Costs of an IVA
Once an IVA is deemed to be the most appropriate solution to help clear your debts you will need to consider the costs and fees associated with an IVA. All the costs will be covered in the IVA proosal.
The proposal should contain all the details of what will be paid to the Insolvency Practitioer (IP) for acting as 'nominee' and as IVA supervisor. A separate fee is also payable for the IP’s work in each of the following roles.
- The IP will help you with your proposal, all necessary application(s) to the court to start the IVA, all communications with your creditors and holding the creditors’ meeting.The IVA's fee is normally a fixed sum, which is agreed with you before work begins on your IVA proposal. In certain situations the fee will be split between work done as IP and any work done before that stage, as intended nominee.
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- The supervisor’s costs depend on the nature of the proposal and what needs to be done to implement the arrangement. In most cases he has an obligation to report the outcome of the creditors’ meeting to you, to the court and all the creditors. He must issue annual reports to all these people too. He may also have to carry out unforseen work on the proposal. For example if a creditor wants to take a dispute to court, or should some work need to be done on tax liabilities or should you break your proposal’s promises to creditors. You should always keep in touch with your IP and especially if your financial circumstances change and you may have difficulty making payments towards the IVA.
- Make sure that you understand under what basis is used for the fees in your case, and that you are happy with it. It is your reponsibility to fix the basis of the supervisor’s fees initially as this forms part of the proposal to your creditors.The amount of supervisor’s fees will affect the return to your creditors under the arrangement. If you are not sure about anything, do not hesitate to get your IP to clarify once again the costs associated with the IVA Proposal.
- Both the supervisor and nominee can charge you for other additional expenses that may be incurred while the IVA is in place, and they should give you details of any likely expenses. For example, there is a fee for registering an IVA with the Department of Trade and Industry and the supervisor is required to take out insurance for which he will pay a premium. Depending on your case, other charges may arise such valuation or legal fees. If the supervisor needs to instruct a solicitor in relation to any problem with your arrangement, the legal fees are then normally paid out of the funds in your IVA arrangement.This will include legal work that crops up if you do not keep to the terms of your arrangement.
- If the Receiver acts as your nominee, you will need to pay a deposit to cover his fee for acting as nominee and formally registering the arrangement. A fee will also be charged for acting as supervisor. This is calculated as a percentage of the money received during the arrangement.