They will be in charge of receiving and distributing your monthly payments and dealing with any issues that might arise in the process.
Having an insolvency practitioner as a nominated representative for your case is a legal requirement of setting up an IVA. Fulfilling this role essentially involves dealing with all of the logistics and administrative aspects of the arrangement. This includes formulating the actual proposal and taking it to the courts, processing your application and arranging preliminary meetings between you and your creditors.
How do I pay my insolvency practitioner?
Both the manner and size of the payment that you must give your designated IP can vary greatly but, as previously stated, a cost of around £5,000 is fairly typical.
Some IPs will require payment in the form of a lump sum before the IVA is actually set up. Some will take a portion out of your monthly payments as a fee for themselves. Each IP is different and so you won’t know exactly how much you’ll pay or how you’ll pay it until you ask around.
Estimates and Consultation Costs
If you think an IVA is the right solution to your debt troubles, then the first thing you should do is scour the market and see what the various IPs available will charge.
To see what kind of costs you could expect to pay, head over to our IVA application page, fill in our quick form and we’ll get you in touch with our trusted partners so that you can get set up right away.
Once you’ve got in touch with an insolvency practitioner, they will want to discuss your financial situation with you and work out a basic plan before setting up your IVA. Sometimes this consultation will be free but some IPs will charge you a small fee for this service.
What if I've been referred for an IVA by the courts?
If you have been referred to an insolvency practitioner by the courts as part of a bankruptcy order, then you will need to pay the IP a fee of £335. However, this fee will be taken off the deposit you gave to the court in the first place when you initially petitioned for bankruptcy.