What does an IVA cost?
The IVA cost is covered by your monthly IVA payments and any equity that you agree to release. 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.
Your monthly IVA payment will be 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 are some circumstances that you need to be aware of however, where you may be required to contribute to the IVA fees (see Who pays the IVA fees?). 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 you will not be able to recover any fees paid up to that point.
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 that claim they can get your IVA passed by altering your expenditure to unrealistic levels or that charge upfront fees (as you may not be able to recover them if your creditors don’t agree to your IVA proposal).
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. If you need to talk to someone about debt, please call the charity’s helpline on 0800 043 40 50 to speak to an adviser.