How is my Partner affected by my IVA?

How is my Partner affected by my IVA?

Your partner is not included in your IVA. However they could still be affected by the Arrangement in a number of ways.

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Is your Partner’s Income included in your IVA?

If you are living with a partner or spouse their income has to be declared in your IVA application. This is because the amount you pay into the Arrangement is calculated using the household disposable income.

Legally speaking your partner is not responsible for paying debts in just your name. However their income has to be included in the income and expenditure statement to show that they are contributing their fair share towards the household bills.

The fact they contribute to the bills is then reflected by spliting the household disposable income between you. This is done using the same percentage split as your income contributions. Your share will have to be paid into the IVA. Your partner can keep their’s to pay for their own commitments.

Some creditors require that 100% of household disposable income is paid into an IVA. They argue this reflects the fact that both you and your partner have benefited from the money you borrowed.

What happens if your Partner has their own Debts?

Your partner may have debt in their own name. Where this is the case they should be allowed to continue paying it from their share of the household disposable income.

There will only be an issue with this if their monthly debt payments are greater than their share. If so it might be possible for them to continue with their payments if savings can be made from your agreed household expenditure budget.

If not and your partner cannot afford to continue paying their debt you may need to consider a Joint IVA.

If your partner has debts but no income of their own or your creditors demand that 100% of the household disposable income is paid into your Arrangement you will have to consider a Joint IVA.

What if you and your Partner have Joint Debts?

Joint debts are things like joint overdrafts or bank loans. Both parties are joint and severably liable for the repayment. If one party does not pay the other is still responsible for 100% of the outstanding balance.

You must include any joint debts in your IVA. However because the Arrangement only protects you this will result in a problem for your Partner. The creditor can and will continue to chase them for the money.

If they have their own source of income it may be possible for them to continue making the payments from their share of the disposable income. If not then you will need to consider a Joint IVA.

Where you and your partner have joint debts it is common to start a joint IVA. However this is not compulsory.

How is a Jointly owned Property affected by an IVA?

If you are a home owner you will need to agree to try and release equity from your property as part of your IVA. However if it is jointly owned you only have to consider your share of any equity. Your Partner’s share is protected.

You must ensure thay your partner understands you may have to release equity as part of the Arrangement. If they refuse to allow you to do so it could result in the failure of your Plan.

Even though your Partner is not obliged to touch their equity one option you might consider is releasing some of their share to settle your Arrangement early. The offer can be made because it is based on money your creditors would not otherwise be entitled to.

If you are joint home owners it is very important you understand the implications for your property if you are considering a Joint IVA. In this scenario 100% of any home equity becomes available to the Arrangement.

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29 thoughts on “How is my Partner affected by my IVA?

    Amy says:

    I have been left 25% of my fathers house, however there is a no sale clause in the will. How does this affect my IVA?

      Hi Amy

      If you receive inheritance during an IVA this counts as a windfall. As such you should make the inheritance known to your IVA company and they would have a claim on it.

      That said, I understand your situation is not straight forward as the property is not due to be sold for the foreseeable future. I am not a solicitor, however given the windfall clause applies even in this situation, I assume that your share of the proceeds of the sale of the property would still be payable into you IVA when the house is eventually sold (even if this is after your IVA has already finished).

      Of course this is not a desirable situation as it leaves everyone hanging. It is likely that even your IVA company would not want this. As such as a compromise, I have seen situations where the claim on the inheritance is waived, but in return the IVA payment are extended for say 12 months.

      Ultimately however, you need to speak to your IVA company about this and see what they say.

    Darren says:

    I’ve been in an iva for a few months I pay all shopping, travel, etc but not the mortgage as it’s my wife’s property the money I transfer into my wife’s account daily is for what she spends daily on dinners going to shop, travel etc and it’s soon mounted up on my yearly review is my ip allowed to see her account as she won’t let them if asked…

      Hi Darren

      Legally speaking if your wife is not in an IVA, your IVA company can’t force her to give them copies of her bank statements. That said, if you transfer money to your wife to pay for living expenses from your income based on an income and expenses budget that was agreed as part of your IVA there should be no issue at your review.

    Nick says:

    Hello,

    I am hoping you might be able to help, with a couple of questions I have around mortgages and IVA’s.

    I started an IVA on the 8th October 2015, however, in February 2020 I made a full and final payment into my IVA and no longer contribute any further payments.

    As it will be six years since my IVA begain in October 2021, my IVA will be removed from my credit file in 8 months.

    I currently live with my girlfriend and we have talked about me getting added onto her mortgage, would this be possible within the next 8 months or would I have to wait until the IVA was removed from my credit file?

    We have also talked about buying a house together? Similar question, but would I have to wait until October before applying for a mortgage?

    Many Thanks,
    Nick

      Hi Nick

      As you say, given your IVA started in Oct 2015, the record will be removed from your credit file in October this year (Oct 2021).

      You will find it neigh on impossible to get a mortgage in your name (either alone or in joint names with anybody else) until the record comes off your file. Even if you could, the interest rate would be so prohibitive that you would certainly decide to wait until October.

      After October when the record has come off your file, getting a mortgage is then possible (either in your name or in joint names with your girlfriend). However, it is still not straight forward. Most high street lenders will still not work with you.

      Given this, I recommend that you speak to a specialist mortgage broker who will be able to assist. Please don’t hesitate to contact us if you would like further information or advice regarding finding an appropriate broker (0800 011 4712).

    Matthew says:

    Hi

    I entered into an iva agreement in May 2019 for 6 years as I am a joint homeowner. I am getting a divorce currently and my wife wants to trade my share of the house equity against a reduced share of my pension, however as I signed an RX1 form I assume I cannot make that decision without asking my iva company and therefore my creditors in which I assume the will reply no way.

      Hi Matthew

      If I understand you correctly, you are suggesting that you give up your share of the financial interest in your property and in return you keep more of your pension. If this is the case then you are correct, you can’t do this during your IVA without agreement from your IVA company. They are likely to say no as your pension is not included in the IVA agreement. As such they would lose out.

      If you were to go ahead regardless without mentioning it to your IVA company, your wife would not be able to benefit because the IVA company has placed a restriction on the property (the RX1 form you signed). This would prevent any future sale until their claim is satisfied. If your wife objected, they would then threaten to fail the whole IVA until it was sorted out which would be a major headache for you.

    Nikki H says:

    Hi I’ve been in an IVA for a couple of years. I have 20 payments left on it. My husband got a job which is really well paid compared to what he was on and our payments went from £70 a month to £439 a month. He has no been TUPEed over to a different company which offers quite a few perks. One of which being a sharesave scheme, which he could save £150 per month. Would this be allowed within the IVA or would they want that £150 toward the monthly payment?

      Hi Nikki

      If your husband is not included in the IVA, then in theory he can do anything he likes with any extra money he earns. If he wants to pay some of this into his employer’s sharesave scheme, there should be no issue with this.

      That said, I do not think your IVA company will agree to reducing your payment in order to help your husband save. So if saving this £150/mth means that you would struggle to maintain your payment, he may have to consider reducing the amount he puts into the scheme each month.

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