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Ask about IVA Fees.
If you are considering an IVA, ask about Fees.
If the IVA company your speaking to just says “don’t worry about that, the creditors pay for the costs” - ask for a straight, numerical answer.
It is true that creditors pay for the costs of an IVA. However, as our charges to the creditors are lower than most other IVA providers, we get IVA’s approved that would otherwise get rejected. Therefore we can help even more people out of debt than most of our competitors.
For more details see our article on Low Fee Iva’s.
Make a Comment
Have you been stung by fees of £7000+ over the course of your IVA?
Have you had to pay an up front fee to get you IVA proposal considered by an Insolvency Practitioner?
Please share your experience by leaving a comment.
2 Responses to “Ask about IVA Fees.”
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September 10th, 2007 at 12:33 pm
I recently made some test enquiries to various IVA providers to assess the level of service and professionalism. Some of the results were eye opening to say the least.
The scenario was of a single man being in debt to the tune of around 25000 spread amongst various creditors.
The first company advised me that I needed to make 62 payments to get an IVA, the first one to cover set up fees and the second to be a direct payment to an Insolvency Practitioner. This is scandalous practice and completely unnecessary. I would ALWAYS recommend that you pay no up front fees for an IVA.
The second company asked no more than how much I owed and then quoted me £250 for an IVA, again with the first 2 payments being for exactly the same reason. On a minimum dividend of 25p in the pound, this meant up front fees of £500, with no guarantee of an IVA, followed by £8750 in ongoing fees. At no time did they ascertain as to whether I could actually afford this figure and when I questioned them on it I was told that if I couldn’t afford it then they could not help me at all. I would also not be entitled to claim back the £500 that I had paid already.
Had I have been advising on a similar scenario, the first thing to do is to ascertain, by a full income and expenditure breakdown, exactly how much can be afforded. It is only then will I feel comfortable about making any recommendation. If £250 is fair then an IVA will be discussed, as well as any other options such as a Debt Management Programme. It is to be stressed that an IVA can NEVER be guaranteed at this stage, indeed it is only when the outcome of a creditors meeting is known that an IVA can proceed. If it is not feasible then an alternative solution, such as Debt Management, can then be offered. As we do not charge any up front fees there is no risk of our clients losing money. For the £250 payment through ourselves, creditors would receive far more money back from an IVA through ourselves, thereby making it more attractive to them. Alternatively, again because of the low fees we charge, should, for example, £190 be a realistic monthly payment then that would still be feasible for us to propose an IVA, thereby allowing many more people to look at IVA’s that are not feasible with the expensive services.
The reason that a lot of larger providers are now charging these up front and extra payments is because it ties a client into them. Should an IVA not go through then they can put the client on a debt management programme in house, leaving the client no choice but to stick with an expensive service or lose the money they have already parted with.
We believe this to be unethical. In such cases, if a debt management programme becomes the option then we will offer the client a choice as to whether they wish to look at one, again with no risk as we haven’t taken any up front fees for the IVA proposal.
September 13th, 2007 at 4:02 pm
IVA Provider Debt Free Direct came a cropper from the Advertising Standards Authority (ASA). Their TV advert stated:
“There is a little known piece of government legislation that could write off what you cant afford to repay, stop creditor hassle, cut your monthly repayments by hundreds of pounds and set you debt-free in just 60 months. And it wont cost you a penny”.
The complaint was about the “it wont cost you a penny” statement. The truth is that Debt Free Direct IVA fees are several thousand pounds per case, which are untimately paid by the debtor by way of money paid into the IVA.
Full details see Debt Free Direct ASA Adjudication
Debt Free Direct went as far as to attempt to take legal action against the Advertising Standards Authority (ASA) to prevent them from publishing this Adjudication.
Full details see High Court Ruling Against Debt Free Direct