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Find out how an IVA will affect you & your partner







Will an IVA affect my Partner?

There are some things to consider when you are thinking about doing an IVA and how it may or may not affect your partner. We have explained some of the criteria below that needs to be considered.

Household Income and expenses

When you are married or co-habiting with a partner, many aspects of your life are equally shared, such as bills and household expenses, so it is logical that both of your incomes and expenses are considered as a whole, when it comes to one of you doing an IVA. Some utilities might be used in varying amounts by each of you, causing more expenditure in the household budget for one person over the other.

Say for example, your partner uses more water than you and you use more electric than your partner. Or your partner might have a more expensive car which is necessary for travel to work, whilst you work from home or use public transport on occasion. In these scenarios, you both use varied amounts of the household budget towards your living expenses, regardless of each other’s income coming into the house.

When it comes to an IVA, it is relatively easy to determine the percentages of income of each partner and how it is allocated. This can be backed up by pay-slips, P60’s, benefits and so on.

Assets

The ownership of assets depends on many matters. Each asset such as a car or a house may be wholly or partly owned by either you or your partner. Some assets may be owned on a 50/50 basis or on an entirely different basis. For example, if you owned a house outright and your partner moved in to live with you, then it would be incorrect to assume that the property is half owned by them from day one.

Debts

Debts can be single or jointly owned. You are both personally liable for your own individual debts and both of you will be liable for any jointly owned debts. One of you may have a lot of debt and the other may have none or very little debt and there may be some or no joint debts. It could be that only one of you is insolvent and in need of taking the IVA route and the other may not need this at all.

So how will all of the above criteria be considered in an IVA in regards to your partner remaining unaffected?

Will my IVA affect my partner?

Will an IVA affect my Partner?

If you decide to enter into and IVA, it might have some effect on your partner, but the extent of the impact will depend on the circumstances regarding the criteria mentioned above. You should discuss any queries or concerns you have with an IVA provider, prior to doing an IVA.

With regard to household expenses and income, your creditors will want to see your Income and Expenditure as a couple in order to see that everything is distributed fairly and that they are getting the best offer possible in an IVA payment. But just because creditors want to see what your partner earns and what bills your partner pays for, doesn’t necessarily mean they will be affected by the IVA.

When it comes to assets such as a house, creditors will expect to see who owns what and in what ratio. This is particularly important if there is equity in a jointly owned property. Creditors would expect you, as the insolvent partner to address your share of any equity for their benefit. You might need to re-mortgage or sell the property and  you will not be able to do this without consent and agreement of your partner.

A key consideration in all of these matters is whether you both have agreed to pool your resources when you first decided to live together or at some point thereafter. Even without a formal agreement, it may be implied from the evidence of your lifestyle and expenditure that you have done so. It may be that your partner has agreed to assist you in the in the IVA, by contributing some or all of their own surplus income to the IVA.

If you have any joint debts with your partner then your IVA may impact on their credit worthiness. Your partner, if they are not insolvent will need to maintain the full contractual repayments on the joint debt during the life of the IVA. Any dividend paid from the IVA would shorten the length of the term of such a debt. During the life of the IVA your partner may also have to deal with the reluctance of creditors to lend funds, knowing that you are insolvent and in an IVA.

To sum up, many people have successfully completed an IVA without negatively affecting their partner whatsoever. It really depends on your current circumstances and your debts. A proper well-constructed IVA will deal with all matters relating to income and expenditure, assets and liabilities and afford both of you an opportunity to fully and finally heal your financial woes.

Any respectable IVA provider will explain everything in detail beforehand, letting you know exactly how your partner will or will not be affected and how. They will be able to calculate everything fairly and evenly and work out exactly what you can afford to pay towards your debts, with minimum impact to your partner wherever possible.

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MoneyHelper

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