For people struggling with debt, it’s natural to worry about how much an Individual Voluntary Arrangement (IVA) might cost. The good news is that IVA costs and fees are included in your monthly payments, so you won’t face any unexpected bills or upfront charges to get started.
The Cost of IVAs: Who Pays for an IVA?
If you’re considering getting an IVA, there are two main costs to understand – the debt repayments themselves and the professional fees.
Who Pays for the Debt?
You’ll make one affordable monthly payment towards your debt based on how much you can realistically afford after essential living costs. This payment goes towards settling your debts over the term of your IVA, typically 5-6 years. Once you complete the arrangement, any remaining qualifying debt is written off*.
Your monthly income and expenses are carefully reviewed to work out how much you can pay without financial hardship. If your circumstances change and you can’t maintain payments, you can request adjustments or a payment break.
Who Pays the IVA Fees?
In practical terms, your creditors pay the fees.
Here’s how it works: each month, you pay into your IVA through your Insolvency Practitioner. The fees will be taken from this payment, and the remainder is distributed to your creditors. This means the proposed fees come from the IVA fund itself.
However, if you receive a windfall, like an inheritance, or your monthly income increases significantly, you may pay more into the arrangement. In rare cases where debts are paid in full, you would also cover the fees.
How Much Does an IVA Cost to Set Up?
IVA costs depend on the Insolvency Practitioner that you contact, and your individual circumstances, including:
- The level of debt you have
- Your affordable monthly payment amount
- The number and type of creditors you owe
- The complexity of your financial situation
Because an IVA is a legally binding agreement, you must work with a licensed Insolvency Practitioner who will handle the IVA process. More complex cases require additional work, which affects the fee structure.
At NDH Financial, we don’t charge any upfront fees. All costs are included in your monthly payments, making debt help accessible when you need it most. Apply now.
Windfall Clauses
In the vast majority of cases, the IVA will be approved with a windfall clause, where you’ll need to contribute any unexpected money received during the arrangement if it is more than £5. This includes inheritance, lottery winnings, and tax rebates. You will also be asked to contribute 50% where your earnings exceed the amount stated in your financial statement.
IVA Fee Structure: What Do the IVA Fees Cover?
The total cost is split into three parts: the Nominee Fee, the Supervisor Fee, and expenses. Some practitioners charge an Advisory Fee, but this is separate from the formal IVA costs.
Advisory Fees
Before you commit to an IVA, your Insolvency Practitioner reviews your circumstances to determine if an IVA is right for you. This assessment ensures you’re choosing an appropriate solution and helps you understand what to expect.
At NDH Financial, we provide consultations with no upfront costs, and do not request any payments before the IVA is approved, making the IVA process as affordable and accessible as possible. Apply today.
Nominee Fees
During the initial stages, your Insolvency Practitioner acts as the Nominee and prepares your IVA proposal. The Nominee’s fee covers:
- Assessing your financial situation and repayment capacity
- Preparing and issuing the proposal to your creditors
- Administering the creditors’ decision procedure
- Negotiating with creditors during the approval process
This fee is usually a fixed amount, though it may vary depending on the complexity of your case.
Supervisor Fees
Once creditors approve your IVA, your Insolvency Practitioner becomes the Supervisor. The Supervisor’s fee covers ongoing administration:
- Collecting and distributing your monthly payments
- Dealing with queries from you or your creditors
- Completing annual reviews of your finances
- Providing annual progress reports to you and creditors
- Handling closing formalities when your IVA completes
This fee can be a fixed amount, a percentage of funds paid into the IVA (typically 15%), or a combination of both.
Expenses
Expenses cover costs paid to third parties that are required as part of the arrangement:
- Statutory insurance
- Software licences
- Document portal access
- Postage
- Registration fee for the Individual Insolvency Register
What Do Creditors Approve?
The proposed fees must be approved by your creditors when they vote on your IVA proposal.
They may accept the fees as presented or request their own structure. Common creditor-approved fee structures include:
- Fixed total fee cap of between £3,650 and £4,200 for all fees and expenses, plus 15% of any additional realisations beyond monthly contributions
- Fixed Nominee fee of £1,000, plus Supervisor fee of 15% of the amount paid into the arrangement
For most IVAs, total fees range from approximately £2,500 to £4,500, depending on your circumstances and what creditors agree.
Additional Court Costs
In some situations, you may need to apply to court during the IVA process:
- Interim order – If creditors are continuing with legal proceedings or a bankruptcy petition, an interim order can stop this pressure from creditors while your IVA is being set up
- Omission from register – If there’s a risk of violence, you can apply to have your details removed from the public Individual Insolvency Register
These court applications require a separate fee paid directly to the court before you can proceed, and must be paid in full before the IVA can proceed.
How much will my IVA payments be?
Your monthly payment is based entirely on your affordability. After accounting for all essential expenses like rent, utilities, food, and travel, whatever remains is what you can reasonably contribute.
Your Insolvency Practitioner will complete a detailed income and expenditure assessment to work out how much you can pay without causing financial hardship. This makes sure your IVA payment is sustainable throughout the 5-6 year term.
If your circumstances change – whether your income drops or essential expenses increase – you can request a payment review. The aim is always to keep your IVA manageable while making progress towards becoming debt-free.
Looking for a debt solution? Apply for an IVA today.
Before making any large financial decisions, it is important to discuss every aspect of debt with an expert to see which debt solution might be the most suitable for your needs.
At NDH Financial, we make the process as transparent as possible, steering clear of using technical jargon that can be difficult to understand.
If you are considering an IVA, contact NDH Financial today.
