Can I do a joint IVA with my partner?
If you are facing unmanageable debts that you can`t see yourself ever being able to repay, it`s important that you consider all your available options, with the help of a debt expert.
One option may be an IVA (Individual Voluntary Arrangement) - a legally binding agreement with your unsecured lenders in which you`ll repay as much of your debt as you can afford, and your lenders will write off the rest.
If your finances are linked with someone else`s - your partner, for example, or anyone else you share budgets with - you may be eligible for a joint IVA.
How does a joint IVA work?
A joint IVA will work in the same way as any other IVA, except that the circumstances of both you and your partner will be taken into consideration (i.e. your combined income and combined debts).
You and your partner will work with an Insolvency Practitioner to draw up an IVA proposal, detailing the proposed terms of the IVA (such as how much you can afford to pay each month, and over what period of time).
This will be sent to your lenders, who will be invited to `vote` on the proposal. 75% (by debt value) of voting lenders must approve the terms for the IVA to go ahead.
Once approved, you`ll start making regular payments towards your IVA. This will usually be on a monthly basis for a period of five years, although the timescale may vary depending on what you have agreed.
On successful completion of the IVA, your remaining unsecured debt will be written off and you`ll be legally debt-free.
What are the downsides of an IVA?
An IVA is a substantial commitment that will most likely leave you with little disposable income for the duration of the IVA. You should only enter into an IVA if you are certain that it is the best option for your circumstances.
You will usually be expected to contribute most of any increase in income (any payrise, bonus, etc.) during your IVA towards your debts. And homeowners may be required to release some of the equity in their home in the 54th month (half way through the final year).
Finally, an IVA is a form of insolvency and will have a significant impact on your credit rating, making it harder and/or more expensive to obtain further credit for the six years it stays on your credit report.
If you`re struggling with unmanageable debt and considering an IVA, click here for more information or call our expert debt advisers on 0800 195 2911.
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- IVA v debt consolidation - a comparison
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