The Fees That Needs To Be Paid For An Individual Voluntary Arrangement

The press is filled with suggestions that people should not pay for debt advice or debt solutions, however an Individual Voluntary Arrangement is never free. There will constantly be a fee to pay no matter what IVA source an individual chooses and uses. The article looks at the foundation for the IVA charges and how it works.

An IVA is a personal appointment taken by a “Licenced Insolvency Practitioner”. Such Insolvency Practitioners commonly come from an accountancy background and have grown their skills to work in the field of insolvency by acquiring hard personal professional qualifications. The administrative workload linked to an IVA is significant, so Insolvency Practitioners usually employ significant numbers of intelligent and often qualified employees themselves to assist with numerous parts of the work involved in the plan.

Therefore the cost of hiring people who will be involved in the Individual Voluntary Arrangement process is crucial. There are also other expenses that are involved 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 initial principal area of time-costs and expenses when setting up an IVA is the process of providing debt advice and then setting up an IVA itself. The IVA advice process involves potentially a telephone consultation 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 IVA the paperwork will need to be 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.

The work involved to this point is all executed after the creditor agreement to the Individual Voluntary Arrangement. At this stage the insolvency practitioner acts as a “nominee” and are asked to give IVA advice by the client and are asked to work on getting the IVA accepted by the creditors. There will be a payment required for the work the insolvency practitioner do, which is payable by the customer and is drawn from the monthly IVA payments.

Once an IVA has been approved by the creditors, the job of the Insolvency Practitioner will change to a “supervisor”. An IVA Supervisor’s work is to handle the management of the IVA case until final completion. This work will include, amongst other things, collecting and distributing payments, conducting IVA reviews, dealing with client and creditor correspondence and closing the Individual Voluntary Arrangement case when appropriate.

Here the IVA fees are known as the “supervisors” fee. Again the fees will be paid by the clients and taken from monthly IVA payments.

IVA fees at the Nominee and Supervisory stages are very strongly controlled by the representatives employed by major creditor organisations. While some difference might exist between different IVA companies, the caps on fees will apply to all and are well-known and understood by specialist IVA providers.

There is a widely known wrong idea that it is the creditors that pay IVA fees. Anyhow this is not true. 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 important to the accomplishment of the Individual Voluntary Arrangement proposal and your financial position in the event that the Individual Voluntary Arrangement later fails.

For further facts please visit our IVA forum where a number of experts are on hand to provide experienced IVA advice. They will be able to answer your questions about IVA fees as well as any other topics connected to an IVA. Other IVA information resources are on hand to ensure that you can find out the answers to any IVA questions that you might have.

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