The Individual Voluntary Arrangement “IVA” has developed over the years so that is now a great rescue tool to help individuals with serious debts, repay as much of their debts as they can afford and most importantly retain their residential property. Generally an IVA will cover a 5 year term but IVA’s can be tailored and offer a combination of contributions and assets.
- Unsecured debt: £15,000+
- Creditors: 3+ (at least 3 creditors and two lines of credit)
- Must be employed/self employed/be in regular receipt of income
- Disposable income: An IVA needs to offer creditors a reasonable return. We recommend that the monthly contribution is no less than 25p in the £ but contributions can start lower in certain circumstances
Homeowners are obliged to seek to introduce a sum in place of their equity in year 5 of the arrangement. If they cannot remortgage they can consider introducing a third party sum instead or adding a maximum of 12 extra contributions in place of equity. IVA’s now provide that there is no requirement for your client to sell their residential property.
Charges to your client
As soon as your client decides to proceed with an IVA then their payments to creditors cease and contributions towards their IVA start. These will be set at a figure which they have agreed they can afford.
It takes around 6 - 8 weeks to set up an IVA and during this period your client will commence their monthly contributions into their IVA. It is likely that by the time the IVA is approved, they will have made one to two contributions which count towards their 60 contributions. It also means that if they have a bad month and cannot afford their contribution they do not end in arrears.
The charges for an IVA are split into Nominee’s fees and Supervisor’s Fees. The Nominee’s fee covers the work undertaken prior to the meeting to approve the IVA. We must undertake a fair degree of due diligence to ensure that all facts are correct and that the IVA is doable and viable. Our Nominees fee will vary depending on the complexity of the case but is typically:-
- Single Consumer IVA £1,500 to £2,000 plus VAT
- Joint Consumer IVA £2,000 to £2,500 plus VAT
- Complex Trader IVA circa £3,500 plus VAT
The Supervisory fees are normally capped by creditors at between 15 and 20% of realisations. The Supervisory fees are drawn monthly from the monthly contributions. All fees will be discussed in detail with your client prior to any plan being put in place.
Please click here to see details of our revenue share for IVA clients
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