If both you and your spouse or partner are struggling with debt you could start a Joint IVA. Only a single monthly payment is required.
Jump to article contents:
- What is a Joint IVA?
- Do both partner’s Creditors have to agree?
- Is a Joint IVA always right for a Couple?
- What happens if you split up?
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What is a Joint IVA?
A couple struggling with debt can both carry out an IVA at the same time. This is known as a Joint IVA. In reality there are two Arrangements running along side each other. One for each person.
The two IVAs are known as interlocking. In other words they start and end at the same time and are paid with a single monthly payment based the household disposable income.
There is no need for both parties to be working. The household income figure used to calculate the monthly payment can be made up of one wage, two or a single wage plus other benefits.
Joint debts are not required to start a Joint IVA. Two interlocking agreements run at the same time with one monthly payment.
Do both Partner’s Creditors have to agree to the Joint IVA?
Because a Joint IVA is based on two Arrangements working together there must be two separate proposals. One for each person. Both of these must be accepted by the associated creditors.
If both people have different creditors it is conceivable that one of the Arrangements will be accepted but the other rejected. The risk of this is reduced if each person has 3-4 different creditors.
In the event that one party only has one or two creditors it is possible that neither of them can be persuaded to agree with the Arrangement. They may then have to consider using a different debt solution.
If there are joint debts it should be relatively easy for a Joint IVA to be accepted. If one of the agreements is accepted then by default the other should also be even if the number of creditors is small.
Is a Joint IVA always right for a Couple?
Where a couple both have debt problems a Joint IVA is not always the right option. If one party’s debts are small and they can maintain their repayments doing so will preserve their credit rating. Two arrangements will negatively affect both credit files.
Keeping one party out of the Arrangement might also be sensible if there is a jointly owned property. If both parties are involved 100% of the equity in the property must be included in the Arrangement.
Involving all of the property equity in a debt solution may not make sense. An example of this would be if one individual’s debts are small relative to their share of the equity. If they avoid an IVA their equity is protected.
Where only one half of a couple starts an IVA the other is not protected. The party not involved must maintain their debt payments from their own income. If they cannot a joint Arrangement should be considered.
What happens if you split up during a Joint IVA?
If you split up during a Joint IVA the arrangement may not necessarily be at risk. One option is to simply decide between you to continue making the agreed payment. However this may not always be possible.
After separating you may want to live in separate accommodation. Very often this will mean that your living expenses go up and you can no longer afford the payment you are making into the Arrangement.
In these circumstances you could try to split the agreement into two. You would then both have your own IVA and retain responsibility for making your own payments going forward.
Where it is not possible to maintain separate Agreements the last resort will be to allow the Joint IVA to fail. Both parties then need to make different arrangements to resolve the outstanding debt in their name.
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