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An individual voluntary agreement (IVA) is considered to be a legally binding and formal agreement between debtor and creditor to pay back the amount of loan taken within a specific period of time. One of the major advantages of IVA is that it can be purely flexible according to one’s needs however with the benefit of flexibility, it can be expensive as well. This is partially due to taking services of a professional known as insolvency practitioner. The insolvency practitioner charges a fee for setting up and managing your IVA.
In order to set up an IVA, there is a need to pay some amount to the professional accountant or solicitor due to professional fee associated with setting up an IVA. These professionals are also known as insolvency practitioners or IP. These IP charges a fee which can vary according to their personal experience and amount of work involved in the process. There are certainly no legal bindings and regulations as how much an IP should charge but normally it would cost an individual around $5,000 on average.
While you may agree upon paying a fee to insolvency practitioner, the next question arises as how and when to pay him. Actually it varies according to different IPs. Some may ask you to pay in full before setting up your IVA. Some of professionals deal with the fees as part of individual voluntary agreement. The fees will be charged from your monthly debt repayments. In this way, when you pay your monthly payment into the IVA, some of the amount will be deducted as a fee charged by the insolvency practitioner and rest will go to balance off your debt amount.
What do the fees cover?
During the period of an IVA, insolvency practitioner has to play three important roles and they will normally charge you for these specific roles. They are as following:
Role of an advisor:
As a role of an advisor, the IP will guide you whether to go for IVA option or is it really suitable for an individual under certain circumstances. In this way, debtors can get an expert opinion regarding the options of IVAs. Also, whether any other option may be more suitable for your needs. It can be a good decision to ask for the expert advice of insolvency practitioner before setting up an IVA.
Role of a nominee:
In this role, IP is mainly responsible for helping you in making a proposal for IVA, make an application to the court and help to arrange a formal meeting with your creditor to get agreement on the proposal. By law, this work has to be done by some insolvency practitioner, you can’t do it on your own.
Role of a supervisor:
As the court approves the IVA and creditors agree, IP will play a role of a supervisor and manages the IVA as it progresses. IP will be mainly responsible for making sure that creditors are getting paid on time. He will act as a correspondent between you and your creditor and keep check on everything.
Estimation of IVAs:
As you make a firm decision to set up an IVA, it is highly advisable to meet different insolvency practitioners and ask them about their fee structures. Getting estimates and quotes from different IPs will help you to select the best deal and also to compare costs and find a one which is suitable to your pocket and needs. Also, it is to keep in mind that some of the IPs offer you free consultation meeting. In this way, you get to know better deals and offers available. See around if such offer is available. This is also to bear in mind that legal aid is not available to set up an IVA.