An IVA, or Individual Voluntary Agreement, is a way of effectively consolidating payments to multiple
creditors into one, manageable and affordable monthly amount. The amount paid will vary from case to
case, but the important thing to remember is that it will be based on individual circumstances and will
never be more than the individual can reasonably afford.
In order to set up an IVA, the debtor and the creditors are required to ‘recruit’ the services of a
licensed Insolvency Practitioner (IP) who is initially responsible for putting together the IVA
proposal, and once approved, they will act as supervisor for its duration (usually 5 to 6 years).
During this time, the IP will act as a go between for all parties involved as well as completing all
the necessary paperwork and communications at the end of the IVA. Because of the amount of work involved,
it is usual for a fee to be taken from the monthly payment for these services
Fee negotiation and the IVA Protocol
During the Creditors meeting, the IP will put forward a proposal to the creditors of how much the individual
will be able to pay each month. Their fee will be detailed within this proposal as part of the monthly amount.
It is at this stage that the Creditors will negotiate with the IP if they feel that the fee proposed is too
high. In recent years, creditors have begun to clamp down on the fees taken by the IP, and as such, a new IVA
protocol has been introduced which helps to in the first instance, reduce the workload for the IP, which has
resulted in lower fees being taken. As it will vary in each case, it is difficult to give a specific figure,
but the annual fee will usually be between £400 and £800 per year (divided between the 12 monthly payments).
There may also be a set up, or Nominee, fee, which could be up to £1500. Again, if this is charged, it will be
built into the monthly payments.
Who pays the fees?
As the fee is taken straight from the IVA fund (this is the total monthly amount paid), it is often considered
that the debtor pays the fees, however as any outstanding debt is wiped clear at the successful conclusion of
the IVA, the fees paid could be seen as a worthwhile investment. That said, should the IVA fail for any reason,
the outstanding debt will not be cleared, and the fees taken will not be refunded and therefore they will be at
the debtors expense.