We have answered some of the most frequently asked questions about IVA payments and fees.
View the questions below or scroll to the bottom of the page to ask your own IVA questions at the ClearDebt Community.
The questions can be categorised by the following:
Facts you need to know about how an IVA works
Benefits that will help ease the current pressures you may be feeling whilst trying to pay back your debt
Be aware of important issues which may affect your relationship with creditors, pending court action, your credit rating and lifestyle.
The IVA monthly payments should be as much as you can reasonably afford after you have accounted for your basic living costs and those of your dependants. The amount should be the most that you can afford and that is achievable too - whatever you propose should be viable for the duration of the proposed Individual Voluntary Arrangement.
You do not pay anything other than your agreed, fixed monthly contribution. An Individual Voluntary Arrangement can only be prepared for you by a qualified licensed insolvency practitioner, so there are inevitable professional fees. However, all fees are paid for from the contributions you make and which are agreed by your creditors.
ClearDebt keeps IVA costs low by collecting much of the required information over the internet from you and by using tailor-made automated procedures and specialist administrators to process cases. Read more on this in the FAQ about ClearDebt.
By keeping our IVA fees low more of your contributions will go to your creditors which means they are more likely to accept your IVA proposal.
In addition, ClearDebt relies mainly on the internet to advertise our services and we do not spend large, wasteful amounts on glossy advertising - we believe the quality of our service speaks for itself.
ClearDebt earns IVA fees, like other IVA companies, in two ways:
1) The ClearDebt Nominee's fee (the fee for putting together the proposal and presenting it to your creditors) for a simple IVA varies depending on the amount of your debt and number of your creditors, and is set under a protocol fixed between the debt resolution industry and the banks and credit card companies. Protocol-compliant IVAs are generally where you are an employed person with bank loans, store, and credit card debts. If you are a sole trader, partner in a business or have complicated affairs our fees may occasionally be higher - but we will explain the reasons if they are higher than our standard - and they still will not alter the payment you make.
2) The Supervisor's fee: ClearDebt charges up to a maximum of 18% of all contributions you make over the period of the IVA, taken monthly, in fulfilment of the supervisory role.
Remember - these fees are included in the agreed amount that you pay each month. There are no additional or hidden fees.
Monthly payments depend on your net disposable income rather than the size of debt. This is considered to be the amount you have left after essential monthly living expenses (excluding your debts) are taken from your monthly take home pay and adding that to any benefits that you might receive. This figure will depend on your personal circumstances and will be agreed between you and your advisor.
Fees are charged for setting up and supervising the IVA however, these costs are integrated into your monthly IVA payments and are not additional. A fuller explanation of these fees and what they cover is explained here: IVA Fees
We do not charge for our initial advice and our fees only come into effect once your IVA has been passed successfully.
If we propose an IVA which is rejected, then we bear the cost. You are not charged a penny. We have a very high acceptance rate (97%) and would not propose an IVA if we thought it would not be approved. However, if the IVA fails because you pull out after you have agreed the proposal we created for you, then you can be charged a fee.
IVAs do have what is called a 'windfall' clause. Each year your IVA is reviewed. If you come into some extra money, for example, inheritance or improved salary, then this is taken into account and you could be required to make increased payments.
Failing to inform us of available funds is an offence. Typically you would be expected to pay the majority of any windfall, up to the total you owe and up to 50% of any salary rises or bonuses into the IVA.
In some cases, a windfall can enable you to complete your IVA in a much quicker period of time.
If you have debts with your bank, some banks may take money from where your wages are paid into, whether you can afford it or not. This is called the Right of Offset. Such debts can be in the form of an overdraft, credit card balance or personal loan.
Therefore we advise you arrange new banking facilities before embarking into an IVA if your current bank holds some of the debt that is to be placed in the IVA. Many of our clients use a ClearCash Prepaid MasterCard for this purpose and use their icount.
People entering into an IVA normally already have some adverse credit history and find it difficult in getting an application to open a conventional bank account accepted. In that case you need to open a non-credit bearing basic account, or a Prepaid card account which does not run applications based on credit checks.
As an IVA is a private matter, your new bank/finance facility does not need to know about your IVA. We can advise you further on this matter.
A standing order will be set up, usually from your new bank account (see above) to an account held by us that will be used to collect and monitor your IVA payments.
Ask your questions at the ClearDebt Community