When you start an IVA it protects you but not your partner. If they also have debts you should consider a Joint IVA.
- Can you start a Joint IVA?
- How is the Arrangement agreed?
- The affect on a jointly owned Property
- What of you separate during a Joint IVA?
Can you start a Joint IVA?
An IVA is an individual debt solution. This means that once in place the Arrangement only protects you from your creditors. If you have a spouse or partner it does not protect them from their debts or a joint debt.
If your partner is also struggling it is possible to do a Joint IVA. Both your debts are then included. Although it is referred to as joint there are actually two IVAs which are interlocked and based on single monthly payment.
You can implement this solution if only one of you is working. Your partner may have little or no income. However payment into the joint Arrangement is based on the household disposable income.
A Joint IVA is possible even if one of you has no income and is unable to contribute anything towards the monthly payment.
How is a Joint IVA Agreed?
In order for a Joint IVA to work both of the proposals must be agreed by the respective creditors. If you have a a joint debt this is generally not an issue. Given that creditor agrees then the Arrangement is normally put in place.
However it is possible for one individual’s IVA to be accepted and the other’s rejected. This may happen if there are no joint debts and one party has only a few creditors who do not respond to or reject the proposal.
If this happens the individual who’s Arrangement was accepted can still continue with their IVA. However the other party will need to consider an alternative solution to manage their debts.
You do not have to have joint debts to start a Joint IVA. However it will help to get the agreement accepted particularly where one party has only a few other smaller debts.
The affect on a jointly owned Property
If you own a property in joint names you will have to try and release your share of the equity if you start an IVA. However if your spouse or partner is not included in the Arrangement their share is not at risk.
But if you carry out a Joint IVA both party’s share (i.e. 100%) of the equity in the property must be considered. It will therefore be far more likely that at least some equity can be released and paid into the agreement.
This is not ideal if one party’s share is worth more than the total of their debts. In this situation it might be better to protect their equity by keeping them out of the IVA.
If you are joint homeowners and one party’s debts total less than their share of the equity you should consider avoiding a Joint IVA and them managing their debt in a different way.
What if you separate during a Joint IVA?
A Joint IVA will normally last for 5-6 years. If you separate from your spouse or partner during this time your ability to maintain the agreed payments may be put at risk.
If the split is amicable you could both agree to carry on paying the agreement between you as normal. If you need to reduce the payments due to increased living expenses this might be possible but would have to be agreed with your creditors.
Where the split is acrimonious it is usually best to separate the Arrangement. One option is for you both to continue making your own payments into you own IVA.
If after splitting with your partner you can no longer afford to pay your IVA on your own you may have to let it fail. You would then need to start a different solution better suited to you.