Low IVA fees could help many to become debt free

Andrew Smith, marketing director of the debt assistance firm ClearDebt, commented that a reduction in IVA fees for those seeking to pay off smaller debts could make the IVA an option for more people.

The debt advice bureau points out that a disadvantage of the IVA, as it currently stands, is that it is often only suitable if the debtor has over £15,000 in unsecured debts, though DebtClear can offer help to those with debts of around half this amount through IVA programmes.

The debtor typically faces two sets of fees when an IVA arrangement is established between the debtor and creditor: a nominee fee to set up the arrangement and a supervisor fee, levied for delivering payments to the creditor. Depending on the sum owed, these can run to thousands of pounds.

“Lower fees mean we can help people with lower debts,” said Mr Smith. He added that, though creditors often accept minimum repayments of a quarter of the sum, creditors could also potentially benefit by receiving more.

IVA administration costs are still in the main lower than those involved in filing for bankruptcy, and offer the debtor more flexibility and protection of selected assets.