What is a Debt Relief Order and how does it work?
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Do you and your partner have problem debts? Are you considering an IVA? Make sure that you read our article on how IVAs can work for couples in debt.
If you and your partner are battling unmanageable debts, then an IVA could be the right solution for you both. An IVA is a form of insolvency which would allow you to reduce your monthly payments on your unsecured debts down to a reasonable amount as long as your creditors agreed. At the end of the IVA, which usually lasts for five years, the rest of the debts included on your agreement would be written off. This is why an IVA may only be suitable if you couldn’t pay your debts off in a reasonable amount of time.
Whether or not it’s right for you will depend on your personal circumstances and you will need to seek professional advice before going ahead with this type of agreement.
Can I have a joint IVA?
Technically, there is no such thing as a joint IVA – it stands for Individual Voluntary Arrangement so they have to be single. There are, however, linked IVAs that could work for some couples as long as you both have debt and live at the same address.
We should mention at this point that if you did go ahead with linked IVAs, then your personal information such as income and expenditure, and notes of conversations that we have with either of you, will be shared with both of you while the IVA is ongoing, even in the unlikely event that you separate. You’d need to make sure that you were comfortable with this before you entered into the agreement.
In these cases, linked proposals can be made to the creditors who will then accept or reject them as they would with a normal proposal. Because of the way that the two people’s finances are linked, the two agreements depend on each other to work, and both have to be accepted for them to go ahead.
If I qualify will my partner still be chased for the debt?
It’s important to remember that when you take out a joint debt you’re both responsible for the whole of the debt – not just half each. Even if you were to enter into an IVA and have some of your debts written off at the end, the other person named on the debt would still be liable for the amount. An IVA for just one person named on the credit agreement does not have the power to write off the total amount owing. If you were approved for an IVA and your partner wasn’t, the lender would continue to chase the other person for the outstanding money.
It’s also important to point out that you are not responsible for anyone else’s debts even if you are married. What we mean by this is that if your name is not on the credit agreement then you’re not legally responsible for it – this holds no matter what the money was used for. So this means that you wouldn’t be able to put anyone else’s debts on your IVA to help them out. If you’re in a position where you think that your other half’s debts might be having a negative impact on your credit score then read our article about Notices of Disassociation. Just be aware that you wouldn’t be able to get a disassociation from someone who you had a joint line of credit with.
Can I get a single IVA with joint debts?
There have been cases where one partner has been approved for an IVA and the other hasn’t, even when taking the joint debts into account.
When we’re looking at whether an IVA is the right option, we check your income and expenditure carefully and put together a household budget. It might just be that your other half’s payments towards the joint debts are taken into account in the household budget to make sure that you could make your IVA payments and they could carry on making their payments as well.
If your partner doesn’t qualify for an IVA then another option is for them to go on a Debt Management Plan. This would lower the monthly amount that they’re paying towards their unsecured debts, but they would still end up paying the whole of the amount back. Click the link to find out more about this informal debt solution.
As we said, going ahead with an IVA, whether it’s single or linked, is a big decision and will have an impact on your life, so make sure that you get lots of advice so you can make an informed decision. Use the options to the left to chat to one of our debt advisors who can answer all your questions.
by Christine WalshBack to blog home