The press is flooded with recommendations that debt advice or debt solutions should be free of charge. Within the specialist area of IVA advice still the simple fact is that there is no such thing as a free Individual Voluntary Arrangement. Fees will apply whatever source of IVA advice you ultimately select and use. In this article we will go into detail of the basis for those charges and how it works in reality.

An IVA is a private appointment taken by a "Licenced Insolvency Practitioner". Such Insolvency Practitioners usually come from a financial environment and have grown their skills to work in the field of insolvency by obtaining hard personal professional qualifications. The administrative workload linked to an IVA is important, so Insolvency Practitioners usually employ significant numbers of intelligent and often qualified employees themselves to assist with several areas of the work involved in the IVA plan.

The fee of employing the people involved in the IVA procedure is thus very significant and in addition there are significant additional costs involved along with mandatory insurances and regulatory memberships, office expenditure and communications expenses. Individual Voluntary Arrangement services are therefore not run for free even where provided by businesses connected to debt charities that would not charge an individual for any other kind of debt assistance.

An IVA advice procedure generally begins with a conference over the phone, this includes fact finding , a meeting in person that may be needed so as a result providing debt advice and setting up an IVA can be time consuming and costly.

When setting up the IVA, it will require the presentation of the IVA paperwork to creditors (and their representatives for review), followed by a creditors meeting at which it will be determined whether or not the IVA has been accepted and agreed.

The work involved to this stage is all performed after the creditor agreement to the Individual Voluntary Arrangement. At this stage the insolvency practitioner acts as a "nominee" and are asked to provide IVA advice by the client and are asked to work on getting the IVA approved by the creditors. There will be a payment necessary for the work the insolvency practitioner do, which is to be paid by the customer and is drawn from the monthly Individual Voluntary Arrangement payments.

The role of the Insolvency practitioner changes from a "nominee" to a "supervisor" when the IVA has been agreed by the creditors. The job of the "supervisor" is to manage with the Individual Voluntary Arrangement case untill it is finalised. This will involve to collect and to distribute the payments, conducting IVA reviews, dealing with the creditor and client correspondence and ensure the IVA case is closed when appropriate.

Here the IVA fees is known as the "supervisors" fee. Again the fees will be paid by the clients and taken from monthly IVA payments.

The representatives at important creditor organisations deal with the IVA fees at the nominee and supervisory stages. There maybe some difference between different IVA companies, however the caps on fees will be applied to all and are well known and understood by specialist Individual Voluntary Arrangement providers.

There is a misunderstanding that it is in fact the creditors that pay Individual Voluntary Arrangement fees. This definitely is not the case. Even though the fees are drawn from money paid into the IVA, it is the customer that is paying the Licenced Insolvency Practitioner that they instructed. It is a good idea taking an interest in the fee levels proposed by any particular IVA provider as they may become relevant to the achievement of the IVA proposal and your financial position in the event that the IVA later fails.