In general, there are 2 areas where, if you are entering into an IVA, you may find yourself being charged fees.
Firstly, there are 'Upfront' or 'Set up' fees, normally charged by the company who introduces you to your Insolvency Practitioner.
Unlike most of our competitors, IVA.org do not charge any up front fees or set up charges for our IVA applications.
Secondly, there are Insolvency Practitioner's fees, charged by the Insolvency Practitioner for the work they undertake on your behalf.
The good news is, however, that in the vast majority of cases the Insolvency Practitioners fees will be paid by your creditors, the exceptions being noted below.
Here's how it works.
All IVA's must be administered by a licensed Insolvency Practitioner and all licensed Insolvency Practitioners charge IVA fees for their work.
Your creditors realise this.
They understand that the work undertaken by the Insolvency Practitioner needs to be paid for and, without the ability to charge fees there would be no-one willing to supervise your IVA or ensure that the terms of your IVA are being adhered to.
So the creditors have an agreement with the Insolvency Practitioner, which is clearly laid out in the IVA proposal, just how much the Insolvency Practitioner is able to charge them for their services.
The creditors allow the Insolvency Practitioner to take their fees out of the IVA fund, which is the name given to the money collected into the IVA from your monthly contributions.
This method of drawing IVA fees is the same for all Insolvency Practitioners, in every IVA, including charity style Insolvency Practices. No exceptions.
This method allows all parties to benefit from the IVA. You repay only what you can afford, your creditors have peace of mind that your IVA is being supervised correctly and your Insolvency Practitioner is able to receive payments for the work they carry out your behalf.
This method of drawing IVA fees is the same for all cases that reach a successful conclusion.
There may be occasions where, perhaps due to unforeseen circumstances, an IVA either fails to complete successfully or completes earlier than expected.
Be warned that either of these scenarios may expose you to the liability of having to pay the Insolvency Practitioners fees
If you are unable to maintain your IVA payments, your IVA may fail and you may become liable once again for your unsecured debts and their original contractual payments.
The outstanding balances will not have reduced by the amount you have paid into the IVA due to Insolvency Practitioners fees charged to this point.
It is, therefore, essential you speak with your Insolvency Practitioner as soon as you begin to experience any problems in maintaining your IVA contributions at the earliest opportunity.
If in the event that you receive a windfall during your IVA, sufficient in size to repay your original debts in full, you will be required to do so.
Further more, you could become liable for interest charges on the original debt and any remaining unpaid Insolvency Practitioner's costs.