Cost of an individual voluntary arrangement
An Individual Voluntary Arrangement (IVA) is a formal and legally-binding agreement between you and your creditors to pay back your debts over a period of time.
An IVA can be flexible to suit your needs but it can be expensive. This is because it has to be set up by a professional, known as an insolvency practitioner. The insolvency practitioner charges fees for setting up and managing the IVA. This page tells you about the cost of an IVA.
Do you have to pay for an IVA?
You usually have to pay for an IVA to be set up. This is because an IVA can only be set up by a professional lawyer or accountant, known as an insolvency practitioner (IP). Their fees can be high and vary depending on the work involved. There are no professional or legal guidelines on what IPs should charge but fees are in the region of £5,000 on average.
How and when do you have to pay?
How and when you pay the insolvency practitioner varies. Some practitioners will ask you to pay in full before setting up an IVA.
Others will deal with the fees as part of the IVA. The fees will be taken from your monthly debt repayments. When you make your monthly payment into the IVA, a portion of the money will go to pay the insolvency practitioner and the rest will go to the creditors.
What do the fees cover?
The IP has three roles throughout the period of the IVA. They will charge you for each of these roles. These are:
- adviser: the IP will advise you on whether an IVA is suitable
- nominee: the IP will help you put together a proposal for an IVA, make an application to the court and hold a meeting with your creditors to get agreement on the proposal. By law, this work has to be done by an insolvency practitioner. You cannot do it yourself
- supervisor: when the court approves the IVA and the creditors agree, the IP will supervise the IVA as it progresses, making sure the creditors get the monthly payments and acting as a go-between for you and the creditors if anything changes.
If you decide you want to set up an IVA, you should ask a number of insolvency practitioners for quotes or estimates on what fees they will charge you. That way, you can compare costs.
Free initial meeting
Some insolvency practitioners may offer you a free or reduced rate initial meeting to talk about whether an IVA is suitable for you. Ask around to see who offers this service.
Fees when referred for IVA by the court
If the court has referred you to an insolvency practitioner for an IVA during bankruptcy proceedings, you will have to pay a fee of £335 to the insolvency practitioner.
The fee will be taken out of the deposit you paid to the court for your bankruptcy petition.
Help with costs
Legal aid is not available for setting up an IVA.