The good news is that an IVA usually has no upfront cost. You don't pay a fee to set one up, and you don't pay anything separately to keep it running. Instead, the fees are taken out of the single monthly payment you already make, so the money going to your creditors and the money covering the costs all come from the same affordable amount agreed at the start.
In other words, an IVA is designed so that its cost is built into your budget rather than added on top of it. You pay what you can genuinely afford each month, and the fees are deducted from that figure before the rest is shared between the people you owe.
The short answer
- There is normally no upfront or set-up fee to start an IVA.
- Fees are taken out of your monthly payment, not added to it.
- There are usually two fees: a nominee fee to set the IVA up and a supervisor fee to run it.
- If your IVA doesn't go ahead or isn't approved, you typically pay nothing.
- Advice on your options is always free — a fee only applies if you go ahead with a solution.
What you actually pay each month
Your monthly IVA payment is worked out from a detailed look at your income and everyday spending. Whatever is left over after your reasonable living costs is what you can afford to contribute. That single figure covers everything — both your creditors and the cost of running the arrangement — so you never receive a separate bill for fees.
Because the fees come out of a payment you were going to make anyway, taking out an IVA doesn't leave you worse off month to month than the affordable amount you agreed. This is one reason many people find an IVA easier to manage than juggling several separate debts.
The two main IVA fees
The nominee fee
The nominee fee covers the work of setting your IVA up: reviewing your finances, drafting the proposal to your creditors, and putting it to a creditors' meeting for approval. It's a one-off fee that is spread across your payments rather than charged separately.
The supervisor fee
Once your IVA is approved, an insolvency practitioner supervises it for the whole term. The supervisor fee covers ongoing work such as collecting your payments, distributing money to creditors, and carrying out your yearly reviews. Like the nominee fee, it's drawn from your monthly payment.
Are there any other costs?
For most people the two fees above are the whole story. Occasionally there may be small additional costs, such as fees for holding creditors' meetings or handling certain assets, but these are always explained to you before your IVA begins and come out of the funds within the arrangement. You should never be surprised by a hidden charge.
It's worth remembering that not every debt can go into an IVA. Knowing which debts can be included helps you understand exactly what your payment is covering and what you'll still need to budget for separately.
What happens if the IVA doesn't go ahead?
If your proposal isn't put forward, or your creditors don't approve it, you typically won't have paid a fee. The costs are only met from payments made into an approved, running IVA. That means you can explore whether an IVA is right for you without worrying about a bill if it turns out not to be the best fit.
Is an IVA good value compared with other options?
Whether an IVA offers good value depends on your circumstances. An IVA can write off debt you genuinely can't repay and freezes interest and charges, but it also affects your credit rating and usually lasts five to six years. It's sensible to weigh it against the alternatives before deciding.
- Read our balanced guide to the pros and cons of an IVA.
- See how an IVA compares with going bankrupt in is an IVA better than bankruptcy?
- Understand the effect on your credit file in an IVA and your credit rating.
You can also get free, impartial information about all your options from MoneyHelper, the government-backed money guidance service.
How IVA Advice Online can help
We'll explain exactly how much an IVA would cost in your situation — clearly, with no jargon and no upfront charge to talk it through. If you'd like to understand your monthly payment and how the fees fit into it, or to check whether an IVA is even the right route, find out how to apply or simply get in touch for a free, confidential chat. Our advice is always free, and we'll only ever tell you a fee applies once you choose to go ahead.