If you are living with a spouse or partner and you are applying for an Individual Voluntary Arrangement (IVA) you will have to declare their income.

Your creditors will require this information to make sure that the amount you are proposing to repay them is calculated fairly. They will require you to pay no more than your fair share of the expenses based on the percentage of the total household income you generate.

For example if you generate fifty percent of the income, your creditors will expect you to pay for no more than fifty percent of the joint household expenses.

Given that you will have to disclose your partner’s income in this way we explain whether or not they will also be expected to contribute towards your IVA payment and pay towards your debts.

Does your partner have to pay towards your debt if you start an IVA?

Legally speaking your partner is not responsible for paying any debt in your name. As such there is a good argument to say that they should not have to contribute towards your IVA payment.

However generally speaking your creditors will argue otherwise. They will say that even though the debt is in your name, it is likely that both you and your partner have benefited from the money that was spent.

For this reason they will normally only accept your application if the amount you propose to repay is based on your household disposable income. That is the amount remaining after your total household expenditure is deducted from your total household income.

BMD Tip: The exception to this is where you have only just started living together with your partner and you can reasonably argue that they have not benefited from the expenditure and debts that you have built up.

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What if your partner has their own debt?

You can only include debts that are in your name (or in joint names with somebody else) in your IVA. If your partner has debts in their own name which they are planning to keep paying they are allowed to do this as long as the payments can be covered by their portion of the disposable income.

You must ensure that you have included a budget in your household living expenditures to allow these payments to be made. If not the payment you make into your Arrangement will be too high and you will not have enough funds to maintain both this and your partners debt payments.

BMD Tip: If your partner’s portion of the disposable income is not sufficient to maintain their payments or if they have no income of their own you will not be allowed to subsidise them as you would be making a preferential payment to your partner’s creditors over and above your own.

In these circumstances your partner may then have to consider carrying out their own debt management solution such as a Debt Management Plan (DMP) or carry out a joint IVA with you.

You have to prove you are paying as much as you can into your IVA

Generally speaking, if you want to apply for an IVA and you are living with a partner or spouse you will have to declare both your incomes.

This is so that you can prove to your creditors that your proposed payments are fair and you are doing as much as you can to repay as much as you can possibly afford.

If you have been together with your partner during the time when your debts were built up, you should also expect your creditors to want your partner to contribute towards the Arrangement. This will mean payments based on a household income and expenditure budget.

At the end of the day the Arrangement is a way of paying as much as you can towards your debt in a controlled and managed way. Providing information about your partner’s income and including this where reasonable will help show that you are doing your absolute best to repay what you owe.