Costs involved with an IVA explained

How much does an IVA cost and who is paying? This is an important question that most everyone will want to know. Of course you are going to be concerned with the costs and fees; this is how the cost works.

The Insolvency Practitioner will charge fees to both the Creditors and the Debtor. All of these fees will be decided at the beginning and will be included in the legal arrangement that is made. The money that is paid out by the Debtor is divided among the Creditors and this is also how the Insolvency Practitioner gets his fees.
This works out great for the Debtor because there is no extra money that he have to come up with, it is all inclusive in the monthly payment to his IVA.

What does an IVA cost?

The first fee is called a Nominee's fee. Generally is between £1,500 to £2,000. What this covers is all the work that an Insolvency Practitioner puts into the IVA before the creditors meeting. The next fee is called a Supervisor fee, is a monthly administration cost to cover maintaining the IVA all through the 60 months. This is usually about £1000 a year. These are both paid by the Debitor.

Is an IVA cheaper than a Bankruptcy?

The typical cost of an IVA could be varied depending on firms, as we said previously, usually charges amount to £2,000 as Set-Up fee plus a continuing annual Supervisory fee for a total amount of £7,000. The IP will work out a repayment plan for the Debtor base on how much they can afford to pay, fees are taken out of your monthly repayment and you won't have any unexpected surprise.

The typical cost to go bankrupt are £150 Court fees, plus £350 to the Insolvency Service firm. If you have your own property to be disposed of, there are additional costs involved.

IVA in a 'Nutshell'

IVA stands for Individual Voluntary Arrangement. Simply put, is a legally binding and recognized Debt Solution available in the UK that allowspeoples with debt difficulties to arrange to pay all their debts in many low payments during five years time.

To qualify your total debts must succeed at least £15,000. If you are willing to participate in an IVA you will have to visit a Practitioner who specializes in Insolvency. This specialist will review your debt situation and prepare a proposal for your Creditors. If the Practitioner can get at least 75% of the Creditors to accept the IVA proposal then you will normally have 60 monthly payments to pay off your debts.

Remember that when you want to apply for an IVA there is no other person that can do it for you then a registered Insolvency Practitioner. They are the only ones that can deal with your Creditors.
Whether IVA is the right way to go or not all depends on your own circumstances. In any case is essential to seek professional advice.

Highlights:

IVA Costs: Set-Up Fees £2,000 - Yearly administration cost £1,000. Total cost after five years £7,000. Bankruptcy: £150 Court fees, £350 Insolvency Service firm. Over cost may apply if you own a property to be disposed of.

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