This guide explains what IVA companies do, how IVA fees work, what to look for in a provider and the questions you should ask before starting an IVA.
On this page
- What is an IVA company?
- What does an IVA company do?
- How do you choose an IVA company?
- Is the IVA company regulated?
- How much do IVA companies charge?
- Are there free IVA companies?
- What questions should you ask an IVA company?
- What should you look out for?
- What if an IVA is not suitable?
- Frequently Asked Questions
What is an IVA company?
An IVA company is a business that helps people arrange and manage Individual Voluntary Arrangements.
The important distinction is that an IVA must be handled by a licensed Insolvency Practitioner (IP). The IP acts as the nominee when the IVA is proposed and, if it is approved, supervises the arrangement.
In practical terms, you may initially deal with an IVA company or adviser rather than directly with the Insolvency Practitioner. However, you should understand who the licensed Insolvency Practitioner is and which organisation is responsible for your IVA.
Only a licensed Insolvency Practitioner can act as the nominee or supervisor of a voluntary arrangement. You can check an IP using the official government service.
If you are still deciding whether an IVA is right for you, our guide to what an IVA is explains how the process works and what an IVA involves.
What does an IVA company do?
An IVA provider will normally help you through much of the process of assessing, preparing and managing your IVA.
This can include:
- reviewing your debts, income, expenditure and assets
- assessing whether an IVA may be suitable
- preparing the IVA proposal
- dealing with your creditors as part of the approval process
- explaining the terms of the proposed IVA
- administering your monthly payments if the IVA is approved
- carrying out regular reviews of your financial circumstances
- dealing with changes in your circumstances during the IVA
- supervising the arrangement until it is completed or otherwise ends.
The Insolvency Practitioner will assess your financial circumstances, including your income, expenditure, assets, debts and creditors, before preparing the proposal. An IVA normally starts if creditors representing at least 75% of the voting debt agree to it. Once approved, it is legally binding on the creditors included in the arrangement.
How do you choose an IVA company?
There is no single IVA company that will be the best choice for everyone. The right provider will depend on your circumstances, the complexity of your finances and the level of support you need.
Rather than choosing a provider simply because it advertises the lowest monthly payment, look at the overall arrangement and the service you will receive.
There are several things worth checking before you agree to an IVA.
1. Check who the Insolvency Practitioner is
Make sure you know which licensed Insolvency Practitioner will be responsible for your IVA.
You can use the government's Find an insolvency practitioner service to check licensed practitioners.
2. Understand the fees
IVA fees are an important part of the decision. Ask the provider to explain exactly what you will pay and how the fees are dealt with.
There are normally fees for setting up and administering an IVA. Under the current IVA Protocol, the Insolvency Practitioner's fees are normally included within the monthly payments rather than being charged upfront. The provider must explain the fees before you agree to the IVA.
Our guide to IVA costs explains the different fees in more detail.
3. Look at the whole monthly budget
A low proposed payment does not automatically mean that an IVA is better.
Your payment should be based on what you can realistically afford after taking your household income and reasonable expenditure into account. Your circumstances will normally be reviewed during the IVA, and payments may need to change if your financial position changes.
4. Check what support is available
An IVA can last for several years, so the service you receive after the arrangement starts matters just as much as the initial application process.
Ask how you will contact your provider, who will deal with your questions and what happens if your circumstances change.
5. Do not be pressured into making a decision
An IVA is a serious financial decision. You should have enough information to understand the advantages, disadvantages, costs and alternatives before agreeing to one.
The Insolvency Service has specifically highlighted the importance of making sure an IVA is suitable before entering into one. An unsuitable IVA can leave someone struggling with their household budget or potentially in further financial difficulty.
Is the IVA company regulated?
It is important to distinguish between the company you initially speak to and the licensed Insolvency Practitioner who formally acts as the nominee or supervisor of the IVA.
Insolvency Practitioners are licensed and authorised by recognised professional bodies. They are subject to regulatory and statutory requirements when carrying out insolvency work.
Before proceeding, ask:
- Who is the Insolvency Practitioner?
- Which professional body authorises them?
- Which company will administer my IVA?
- Who will supervise the arrangement once it has been approved?
If you are unsure about a provider, checking the official Insolvency Practitioner register is a sensible starting point.
How much do IVA companies charge?
There is no single fixed price for an IVA. The cost depends on the circumstances of the arrangement and the work required by the Insolvency Practitioner.
GOV.UK explains that IVA costs normally include a setup fee and a handling fee associated with administering payments. You should be told about the fees before asking an Insolvency Practitioner to act for you.
For protocol IVAs, the Insolvency Practitioner's fees are included within the agreed payments rather than normally being charged separately upfront.
This is why it is important to look beyond the headline monthly payment. Two proposals with similar monthly payments can have different overall outcomes depending on the length of the IVA, fees, circumstances and other terms.
Read our guide to how much an IVA costs before making a decision.
Are there free IVA companies?
You may see advertisements for a "free IVA" or "free IVA advice". It is important to understand what this means.
An IVA itself is not free. The Insolvency Practitioner charges fees for preparing and supervising the arrangement.
However, you may not have to pay those fees separately or upfront. Under the current IVA Protocol, the fees are generally included within the payments made during the arrangement.
Some organisations also provide free debt advice. Free debt advice is different from a free IVA.
If someone tells you that an IVA has no fees at all, ask them to explain exactly how the Insolvency Practitioner's fees will be paid.
What questions should you ask an IVA company?
Before agreeing to an IVA, it is worth asking the provider some straightforward questions.
- Is an IVA definitely suitable for my circumstances?
- What alternatives should I consider?
- Who will be my Insolvency Practitioner?
- Who will supervise my IVA?
- How much are the total fees?
- How much will my creditors receive?
- How long will my IVA last?
- What happens if my income changes?
- What happens if I cannot afford a payment?
- Will I need permission to take out credit during the IVA?
- How will my home, car or other assets be treated?
- What happens if the IVA fails?
A reputable provider should be willing to explain the answers clearly rather than simply focusing on getting the IVA started.
What should you look out for?
Be cautious if you feel that you are being pushed into an IVA before you have had an opportunity to consider your alternatives.
You should also be wary of promises that make an IVA sound guaranteed or risk-free. An IVA is a legally binding agreement and there are circumstances in which it may not be suitable.
For example, the current IVA Protocol says that an IVA may not be suitable where debts are relatively low, the affordable monthly payment is very small or income mainly consists of benefits.
You should also understand what happens if you cannot maintain the agreed payments. An IVA can be cancelled if you do not keep up with the terms, and this can have serious consequences.
Our guide to the pros and cons of an IVA explains the main advantages and disadvantages before you commit.
Do all IVA companies offer the same service?
No. Although an IVA must follow legal and regulatory requirements, the experience you have with a provider can vary.
Some providers operate large teams and use online communication extensively, while others may offer more traditional forms of contact. The important thing is to understand how the provider will support you throughout the arrangement.
You should also remember that the company you speak to initially may not be the same entity as the Insolvency Practitioner responsible for supervising the IVA.
Rather than looking for a provider simply because it claims to be the "best", compare the information you are given about suitability, fees, the proposed payments and ongoing support.
What if an IVA is not suitable?
An IVA is only one of several ways of dealing with problem debt.
Depending on your circumstances, alternatives may include:
- Debt Management Plans
- Debt Relief Orders
- bankruptcy
- informal arrangements with creditors
- other forms of debt advice or repayment arrangement.
The right option depends on factors such as your income, debts, assets, home ownership and ability to make payments. GOV.UK recommends getting debt advice to help you understand the options available.
Do not assume that an IVA is the best solution simply because a company has recommended one. The aim should be to find a debt solution that is sustainable for your circumstances.
Frequently Asked Questions About IVA Companies
Compare IVA Options Before You Decide
Choosing an IVA company should not be about finding the provider making the biggest promises. It is about understanding whether an IVA is appropriate for you, what it will cost, what your payments will be and who will be responsible for supervising the arrangement.
Before committing, make sure you understand the IVA process, the advantages and disadvantages of an IVA and the costs involved.
If you are considering an IVA, you can also use our IVA calculator to get an initial indication of whether an IVA may be suitable for your circumstances.
