One of the fundamental rules about debt in the UK is that if you are unable to repay what you owe a third party cannot then be made responsible for paying it. Even if you are married your spouse cannot be made to pay your debt.

As such if you start an Individual Voluntary Arrangement (IVA) meaning that you are not likely to repay all of the debt your partner cannot be made responsible for the payments in your place.

Nevertheless there are certain elements of the Arrangement that may affect them that you need to be aware of. We will look at these in detail.

Do you have to disclose your partner’s income in your IVA?

In order to start an IVA you first need to calculate exactly how much you can afford to pay towards your debts each month. This figure is called your disposable income. If you are living with your partner and they also have an income you will normally have to disclose what this income is during this process.

Your partner will not be expected to contribute towards your debt. However they do have to contribute to their fair share of the household living expenses based on the amount they are earning.

If you both earn roughly the same amount then your creditors would expect your partner to pay for half of the joint living expenses (mortgage; rent; utilities etc). They would not accept you claiming that you pay for all of the household expenses and therefore artificially reducing the disposable income you can afford to pay in to the Arrangement.

BMD Tip: Your partner could avoid disclosing their income if you can prove that you keep your incomes and living expenses totally separate and they are paying for exactly half of the household bills.

Do you want help to start an IVA? Give us a call on 0800 077 6180 or complete the form below to speak to one of our experts

What if you are helping your partner to pay their debts?

You may not be paying your partners debts directly. A common way for someone to help pay their partner’s debts is to allow them to live rent free so all of their money can be used for their debt repayments.

However this situation cannot continue if you start an IVA because your creditors will rightly take offence to the fact that you are proposing not to pay them in full while you are continuing to pay someone else’s debt.

BMD Tip: If your partner is unable to continue to pay their debt without your help, then you should both be looking at a debt management solution. You might both be able to start an joint IVA or they could use a Debt Management Plan (DMP).

What happens to joint debts in an IVA?

If you have got joint debts with your partner and you start an IVA it is very important to understand that they are still liable to pay the full outstanding balance of the debt themselves. The fact that you have started your Arrangement does not protect your partner if you have joint debts.

If your partner is not in a position to be able to continue to pay any joint debts from their disposable income you will probably both need to use a debt management solution to deal with the problem.

This might be two interlocking agreements known as a Joint IVA. However the solution you both choose will very much depend on your specific financial circumstances.

What happens to jointly owned home in an IVA?

If you are a home owner you will be expected to release equity from your property if you can to increase the amount you repay into your IVA.

If the property is owned in joint names with your spouse or partner, then the equity in your property will normally be shared between you 50/50. Because your partner is not responsible for paying your debt, they cannot be made to use any of their share of the equity to put towards your debts.

This will come as a relief to many spouses and partners. However it can also give you an opportunity to settle your Arrangement early if your partner chooses to release some of their equity for this reason. They are under no obligation to do this and so can stipulate the condition that the money is used to pay for an early settlement of your IVA. If the creditors do not agree to this then the money is simply not made available.