The fees you pay for an Individual Voluntary Arrangement

The press is awash with recommendations that people should not pay for debt advice or debt solutions. Within the specialist area of IVA advice however the clear well-known fact is that there is no such thing as a free IVA. Fees will apply whatever source of IVA advice you ultimately select and use. In this article we will make clear the basis for those charges and how it works in reality.

An Individual Voluntary Arrangement is a private appointment taken by a "Licenced Insolvency Practitioner". Such Insolvency Practitioners commonly come from an accountancy environment and have developed their skills to work in the field of insolvency by obtaining difficult personal professional qualifications. The administrative workload connected to an IVA is important, so Insolvency Practitioners tend to employ significant numbers of intelligent and often qualified employees themselves to assist with multiple parts of the work involved in the IVA plan.

As a result the fee of hiring people who will be involved in the Individual Voluntary Arrangement plan is important. There are also other expenses that are included such as mandatory insurances and regulatory memberships, communications expenses and common office costs. So IVA services are not run for free, even when they are provided by businesses connected to debt charities that would not charge an individual for any other kind of debt assistance.

The first key area of time-costs and expenditure when setting up an Individual Voluntary Arrangement is the process of providing debt advice and then setting up an IVA itself. The IVA advice process involves potentially a telephone session where fact-finding will take place, a face-to-face meeting if necessary (which it should be for the self-employed at least), provision of written confirmatory advice and the preparation of IVA documentation for signature.

When setting up an Individual Voluntary Arrangement the paperwork will need to pe presented to the creditors for a review and after a follow up meeting it will be decided whether the IVA has been accepted or not.

All of the work to this point has been administered prior to creditor agreement to the IVA. The Insolvency Practitioner is at this action acting as a "Nominee" that has been instructed by their client to provide IVA advice and to work to get the Individual Voluntary Arrangement agreed by the creditors. For this work a "Nominee Fee" will be charged. Such a "Nominee Fee" is payable by the client and is drawn from the agreed IVA monthly payments as they become available.

The role of the Insolvency practitioner alternates from a "nominee" to a "supervisor" when the IVA has been agreed by the creditors. The duty of the "supervisor" is to deal with the Individual Voluntary Arrangement case untill it is finalised. This will involve to collect and distribute the payments, conducting IVA reviews, dealing with the creditor and client correspondence and make certain the IVA case is closed when suitable.

For this work the IVA fees are known as the "Supervisors" fee. Once again the fees are drawn from the payment made into the IVA by the client.

The representatives at important creditor organisations control the IVA fees at the nominee and supervisory levels. There could be some difference between different IVA companies, The caps on fees will be applied to all and are well known and understood by specialist Individual Voluntary Arrangement providers.

There is a widely known misunderstanding that it is the creditors that pay Individual Voluntary Arrangement fees. However this is untrue. As the fees is drawn from the money paid into the Individual Voluntary Arrangement., it is the client who pays for the licenced insolvency practitioner that they direct. It is a beneficial idea to look at the fee levels put forward by IVA providers, this is as they become necessary to the achievement of the IVA proposal and your financial position in the event that the Individual Voluntary Arrangement later fails.