An Individual Voluntary Arrangement (IVA) is a way of helping you to cope with debts that you can no longer manage. As long as 75% of the value of your creditors agree to the IVA, you will have to make a set payment for five years. This agreement has to be administered and managed by an insolvency practitioner, so what are the costs of an IVA?
What Does An Insolvency Practitioner Do?
Insolvency practitioners are very well trained and highly regulated people or companies who will assist individuals or businesses to sort out their finances when they become insolvent. They have to pass exams and gain experience to be able to obtain the licence they need to carry out this work. From the point of view of IVA Debt management, they will collect the monthly payment that has been agreed with your creditors, and distribute it accordingly.
Of course, they do not do this free of charge, they have to make a living just like everyone else. However, often their fee is part of your monthly payment, which is why some people get the impression that an IVA is free.
You just have to be aware that if your IVA fails for any reason, any fees you have already paid will be kept by the insolvency practitioner, and not returned to you.
You Have to Use an Insolvency Practitioner
You have no choice in this matter, by law you cannot arrange an IVA yourself, you have to use an insolvency practitioner. The first thing you need to do is to take advice as to whether you qualify for an IVA and if it would be the best thing for you to do.
Assuming that is the case, the insolvency practitioner (IP) will arrange a meeting with your creditors to discuss the proposal they have put together regarding your financial affairs. If they have the creditors’ approval, they will apply to the courts to be allowed to put your IVA in place. Once the court and your creditors agree to an IVA, the IP will supervise it throughout.
How Does an IVA Help?
There can be all sorts of reasons why suddenly you cannot pay your liabilities, and the amount of stress and worry this can cause can be enormous. An IVA helps by taking control of your finances and stopping all interest and charges at that point. Creditors are not allowed to take any other legal action against you or contact you directly. Everything has to be handled through the insolvency practitioner, who will act as a go between for you and your creditors.
Three months after the five years has finished, your IVA is removed from the Insolvency Register, although it may stay on your credit record a little longer.
In reality, the cost of an IVA is a lot of money, but the way that most insolvency practitioners include their fees in your monthly payment means that you do not have to worry about finding cash to pay them.