If you are considering entering into an IVA (individual voluntary agreement) with your creditors then you are probably relishing the thought of finally getting some relief from your debts. It could be the case that you were contacted by a company who explained that an IVA would be the perfect way for you to get rid of things like credit card debt, store card debt and personal loan debt for example. If this is what happened to you then have you ever stopped to think about how these people make their money? After all, they will be putting in a lot of hours to talk to you and offer you advice about the best way forward and then they will have to get in touch with your creditors and speak to them about agreeing to this financial arrangement. They are not going to do all of this work for free.
Who Pays the Fee?
The companies that deal with things like IVAs are registered licensed insolvency practitioners and are qualified to offer you advice. There will likely be a large number of people with qualifications in this area working for the company and they all have to be paid. And paid quite well in all honesty. So where does the money come from? Would you believe me if I told you that you, the debtor are paying for these services?
What the Money Pays for
Most of us think that the creditors are the ones who pay for the service of the debt management company but this is not the case. At the end of the day, the insolvency practitioner is working for you to help you get your debts paid off. They are therefore going to be paid from the agreed monthly payment that is set up between you and your creditors. A certain percentage of the amount that you pay each month goes towards your debts and the rest will go to pay for the services of the insolvency practitioner. This money will pay for the insolvency practitioner to collect the monthly payments from you and to distribute this payment among the various creditors that you owe. The insolvency practitioner is also going to be liaising with the creditors on your behalf when the need arises so the payment will also cover this.
Is it Worth the Charge?
Although many of us are unaware that we pay a fee for the services of the insolvency practitioner, most of us would gladly agree to it if it meant getting out of debt. The insolvency practitioner does a lot of work on our behalf so it is only right that they should get paid for this job.