Interlocking IVA For Couples
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The term IVA is an abbreviation of “individual voluntary arrangement”. As the full name suggests, this is a debt solution created for an individual rather than a couple.
This doesn’t prevent you and your partner from dealing with your debts together.
A “joint IVA” doesn’t exist in a technical sense but an “interlocking IVA” is effectively the same thing.
An interlocking IVA enables you to deal with your debts in a coordinated way. Your IVAs will be jointly arranged, jointly managed, and jointly paid.
The calculation of the monthly payment is produced using a joint household budget. This process ensures that you can cover all of your bills and expenses while dealing with your debts.
Each of your creditors votes on whether to accept your individual IVA proposals. Assuming both of your proposals get accepted your interlocking IVA will be up and running.
There’s no requirement to have a joint debt in order to proceed with a joint IVA.
If you do have joint debt these accounts will be included in each of your arrangements. Your individual liability for a joint debt will end once you complete your IVA.
The outcome is different if you have a joint debt and only one of you enters an IVA. The IVA user’s liability ends when they complete the arrangement but the other borrower remains fully liable for any part of the balance that has not been repaid.
If you are joint homeowners your home is likely to be your main asset.
Each of your arrangements will include an IVA equity release clause. This determines what action you’ll need to take about the equity in your home in the final year of the arrangement.
A joint IVA might require you both to address the full amount of equity in your property in the final year by way of a new mortgage or a one year extension of payments.
If only one of you enters an arrangement this equity release clause will only apply to that person’s share of the equity.
Users of an interlocking IVA are usually married, civil partners, or a cohabiting couple.
This debt solution might also be available if you live with someone who isn’t your partner but you are each financially dependent upon the other.
If you separate or divorce during the arrangement it can split into unlinked IVAs.
Provided that you can still afford to pay you’ll continue with the plan and each deal with your IVA provider separately.
A joint IVA is available if you live in England, Wales, or Northern Ireland. There are three other main debt solutions you can consider using if you live in one these nations.
A debt management plan enables you to repay your debts at a rate that you can afford. No debt gets written off and the plan continues until the debts are cleared. A joint debt management plan is available for couples.
A debt relief order can help you to get your debts written-off quickly and cheaply if you aren’t a homeowner and have little disposable income. Joint debt relief orders do not exist.
Bankruptcy may be a sensible way to deal with a serious debt problem. If you own assets or work in certain types of industries bankruptcy may be inappropriate. Joint bankruptcy does not exist in the UK.
If you’re worried about debt and considering a joint IVA please contact us.
We’ve been helping couples to deal with their debts together since 2007. Our advisers are friendly experts and all advice is provided on a confidential basis.
Author: Andrew Graveson
Qualified Debt Adviser & IVA-Guide.co.uk Founder
Page Last Updated: 31/07/2020