An Individual Voluntary Arrangement (IVA) is a popular debt solution for many UK residents struggling with unmanageable debts.
However, before committing to an IVA, it’s essential to consider how it might affect your partner’s financial situation.
While an IVA won’t directly impact your partner’s credit file, it could indirectly affect it if you have joint debts.
What is an IVA?
An Individual Voluntary Arrangement (IVA) is a debt solution available to residents of the UK who are struggling with unmanageable unsecured debts.
An IVA is a legally binding agreement between you and your creditors, where you agree to pay back an affordable amount of your debts over a fixed period, usually five or six years.
In return, your creditors agree to write off any remaining debt at the end of the IVA.
IVAs are a popular alternative to bankruptcy as they allow you to avoid the long-term consequences of bankruptcy while still allowing you to deal with your unsecured debts.
Can you use an IVA to settle joint debts?
While an IVA can only be applied for by a single individual, joint debts and joint financial accounts can be included in the IVA proposal.
However, it’s essential to note that joint debts are only applicable to the individual’s share of the debt.
The other party would still be responsible for their share of the debt, and creditors may pursue them for payment unless they are willing to consider a formal debt solution of their own.
Additionally, if you have a financial link with your partner, such as a joint bank account or mortgage, your partner’s credit file may still be impacted by your IVA, even if they’re not directly responsible for the debt.
Can they use my partner’s income to pay off an IVA?
The simplest answer is that your partner can make an offer to do this if they wish, there is nothing to stop them making an offer.
That said, it’s not possible to say what the outcome of that offer would be without having an in-depth knowledge of your IVA. And even then it may be that your Insolvency Practitioner (IP) cannot answer this as your creditors may need to agree to this.
The best thing to do will be to contact the IP supervising your case and ask them if this will be possible and if so will it fully resolve your current situation.
Can they take my partner’s wages for my IVA payments?
Your partner’s wages cannot be taken into account but the IVA company may want to reassess your position, as you are no longer solely responsible for all your household bills.
You must update the IVA provider of your change in circumstances. You have a legal duty to notify your IVA supervisor of changes and to not do so could result in IVA failing.
Will I still be able to help with household expenses while in an IVA?
Yes, you should still be able to contribute to household expenses while in an IVA. Your Insolvency Practitioner (IP) will consider your living expenses, including household expenses, when creating your IVA proposal.
It’s important to be honest and upfront about your expenses, so your IP can accurately assess your financial situation and create a realistic repayment plan. If you have an active joint bank account, you should inform your IP, as this could impact your IVA arrangement.
You should still be able to pay for essential household expenses, and your IP will work with you to create a budget that allows you to live within your means while also repaying your debts.
Can an IVA affect my partner’s credit history?
Yes, an IVA can affect your partner’s credit history, particularly if you have a financial association with them, such as a joint account or mortgage.
While an IVA won’t directly impact your partner’s credit file or credit rating, it could indirectly affect their ability to obtain credit in the future. This is because lenders will take into account the fact that you have an IVA when assessing your joint financial applications.
Your partner’s credit history will only be affected if they are financially linked to you, and if you have missed payments on joint accounts or if the joint account is included in the IVA. It’s important to consider these factors when deciding whether an IVA is the right debt solution for you.
My partner is refusing to disclose their income & expenditure on the IVA forms, what can I do?
You will need to speak to your IP and ask them this question. The answer could be that it does not matter at all or it could be that it means that the IVA fails.
Without knowing the details of your proposal and the history of your case it’s not possible to say with any degree of accuracy.
My ex-partner used my address for their IVA, will it affect me?
If you do not have any link financially then there shouldn’t be anything that has an impact directly on you.
If you do have, or previously had, any financial ties then you may wish to check with the credit reference agencies to see if any details show on your file about your ex-partner as a financial association, just living in the same house does not mean that you are financially connected.
Can I leave out a joint mortgage with my partner if I get an IVA?
All income and expenditure must be declared in an IVA. Secured debts like mortgages are not included in the list of debts the IVA will tackle.
Your share of the monthly payment will be included in your monthly expenditure allowance. However, You may have to release your share of any equity from the property at the end of the IVA.
Would a joint loan with my partner be included in my personal IVA?
A joint loan means that both of you are jointly and severally liable for the whole amount of the loan.
If you are dealing with your liability by entering into an IVA then it does not mean that your partner’s liability has been dealt with at all. They will need to pay back all of the debt that remains after your IVA contributions have dealt with your liability.
If, as an example, this loan is £5,000 and your IVA returns £1,000 to the lender then your partner will still be required to pay the remaining £4,000, unless they are also entering into a legally binding arrangement for their debts.
You may also want to read this article on Joint IVAs.
How do I know if an IVA is the best formal debt solution for me?
Whether an IVA is the best formal debt solution for you depends on your individual circumstances. Some factors to consider include the amount of debt you owe, your income and expenses, and the types of debt you have.
It’s also essential to understand the implications of an IVA, such as the impact on your credit rating, and the risk of failure if you’re unable to maintain the repayments. Ultimately, the decision to pursue an IVA should be based on careful consideration and a thorough understanding of your financial situation.
It’s always best to seek debt advice before considering any formal debt solutions, including an Individual Voluntary Arrangement (IVA). A debt advisor can assess your financial situation and recommend the most appropriate debt solution for your circumstances.
