IVA definition and what it means for you
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If you’re considering starting an IVA you might be undecided about whether to tell your partner or not. Our blog will explain all and help you make your decision.
An IVA is a formal debt solution that’s designed to deal with insolvency and can, in the right circumstances, provide a welcome route out of problem debt for some people. If you’ve sought professional advice, and know that starting an IVA is the best course of action, you might be wondering how this could affect your partner/spouse and whether you have to tell them about the plan.
If you’re in this situation, this blog is for you. Hopefully after reading it, you’ll know how an IVA might affect you if you’re in a relationship and how to proceed with everyone’s best interests in mind.
Should I tell my partner about my IVA?
When it comes to an IVA there is a certain amount of privacy involved in the process. Your IVA provider will tell the creditors included on the plan about it (they will have to as the lenders will vote on whether they agree to the proposal or not.) But apart from letting the organisations that you owe money to know, your provider won’t tell anyone else, and they certainly won’t contact your family or friends about your plans to start an IVA. So if you’re wondering whether you have to tell your partner about your IVA, then the answer is no.
However, you may find that you’re more comfortable telling them about what’s going on, as, in reality, it may be too difficult to keep it from your partner, particularly if you live with them. This is because an Individual Voluntary Arrangement (IVA) is a formal debt solution to deal with insolvency, and will normally last for five-six years. The IVA may affect your life in ways that you will struggle to keep from someone you live with, especially over such a long time period. For example, you will have to live with a fairly strict budget, which makes sure that you’re able to pay as much money back to your creditors as possible. You may also receive phone calls and letters from your IVA provider when they need to keep you up-to-date with balances or when they need to carry out reviews.
If you live in the same house as your partner and you share joint finances, it may prove a difficult task to keep your IVA a secret. In most cases creditors will want to see a joint income and expenditure and, in this case, your partner will be asked to sign a consent form for this information to be shown as part of the proposal.
If you don’t want your partner to know about your IVA, because they don’t know the extent of your debts, then our blogs Secret Debts and If I get married will my debts follow me should help in terms of how you might want to approach the subject with a partner.
If going on an IVA means you’ll have to go into detail about the extent of your debts with your other half for the first time, this can seem daunting, but may not be as bad as you think. First of all, the very fact that you’ve sought professional advice and have been advised to start an IVA means that you want to deal with the problem and stop it from getting any worse. An IVA gives you the opportunity to lower your monthly payments on your unsecured debts and, when it’s completed successfully, the remainder of your included debts would be written off entirely. While there may be some changes in lifestyle that you have to live with while it’s ongoing, an expert would never recommend an IVA if the benefits to you didn’t outweigh the downsides. So, all things considered, an IVA has the potential to provide a welcome route out of unmanageable debt and an end to some of the stress that you may have been feeling in connection with your finances. This is definitely a positive piece of news to be able to share with your partner and a step in the right direction.
If I don’t tell them, is there any other way they may find out?
You do have a right to keep your IVA private if you wish to, having said that there are two ways which your other half may still find out about it even if you didn’t tell them. If you include any joint debts you both have on the IVA, your provider will contact the lender to let them know about the proposal. Your IVA provider then couldn’t do anything to stop your lender from contacting the other person responsible for the debt, this won’t be to tell them about the IVA, but rather to chase them for the contractual payments. Also if you had a joint mortgage then your IVA provider would need to write to your mortgage company to inform them even though the debt wouldn’t be included on the IVA. However, if you were to go ahead with an IVA an allowance would be made in your expenditure so that you could still afford to pay the mortgage.
An IVA is a way to deal with insolvency (this means not being able to pay your debts back at the rate that was originally agreed to) and if you started one, it would be recorded on the Insolvency Register. This is a public register, which can be accessed by anyone, so if you thought that your partner would have any reason to check whether you were insolvent, they could theoretically find out this way.
The Insolvency Register records details like your name, address and date of birth, however, there is a way to keep your details off this register altogether if you think that you may be at risk of violence or abuse from a partner, former partner or anyone for that matter. Our blog will tell you how to apply to be excluded from the register if you’re in this situation.
How will my IVA affect my partner?
You may also be worried about how going ahead with an IVA will affect your partner’s life. Well the reassuring thing here is that an Individual Voluntary Arrangement is just that – individual. If you were to start an IVA the restrictions, for example living to a strict budget and not taking out any more credit, would just apply to you and not your partner as well.
When you first speak to a debt advisor, they will take you through your income and expenditure carefully and then come up with a disposable income (DI) figure. This is the amount of money that’s spare every month that you could use to pay off your debts. If you live with someone else and you share finances, the advisor will take all your essential payments into account, meaning that you will still be able to contribute to the household bills and you won’t be leaving your partner to shoulder all the financial responsibility.
If you have joint debts with a partner, but they don’t need to start an IVA, it’s possible that your payments will be lowered on that particular debt as part of the IVA and then your partner will continue to make the contractual payments as normal. Your budget on the IVA will be worked out so that your partner is able to afford to continue making the payments they need to make. Just bear in mind that once your IVA is over, your partner will still have to continue making their payments towards that debt. If there is any financial association between the two of you, such as a joint bank account, then it couldn’t be guaranteed that the IVA wouldn’t affect their credit rating as well. It is possible to apply for a notice of disassociation which separates out two people’s financial history, but this only works when your shared finances are inactive.
We hope that this blog has put your mind to rest somewhat if you’re considering an IVA but worried about telling your partner or how it may affect them. For more information on this, and the other solutions out there, make sure you explore the rest of the site and have a look through the blog. If you’re ready to see whether an IVA is right for you, give us a call and have a chat with one of our advisors using the options to the left.
by Christine WalshBack to blog home