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.
Included in this article:
- 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 not included in your monthly payment unless they agree to assist you.
Struggling to get your head round all of this? We can help. Call us (0800 077 6180) or complete the form below. The advice is free and confidential.
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 because 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 feasible.
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Hi, I just have a question about my Iva. The Iva is solely mine and when I made the proposal me and my wife’s wages were taken into account, but do I have to declare my wife’s wages if she has a pay rise?
Hi John
This is one of those questions where the answer is “it depends….”. In theory if your wife is not party to the IVA then there is no legal obligation on her or you to declare the fact she has received a pay rise. You are legally obliged to inform your IP of changes in your circumstances but not changes of someone who is not party to the IVA and is not legally bound by its terms (ie your wife).
That said there may be circumstances when you might need to. The first is if there is any stipulation from the creditors in your Agreement that you must inform them if your wife’s income increases. This would be unusual. It normally only occurs for example if creditors have requested that she looks for work for some reason.
The second is if when your IVA was set up your share of the income was greater than hers. For example if your income was 75% of the total and hers was 25%. In this situation your income was subsidising her. If her income then rises you would then need to subsidise her less. As a result your ability to pay into your IVA increases. In this situation you arguably have a moral obligation to inform your IVA company. However not a legal one. At the end of the day you only have to inform your IP of changes to your income.
Given all of this the bottom line is you are unlikely to be under a legal obligation to declare your wife’s pay rise. When you have your annual review you can confirm that your income has not changed which is correct.
Hello,
My wife is going to apply for IVA. Our marriage is not registered in UK. We never had any joint account or any joint credit. I have inherited property abroad which would be sold in next year and I may have bring this money in UK to pay the initial deposit for the mortgage solely on my name without including my wife as she will be on IVA. My questions are:
1-Can my future mortgage will be effected if my wife on IVA?
2- Would my wife need to declare that to IVA If i bought the property on mortgage on my name.?
Hi Ahsan
If your wife starts an IVA your assets are not affected and cannot be claimed by her creditors. As such your property abroad is safe. If you chose to sell it and transfer the money to the UK to buy a property in your name then this would remain your asset and would not become part of your wife’s IVA. She would not have to declare anything
Your ability to get a mortgage should also not be affected. Her credit rating will be negatively affected by her IVA but not yours.
My ex husband is in an Iva I am now being chased and have been threatened with bailiff s if it is on his Iva can they chase me
Hi Jane
You cannot be chased for debts that are just in your ex’s name. However the problem may be that you had a debt in joint names.
Your ex would have rightly included any such debts in his IVA. However that does not protect you. You are still liable for the total balance of joint debts and the creditor can still use enforcement action against you to collect them.
If this is the case and you are not able to pay the debt then you should consider using a debt solution yourself.