How Much Does an IVA Cost?
If you’re reading this, you may be one of the many people who are struggling in the current economy and finding themselves overwhelmed by debt. There are several pathways out of debt and IVAs are often seen as a preferred alternative to bankruptcy. With so many people seeking a way out of debt, it may come as no surprise that the UK Government report that in 2022 individual voluntary arrangement (IVAs) were at the highest recorded number since 1990. If you are considering the pros and cons of an IVA, you may be asking how much does an IVA cost?
In examining the costs of an IVA, you need to be aware that it isn’t only the debt itself you need to consider. As per the IVA Guidance Protocol from the Insolvency Service:
It is accepted that an IVA is a regulated process under statute, which requires certain work to be undertaken, and which may have a cost unconnected with the debt and/or number of creditors of the IVA.
That means all insolvency practitioners will charge fees for assisting you with an IVA. Let’s have a closer look at how much does an IVA cost and how that relates to what your insolvency practitioner does for you.
Citizens Advice is a free and independent service that breaks this down well in the impartial advice they offer consumers. They explain that the fees for an IVA are usually around £5,000, which covers the following work by your insolvency practitioner:
- Checking if an IVA is right for you.
- Applying to the County Court for your IVA and speaking to your creditors.
- Making sure your creditors get the agreed payments and reviewing your situation each year.
The process of an IVA often includes the insolvency practitioner applying to the County Court for an ‘Interim Order’. As National Debt Line explains, this stops creditors from starting bankruptcy procedures or other enforcement action against you.
Your insolvency practitioner will develop an IVA proposal and arrange a creditor’s meeting. Once the IVA is approved by 75% of your creditors, interest on your debt is frozen. Once the IVA is completed, any remaining debt is written off and when your insolvency practitioner issues your IVA Completion Certificate, you will be debt free.
To summarise, an IVA will usually cost about £5,000, which includes a set up fee and a handling fee each time you make a payment. These fees are often included in the one monthly payment that you make to your insolvency practitioner who takes their nominee fee and disburses the remaining portion in agreed amounts to each of your creditors.
When considering how much does an IVA cost, it’s also worth considering how much does an IVA save you. Not only can the benefits of an IVA offer enormous peace of mind at such a difficult time, but they also stop your debt increasing and legal action against you while you are working towards being debt free.
Professional Advice When Considering How Much Does an IVA Cost
Irwin Insolvency has over 25 years of experience helping people like you towards a solid financial future. Contact Irwin Insolvency today for peace of mind and sound advice you can trust for individual voluntary arrangements.