There are always fees involved in an IVA. The Insolvency Practitioner is a professional who needs to be paid. Time and expertise are required in ascertaining the facts of an individual IVA proposal and communicating with creditors. Given that it’s a formal, legally-binding agreement, paperwork has to be thorough and accurate. Setting up an IVA and obtaining approval from creditors can be a lengthy process. And once set up, the managing of an IVA can be a time consuming business – distributing monies to creditors, monitoring debtors’ financial situation (there is normally an annual review) and dealing with issues that may require variations to the IVA can be time-consuming.
So – Insolvency Practitioners need to be paid! Their fees normally reflect the 2 stages of setting up and managing in what is known as a nominee fee (setting up) and a supervisor’s fee (ongoing management). Debtors will be informed of these fees – but they come from the regular monthly payments made into the IVA by the debtor. They cannot be in addition to it because the monthly payment offered in the IVA is already the best that the debtor can offer. With the agreement of the creditors, Insolvency Practitioners hold back some of the payments made to cover the costs involved.
If there is a referral company involved they too are paid – normally by the Insolvency Practitioner from the fees they themselves will be paid. Sometimes companies are looking for an upfront fee to be paid before the IVA has been accepted to cover some of the costs involved in the application, but this is not really necessary as plenty of companies will provide this service quite freely. So generally speaking there need not be any upfront costs – just the agreed monthly payment after the IVA has been accepted by the creditors.