I'm about to enter into an IVA for 40k. Due to my wife recently finding work I'm going to be paying back 91% of this. The IVA company appear to be charging over 8.5k in fees, so my creditors will only receive 69%.
Are these amounts of charges normal?
I can't help thinking I'd be better paying the entire amount to my creditors with a DMP over 6+ years rather than having such a high monthly payment for 5.
Hi Estel. Fees in an IVA will ultimately be decided by your creditors as will your offer of repayment. If you are concerned about your ability to maintain the high monthly payments, you should discuss this with your case manager.
A DMP could also be an option for you but interest and charges are not guaranteed to stop so it could last a lot longer than the IVA. Both options should have been discussed with you.
I guess each IVA company will have their own fee structure but broadly these should be similar, I believe my fees are 15% of realisations, irrespective of this, your fees are agreed by your creditors, if they thought they were too high they would ask your IP to modify them accordingly.
With an IVA, all you need to be concerned with is that your disposable income which forms your IVA payment is accetable to you in that the rest of your allowances in your budget are fair and reasonable for you to live with for the term. Don't forget you are having all interest frozen in an IVA which would not be in a DMP.
It is up to you which route you take, personally, I couldn't care less what fees my IVA company make, for me, the interest is frozen on my debt and I am protected from my creditors and will be debt free within 4 years now, irrespective of how much my creditors get back
Hi Estel - your creditors will agree the fees with the IP and ask for them to be modified if need be. They will not say yes to anything they are not happy with and if the company you have chosen have an excellent success rate and good reputation for credible proposals then you have nothing to worry about. As long as your budget has been set right so the IVA payment you are making is realistic and reasonable then this sounds fair to ensure you are in a protected arrangement with no interest added, have an elemenet written off at the end, have a flexible arangement that can adapt should you have changes in circumstances and ultimately, peace of mind from no more action from the creditors.
Hopefully you will have done you research to know you are working with a good reliable ocmpany. Hope it all goes well.
Regards, Tina Shortland, Debt Advisory Manager for Melanie Giles at Debt Advice TV.
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I've never taken too much heed to fees within the IVA as I am aware my creditors agree to them and not me. They'll get the return agreed at the meeting and any extra I pay over will enhance the dividend. x
IVA final payment left the bank on the 26th January 2013...looking forward to a debt free future.
It is important for our clients to understand the basis of our charges, as these have to be agreed with you all before creditors can have their own say on matters. Whilst it is easy to feel that they are actually being paid indirectly by creditors, it is vital to understand what IPs actually do for our money and where we truly do add value.
The option between a DMP or an IVA should be carefully thought through at the pre-proposal stage, as a DMP can also have some advantages if you can persuade creditors to cease charging interest. I recently heard of a DMP where creditors refused to cease charging interest because they felt that the monthly payments into the DMP were too high!
I disagree with those who don't think the IP fees are relevant.
Let's take an example where you have debts of £50k and can afford to repay £500/month over 5 years. If the IP fees were 15% this would result in a dividend to the creditors of approx 51p, whereas if the IP fees were 25% the dividend would only be approx 45p.
This could be the difference between the proposal being accepted or rejected, or perhaps only being accepted if you agree to increase the payments to raise the dividend level.
I don't see it that way Vince, if the fees proposed were an issue for the creditors at the meeting they wouldn't outright reject it, they would ask the IP for a modification on their fees.
I can't see any IP putting forward a proposal with high fees which were unlikely to be approved as they would have put in an awful lot of work to get to that stage for no return and damage to their credibility
I see it the same as Lem, it's decided at the meeting as far as I'm aware and often we see the only modification as being the IP fees which doesn't affect the person paying the IVA.
It's not I don't think they're relevant and it was all explained to me in detail pre-IVA but I leave it to my IP to sort as without them I'd still be juggling and stressing over my creditors. They're working for me and i expect to pay them. x
IVA final payment left the bank on the 26th January 2013...looking forward to a debt free future.
All I know is that my original proposal was rejected which offered a dividend of 74.5p with supervisor fees equivalent to less than 6% of my monthly contributions. I had to increase my monthly contributions so the estimated dividend was 78p in order to get the proposal accepted. I'm not sure it would have been approved with IP fees at 25%.
It wasn't the supervisor fees that were an issue as they were very low, my point was if they needed an extra £180/month out of me with low supervisor fees, how much would they have wanted if the supervisor fees were higher?
It seems very odd that they would have wanted an extra £180 a month from you Vince, that is an awfully high sum to find. As I understand it, at the end of the day, all you can offer is your disposable income after allowances, fees come out of that whatever they end up being.
My dividend is only 20p in the £1 with 15% fees, if my creditors had come back to me wanting that kind of increase I would have told them where to go.
I have never understood why supervisor fees are based on a percentage of the annual payment.
So if I am paying £1000 per month I would be paying lots more than someone on £200 per month. This is no reflection on the amount of work involved in each case as the monthly payment is cannot be a gauge of this.
However, as has been said, if your proposal is accepted and you don't intend to pay back all the owed amount is largely irrelevant.
