There’s a common misconception that because entering into an Individual Voluntary Arrangement signifies financial difficulty, it also means that they’re entered into completely free of charge. Unfortunately, nothing could be further from the truth – and in fact, they can certainly prove to be quite expensive.
In the first instance, an IVA can only be entered into with a recognised professional, such as an insolvency practitioner, lawyer or accountant – and they’ll naturally have to charge for their time and expertise. Going forward, there’s also the ongoing management of the IVA to consider and this is where the cost can quickly start to rise.
So how much is an IVA likely to cost?
If you’re thinking of going into an IVA, then it’s important to shop around and find the right professional to use since prices (as with any other type of service) will naturally vary quite significantly between each firm. It’s also important to bear in mind that the cheapest quote isn’t necessarily the best option either. You need to find a person or firm you can trust – someone who has good reviews – and someone who understands your individual circumstances.
On average, however, you can expect to pay around £5,000.00 for an IVA arrangement so it’s certainly not a cheap means of getting out of debt.
In terms of repayment options these also vary between each advisor so make sure you’re absolutely clear on what needs to be paid and by when.
Whilst some advisors will ask for payment in full prior to setting up the arrangement others might deal with the fees as part of the IVA arrangement. For the vast majority of debtors, payment up front simply isn’t an option – particularly given the reasons they might be entering into an IVA in the first place. However, if you can negotiate the cost being spread out over the term of the arrangement then repayments will simply be bundled into the one, monthly payment that you then make to your advisor for onward submission to your creditors.
So what do the fees cover?
There are basically three roles your advisor has to manage through the arrangement, namely:
As an advisor – i.e. your chosen advisor will have to speak with you at some length to decide whether an IVA company is definitely the best option for you given your circumstances.
As a nominee – once you’ve both decided that you want to proceed with an IVA, your advisor will put a detailed proposal together for onward submission to the Court. Thereafter, they’ll organise a meeting of creditors so that the proposals can hopefully be agreed (although this isn’t necessarily the case in all submissions of this nature). This particular role can’t be undertaken by a private individual and has to be done by a regulated professional.
As a supervisor – once your proposal has been accepted by the vast majority of creditors then your advisor will continue to manage the arrangement and review it from time to time to ensure it continues to work for everyone involved.