What does an IVA cost?

What you pay each month

Your insolvency practitioner goes through your income and your spending. They work out what you can comfortably afford to pay each month. They review this every year. If your money situation changes, your payments can go up or down.

The agreed payment is the only regular cost. The fees are inside it.

How the fees work

An insolvency practitioner charges a fee for their work. The Insolvency Service says the fee is included in your monthly payments, not charged upfront. GOV.UK says the fees are usually a set-up fee and a handling fee each time you make a payment.

Typically, your first monthly payments cover more of the fees than the debts you owe. So your debts go down slowly at first.

We do not list a typical price here. We have not found an official figure we can stand behind. Each practitioner sets out their own fees in your proposal. Ask to see them.

What if the IVA ends early?

If your IVA is cancelled early, you may have paid off less of your debt than you expected. Fees took more of your early payments, so your creditors got a smaller share. You do not get a refund of money you have already paid.

If your IVA is cancelled, creditors can chase you again. They may add interest and charges that were frozen while the IVA ran.

Things that can change what you pay

• A longer IVA. A standard (protocol) IVA usually lasts 5 years. It lasts 6 years if your equity in your home is £10,000 or more. More months means more payments.
• Missed payments or a payment holiday. If you take a payment holiday, your IVA is extended to make up the missed payments.
• A pay rise or other extra money. You must tell your practitioner. You may have to pay more. Money or assets worth more than £500 that you get during the IVA, such as an inheritance, can be claimed by your practitioner.
• Not working with your practitioner. If you do not give them the information they reasonably ask for, your IVA may be cancelled.

Questions to ask before you agree

The Insolvency Service says people are given a “key facts” document before they agree to an IVA. Ask for it. Then ask:

• What are all the fees, and when are they taken?
• How much of my first payments goes on fees, and how much goes to my creditors?
• What happens to my payments if the IVA ends early?
• Is this a protocol IVA? If not, how are the terms different?
• How long will it last, and what could make it longer?
• Who told you about me, and does anyone get paid for that?

The last question matters. Under the protocol, the practitioner records who referred you and how that person is connected to you. You can ask to see it.

How other options compare on cost

• A Debt Relief Order has no application fee, but there are strict rules about who can have one.
• Bankruptcy costs £680 to apply. Your income and belongings can also be used to pay towards your debts.
• Breathing Space is free to apply, but it is temporary.

Cost is only one thing to weigh. The IVA or bankruptcy page covers the others.