What does an IVA cost?

The IVA cost is covered by your monthly IVA payments and any equity that you agree to release (your creditors will pass on an amount to your Insolvency Practitioner each month to cover fees). Essentially, the people you owe money to are agreeing to receive less back from you so that your IP can be paid for their work. Even if your IP decided to charge nothing at all, all it would mean is that your creditors would receive more back; your monthly payment wouldn’t change.

There are some circumstances that you need to be aware of however, where you may be required to contribute to the IVA cost. If you receive a large amount of money during your IVA, which means you are able to repay your debts in full or if your IVA fails then your creditors are entitled to ask you to contribute in full or in part to the IVA fees.

The amount you can realistically afford to give to your creditors each month is calculated by subtracting all of your monthly essential expenditure (travel costs, food, utilities, insurance etc) and priority debt arrears payments (mortgage arrears, Council Tax arrears, court fine arrears etc) from your monthly incomings (wages, benefits, investments etc).

You’ll never be asked to pay more than this calculation shows you can afford, no matter how much your monthly contracted repayments are.

There is a more detailed explanation of the IVA cost calculation here.

You’ll have to stick to the monthly payments that you’ve agreed to for the next five years so you need to be realistic about how much you can live on each month. Be wary of IVA companies claiming that they can get your IVA passed by altering your expenditure to unrealistic levels.

You can read more about IVAs and whether they are suitable for your situation in our IVA section.

Debt Advice Foundation is a registered UK charity offering free, confidential support and advice on any aspect of debt, including IVAs. Our helpline advisors are available Monday to Friday 8am to 8pm and Saturday 9am to 5pm on 0800 043 40 50.