How much does an IVA cost?

Hearing that there are fees for an individual voluntary arrangement (IVA) when you’re already struggling with debt may be offputting. But before you decide an IVA isn’t for you, it’s important you understand how those fees work and why they won’t affect how much you pay unless your financial situation improves to the point where you need to repay all of your debt or your IVA fails.

An IVA allows you to repay a proportion of your debt and have the rest written off. You will usually be asked to make monthly payments for a set period – typically five or six years. Afterwards, any unpaid debt will be written off.  

The decision on how much you should pay each month will be based on a detailed examination of your finances. You will be left with enough money to cover reasonable, essential expenses. This includes food, clothing, household bills, travel, getting your hair cut, going to the dentist and even a modest amount for socialising. Whatever is left over – your disposable monthly income – will be paid into your IVA.

The fees your IVA provider takes are taken from this monthly payment and agreed between your creditors and your insolvency practitioner. 

IVA costs can vary between companies. If you get an IVA from our sister company, Freeman Jones, you’ll only be charged a fee if it’s accepted by your creditors.  

Freeman Jones usually ask for £4,300 to cover all the fees and costs of an IVA. But it is always up to the creditors to decide how much would be allowed and they may ask for a change before agreeing to your IVA. 

The total fees you’ll pay and when you’ll pay them will be set out in your IVA proposal.  

IVA fees cover the nominee and supervisor fees, as well as expenses.

Nominee fee

This is the fee for arranging your IVA. It includes the cost of:

• preparing your IVA proposal which sets out the terms and gives your creditors a detailed look at your finances
• organising the creditors’ meeting where the people you owe money to decide whether to accept your IVA proposal and say if they want any changes 

Your creditors decide when the nominee fee is taken. They usually ask us to either:

• take the nominee fee before they start receiving payments towards your debts; or
• start taking the nominee fee from your third payment (they agree to accept smaller payments towards your debt until it has been paid in full) 

Whichever option they choose, your regular monthly payment will stay the same.

Supervisor fee

This covers the running costs of your IVA.  

Expenses

These are any other costs related to running your IVA e.g. postage or insurance. 

If you cancel your IVA within the first 14 days, you’ll get a refund of any fees you might have already paid. 

If your financial situation improves to the point where you’re able to repay your original debts in full, you’ll still need to pay for the fees that were agreed when your IVA was approved. 

If your IVA fails, any fees you’ve paid up until that point won’t be refunded. But your supervisor will do everything they can to make sure this doesn’t happen.

So it’s important to talk to them if you’re having problems keeping up with your payments. There are a number of things they can do to help. 

If your issues are short-term, they may be able to arrange a payment break. And if there’s been a long-term change to your financial situation, they can try to negotiate a variation of your IVA i.e. ask your creditors to accept reduced payments.