So here are the basic charges that you should be paying, with a brief explanation to go with it.
Debt Relief Order (DRO)
This fee is per person, as a DRO is individual, joint applications cannot be done
This fee is paid to the Insolvency Service, and NOT to any third party organisation.
There is no reduction in the cost if you are on low income, benefits, etc.
Maximum £707 Variable between £525 and £707 depending on circumstances
This fee is per person, as a Bankruptcy is individual, joint applications cannot be done (except in businesses)
There are two fees to be paid, the Court fee and the Official Receiver's Deposit.
The Official Receiver's Fee is £525 and there is no reduction for low incomes, benefits, etc.
The Court Fee is £175, and depending on your circumstances you can get part or all of this fee remitted (reduced). (You will need to complete a Form EX160 claim this, do it in advance or submitting your petition).
In some courts (please ask BEFORE going to court) there is a charge to 'swear your documents, which is a legal requirement, and if they charge there is a flat fee of £7. If charged this again can be remitted, though many do this free of charge
These fees are paid in CASH to the court you are presenting your bankruptcy in, they are NOT paid to any third party organisation.
Again you should not need to pay anyone to submit the application for you.
Individual Voluntary Agreement (IVA)
Maximum = Up to 40% of all monies paid in - most charge a lot less
An Individual Voluntary Arrangement (IVA) is a formal agreement between you and your (lenders) creditors. It is generally appropriate for people who are unable to make their monthly repayments in full but who do have some money to give to their creditors each month. An IVA proposal sets out how you are going to repay your creditors, usually over a period of five to six years. The IVA can also take the form of a lump sum raised from the sale of an asset such as property or an insurance policy or a contribution from friends or family.
There should be no upfront fees for an IVA, as any reputable company should collect the fees from the agreed payment into the IVA when and if the IVA is approved. If the IVA is not realistically going to be approved then this kind of provider would not put forward as if the IVA is rejected they will have done the work of the adviser, nominee and creditors meeting for no reward - fees are not cheap
Debt Management Plan (DMP)
Maximum NIL up to 25%
By using the service of either PayPlan or CCCS, the DMP will not cost you anything, because these organisations are funded by the creditors directly.
If you choose to use a fee charging company, you can expect (as an average) the first two month's contributions to be retained by the company to cover 'set up costs' and they will retain up to a further 20% of each month's payments as 'administration charges'. In effect this reduces your DMP payments by about 25% or will extend your repayment period by 25%.
We also caution the use of fee paying companies as many DO NOT pay the creditors and 'fold' taking your money with them.
Informal Voluntary Agreement (IVA)
Oh yes they do exist, please be VERY careful when dealing with small debt management companies when entering into an IVA, as some have recently been advertising IVAs and people have signed up thinking they are INDIVIDUAL VOLUNTARY AGREEMENTS, when in reality they are signing up for a DMP in another name!
Recently we are aware of a person who LOST £1500 to a company who convinced the person they were in an INDIVIDUAL VOLUNTARY AGREEMENT, when in reality they were in a DMP and then 'folded' the company.
Currently this practice is not illegal and OFT is investigating!
[Correct as at 04/004/2011]
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Abbreviations used in DQF
My advice is guidance only, if you want the law then consult a lawyer!
(c) All Spelling mistakes are my own design, infringement of them may result me sulking!