The upfront cost is zero
You do not pay a separate setup fee for an IVA. Reputable IPs and firms who introduce IVA cases will not ask you to pay anything upfront. This is a defining feature of the arrangement.
If anyone asks you for a fee upfront to set up an IVA, that is a strong warning sign. This is not how compliant IVA introduction works. The FCA and the Insolvency Service take action against firms charging upfront fees for insolvency work they cannot deliver.
How the IP is actually paid
The IP's fees are drawn from the monthly contributions you make into the IVA. Each month you pay a set amount to the IP — say £120 — and the IP takes their fee out of that pot before distributing the remainder to creditors.
IP fees are structured in two parts under the standard protocol: a Nominee fee (for setting up and getting the IVA approved) and a Supervisor fee (for administering the ongoing arrangement). The Nominee fee is a fixed amount, typically £1,500-£2,500. The Supervisor fee is a percentage of the monthly funds handled, usually 15%.
The specific fee levels have to be agreed by creditors when they vote on the IVA. If creditors think the fees are too high, they can propose amendments or vote the IVA down.
What you actually pay each month
Your monthly contribution is calculated from your surplus income using the Standard Financial Statement — a UK-wide budgeting tool that sets agreed spending figures based on family size and situation.
Typical monthly contributions in an IVA are between £80 and £250, though they can go higher for people with larger incomes and larger debts. The contribution runs for the full length of the IVA — usually 60 or 72 months.
Total contributions over the life of a typical IVA are £6,000-£15,000. Of this, some pays IP fees and the rest goes to creditors as a dividend on their claims.
Are there other costs?
A small "case administration" cost may be shown separately (approval of the proposal, filing at court in some cases, distribution to creditors). This is normally included in the IP fee structure agreed by creditors.
If you own property and the equity release clause activates in the final year, remortgage costs (arrangement fees, valuation fees, legal costs) will fall to you as they normally would with any remortgage. These are not IVA fees but they are a real cost.
If the IVA fails and you fall back into a formal insolvency route (usually bankruptcy), the costs of that are separate. A failed IVA typically means you have paid substantially towards fees and creditors, but the original debt is not discharged.
What happens if you cannot afford the monthly payment?
If your circumstances change and you cannot afford the agreed contribution, you can ask your Supervisor to review the payment level. Small reductions or short payment holidays can normally be agreed without a full variation.
Larger changes require a variation meeting where creditors vote on new terms. If creditors do not accept the variation, the IVA can be terminated.
Termination usually means the original debts revive (plus any interest that would have accrued), and you can be pursued by creditors again. It is one of the reasons IPs stress the importance of only entering an IVA where the monthly contribution is genuinely sustainable.