If you are living with a partner or spouse they are not responsible for paying your debts. However there are implications if you start an IVA.
- Does your partner have to pay your debts?
- How is a joint property affected?
- What happens if you have joint debts?
- Can you continue to pay your partner’s debts?
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Does your Partner have to Pay Your Debts if you start and IVA?
In the UK your partner is not liable to pay debt in your name. If you do not pay it then no one else can be legally forced to do so regardless of whether you are married or living together.
As such if you start an IVA they are not legally responsible for helping to make the payments. In addition they are not liable to pay any debt left outstanding after the Arrangement is completed.
You will normally have to disclose their income in your application. This is to confirm the amount they should contribute towards the household living expenses and ensure you are not paying more than your fair share.
Your partner should not have to contribute towards your IVA. Their share of the household disposable income is generally not included in your monthly payment.
How is a Joint Property Affected if you start an IVA?
If you are a home owner you will not be forced to sell your home if you start an IVA. However you will need to agree to try and release equity from it to increase the amount paid back to your creditors.
Where the property is owned in joint names with either your partner or spouse their share of the equity is protected. You would only be expected to realise extra cash from your share of the equity.
It will be important for you to tell the other joint owner about your IVA and potential obligation to relase some of your equity. If you do not and they subsequently refuse to co-operate it could lead to the failure of the Arrangement.
You may be able to settle your IVA early if the joint owner agrees to releasing some of their share of the home equity to enable a lump sum payment to be offered.
What happens to Joint Debts if you start an IVA?
You have to include all your unsecured debts in your IVA. This includes any in joint names with your partner. However they are not protected by the Arrangement. They remain liable for 100% of the balance.
This may not be an issue of they can maintain the ongoing repayments for these debts themselves from their share of the household surplus income. However if they cannot the creditor can start legal action against them.
To protect themselves from this action your partner will also have to consider using a debt management solution. The most appropriate option for them will depend on the wider financial circumstances.
If you and your partner have joint debts you could consider a joint IVA. This would give you both legal protection from your creditors.
Can you continue to pay your Partner’s Debts if you start an IVA?
You may have been helping your partner pay their debts from your income. If so it is unlikely you will be able to continue doing this if you start an IVA. All of your disposable income will have to be paid into the Arrangement.
It is not possible to include an amount for paying their debts in your living expenses budget. Your creditors would reject your proposal on the basis that you were making preferential payments (paying some and not others).
Where your partner cannot afford to pay their debt perhaps becuase they have no income of their own they will also have to consider using a debt management solution.
It might possible for you to make savings from your agreed living expenses to enable you to maintain your partner’s debt payments. However in most cases this is not recommended or feasable.
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