Under the law you cannot be forced to pay someone else’s debt. However you may still have to pay towards your Partners IVA.
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- Will you have to pay into your Partners IVA?
- What if you have your own debts?
- What happens to your share of any Home Equity?
- Can you pay your Partners IVA?
Will you have to pay into your Partners IVA?
If your partner wants to start an IVA they will have to disclose your income during the application. This is because the total household income must be considered when calculating how much they will have to pay into their Arrangement each month.
Their payment will be based on their share of the household disposable income. The split is determinated pro rata relative to the percentage of the total income you both contribute.
Your share of the disposable income is then normally yours to keep. You should not be required to pay it into your partner’s Arrangement.
Your Partner’s creditors could demand that your share of the household disposable income is also paid into their IVA if they feel you have benefited from the debt.
What if you have your own debts to pay?
You may have debts in your name which you need to continue paying. This will not be a problem as long as as you can cover the payments with your share of the household disposable income.
However where your debt payments are relatively large you may not be left with sufficient funds to pay them. In these circumstances you will need to consider reducing your payments or starting a Joint IVA.
If you have no income ongoing payments towards your debts cannot be included in the living expenses budget. This would mean your partner would be paying these over the debt in their IVA. Their creditors would not agree to this and you will need to consider a joint IVA or alternative debt solution for your debts.
Any joint debts must be included in your partner’s IVA. However you remain liable to pay the outstanding balance. Your options in these circumstances will depend on the size of the debt.
What happens to your share of any Home Equity?
It is very important to understand the implications of your partners IVA if you are joint home owners. Under the terms of the Arrangement they will be obliged to try and release their share of any property equity.
Your share of any equity is protected. You will not be obliged to release any of this as part of your Partner’s Arrangement. However you cannot block them from remortgaging to release their share.
If you refuse to allow your partner to release their equity this could cause their whole Arrangement to fail. As such you must be prepared to give your permission from the beginning.
You can help settle your Partners IVA early by offering to release home equity. This could be done at any time during the Arrangement.
Can you pay your Partners IVA for them?
If your partner has little or no income of their own they may not be able to afford viable IVA payments. In this situation you can make the payment on their behalf if you wish.
This situation is common in the case of a joint IVA. One party may have no income of their own and so the Arrangement is funded entirely by the other. However it can also happen where the party funding the IVA is not otherwise involved.
Alternatively if you can make a cash lump sum available you could pay for a Lump Sum Payment IVA on behalf of your partner. In this scenario ongoing monthly payments are not then required.
If your partner has no income to pay for their own IVA it may not be the best solution for them. If they do not own property Bankruptcy a Debt Releif Order might be a cheaper option.