IVA - Initial Fee
If an IVA is recommended as the most suitable solution for you, and you decide to proceed, Churchwood Finance will charge a fee which will be no more than twice your monthly disposable income figure as calculated in our comprehensive review of your personal financial circumstances. This fee covers the cost of the financial review, processing the associated paperwork and the preparation and submission of your case to the Insolvency Practitioners. Within the Churchwood Finance group, IVAs are managed by Churchwood Financial (Management) Limited trading as Kingsgate Insolvency.
IVA – Insolvency Practitioner’s Fees
There are 2 types of fees charged by the Insolvency Practitioner.
The amount of the fees varies according to your individual circumstances and the fees will not be charged until they are agreed with you. The fees will also be agreed with your creditors when the IVA has been approved.
Nominee’s Fee
This fee covers all the work which is done leading up to your proposal being considered by your creditors.
The IVA proposal - this is the document which explains why you are unable to pay your debts and includes full details of your financial position. It explains how much you are proposing to pay towards your debts and the proposed costs of the IVA.
The meeting of your creditors – This is a meeting arranged by the Nominee for your creditors to consider your proposal. The Nominee will prepare a report recommending the proposal for acceptance based on the Nominee having reviewed your proposal and the documents which confirm the contents of the proposal are accurate such as wage slips, creditor statements, house valuation reports etc.
Changes to the proposal – The Nominee will consider with you any changes requested by creditors which are required in order to secure their acceptance of the proposal and will advise you whether you should accept the changes or consider an alternative approach to managing your debts.
The Nominee’s fee charged by Kingsgate Insolvency is likely to be in the range of £1,000 to £2,000 plus VAT depending on the amount you are proposing to pay into the IVA.
Supervisor’s Fee
This fee covers all the work which is done after the proposal is approved in supervising the IVA and paying your creditors until the IVA is concluded.
Income Contributions. The Supervisor will check that you are making payments of contributions on time at the correct amounts. Each year the Supervisor will review your income and expenses.
Asset Realisations – If you are proposing to introduce any assets into the IVA by, for example, a remortgage, the Supervisor will check that this is done in accordance with the terms of the IVA.
Creditors - the Supervisor will check that the claims of your creditors are correct and will then arrange to make regular repayments to your creditors during the course of the IVA.
Changes in financial circumstances – If your circumstances change and you need to ask creditors to agree to vary the IVA the Supervisor will help you through this process.
The Supervisor’s fee charged by Kingsgate Insolvency will vary depending on how much you propose to pay into your IVA and also on the amount creditors agree should be charged. Typically the Supervisor’s fee will be in the region of 15% plus VAT of the payments you make into your IVA after payment of the Nominee’s fee, and is likely to be in the range £1,500 to £5,000. An illustration of the fees and expenses payable in a typical IVA is set out below.
Example of fees and expenses payable in a typical IVA*
| Total payments by the borrower into the IVA 60 x £300 per month |
|
|
£18,000 |
|
| Nominee’s fee |
£1,763 |
|
|
|
| Supervisor’s fee |
£2,860 |
|
|
|
| Supervisor’s expenses |
£290 |
|
|
|
| Total fees and expenses (included in the above mentioned payments) |
|
|
£4,913 |
|
| Total distributed to creditors under the IVA |
|
|
£13,087 |
(44%) |
| Total debt taken into the IVA = £30,000 |
|
|
|
|
| Total debt effectively written off on completion of the IVA |
|
|
£16,913 |
(56%) |
*This example is based on a typical case where a client has unsecured debts totalling £30,000, little or no equity in property and completes an IVA over 60 months. All payments are inclusive of VAT where appropriate.
Key points about our fees:
We will explain the fees and expenses we propose to charge in a letter to you and ask you to confirm your agreement to these fees before we charge for any work on your behalf.
If your IVA is not approved by your creditors, you will be liable for any costs already incurred although we will restrict these costs to a maximum of 3 months proposed IVA contributions.
If your IVA is approved the fees will be paid from the monthly contributions you pay into the IVA. This means that your creditors will bear the costs of the fees and for this reason the fees which we seek to charge may be varied (with your agreement) by your creditors before the IVA is approved.
Both the Nominee and the Supervisor will charge expenses they incur in addition to their fees. The expenses payable will be estimated at the commencement of the IVA but the final amount of these expenses may vary from this estimate.
Once you enter into an IVA it is important to keep up the proposed payments. If you do not keep up the proposed payments the IVA may fail. During the first few months of the IVA, your payments into the IVA will be used to pay the Nominee’s fee and the Supervisor’s ongoing fees before any payments are made to your creditors. If the IVA fails you will remain liable for payment of any outstanding balances to your creditors. Your debts are likely to have gone further into arrears.
IVAs do have some flexibility so that you may be allowed a small payment break due to unexpected expenses arising or difficulties at work.
You should also note that your credit rating is likely to be affected for up to 6 years after the IVA has been approved. You may not be able to obtain credit in the short term, and possibly in the medium to long term either.
An IVA may affect your credit rating for up to 6 years and a fee may be applicable depending on suitability and qualification.
Churchwood can help reduce debts with an IVA
Sometimes debt gets to be so bad it become impossible to simply juggle it around, consolidate or pay back by scrimping and saving a bit. When this happens, consumers are often faced with the possibility of going bankrupt. But an individual voluntary arrangement (IVA) offers an alternative and can be a very effective form of debt help .
An IVA can write off debt by proposing to creditors that they take a smaller amount, with reduced payments each month. Because the alternative to doing this may be bankruptcy – in which case they would lose everything – many will be prepared to accept the deal. And as long as at least 75 per cent of those you owe money to agree to the IVA, the rest will be legally bound to accept it.
Once this happens, your creditors will stop chasing you, putting an end to stressful mornings when the post arrives. Interest and other penalty charges will cease so you don't find your debts rising and can be sure of what you need to pay. And an IVA will protect your assets, meaning you will not have to sell things like your house.
Churchwood can help you gain the benefits of having an IVA
Although it is a form of insolvency, IVAs have many advantages over bankruptcy . Firstly, if you take the latter step, it will have an extremely damaging effect on your credit rating, meaning you can wait six years before you are allowed to get credit again, while you will only be able to use very limited banking facilities.
In addition to this, your employment situation may be affected, either because you are barred from holding some positions (like company directorships), or because you will be credit checked for certain kinds of jobs, such as in the financial sector.
With an IVA, you will certainly see your credit rating affected, but it will not be as bad as this and will place fewer restrictions on you.
Another advantage of an IVA is the way you can keep your arrangement private. Anybody who goes bankrupt will have this automatically published in the London Gazette, while the local press can also report it. In contrast, an IVA is a confidential agreement, so if you want to keep your financial affairs private this is a way to ensure this is the case.
Churchwood can say if your best solution is an IVA
Since we are a responsible debt management company , we will not seek to treat your situation as if taking an IVA is the only option. There are pros and cons and it is not the right answer for everybody. Sometimes debt management plans to help you deal with existing levels of debt are enough to get things under control, while consolidating debts into one payment might be the solution some need.
But for many people in debt IVA help is indeed the best way forward. The amount by which we can help with debt reduction will vary and depends on the progress of negotiations we carry out with your debtors.
So if you have problems with your repayments, call our debt helpline and discuss with our experts whether an IVA is the right solution for you.
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