Can Couples Have a Joint IVA?

A linked IVA means that you and your partner each have your own IVA, but the arrangements are connected because you share household income, expenses or debts.

Whether this is suitable will depend on your individual circumstances and the types of debts you have.

What is a joint debt?

A joint debt is a debt that two people are both legally responsible for.

Common examples include:

• Joint loans
• Joint credit cards
• Joint overdrafts
• Some household bills or other credit agreements held in both names
• Joint mortgages

With a joint debt, both people are responsible for the full balance. This is sometimes referred to as joint and several liability.

This means that if one person cannot pay, the creditor can usually ask the other person to repay the outstanding balance.

What happens to joint debts if one person has an IVA?

An IVA only applies to the person who enters into it.

If you have a joint debt and only you enter an IVA, your partner does not automatically become protected by your IVA.

For example, imagine you and your partner have a joint loan with £10,000 outstanding. If you enter an IVA, the IVA can deal with your liability for the debt. However, your partner remains responsible for the debt and the lender can still pursue them for repayment.

This is why it is particularly important for couples with joint debts to consider both people's financial circumstances before deciding on a debt solution.

Can joint debts be included in an IVA?

A joint debt can generally be included in your IVA, but this does not remove your partner's responsibility for the debt.

Your IVA deals with your liability for the debt. If your partner does not have an IVA of their own, they remain liable for the outstanding balance.

The way a joint debt is treated can depend on the circumstances and the terms of the IVA, so you should get individual debt advice before making a decision.

Is there such a thing as a joint IVA?

Strictly speaking, there is no such thing as a joint IVA.

An IVA is an individual legal arrangement between one person and their creditors.

However, couples can sometimes have linked or interlocking IVAs. These are separate IVAs for each person that are linked because the couple share household finances.

For example, you and your partner might both have unsecured debts and contribute towards the same household expenses. You could potentially each have an IVA, with the arrangements taking your shared household income and expenditure into account.

You would still have:

• Your own IVA
• Your own debts
• Your own creditors
• Your own legal agreement

Your partner would have a separate arrangement.

How does a linked IVA work?

When a couple applies for linked IVAs, the Insolvency Practitioner will normally look at the household's overall financial circumstances.

This can include:

• Both partners' income
• Household bills
• Rent or mortgage payments
• Council tax
• Food and other essential living costs
• Transport costs
• Childcare and other family expenses
• Individual debts
• Joint debts

The aim is to establish what each person can reasonably afford to contribute towards their own debts.

Your partner's debts do not automatically become your responsibility simply because you live together.

Similarly, entering an IVA does not automatically make your partner responsible for your individual debts.

Will my partner's income be included in my IVA?

If you live with your partner, their income may need to be considered when your household budget is prepared.

This does not mean that your partner automatically has to pay your debts.

Instead, your Insolvency Practitioner will usually need to understand how household income and expenditure are shared.

For example, if you and your partner share the mortgage, utilities and food costs, these expenses may be divided between you when working out what you can afford to pay into your IVA.

The exact calculation will depend on your circumstances.

What happens if we have joint bank accounts?

If you have a joint bank account with your partner, this should be discussed before entering an IVA.

A bank that you owe money to may have the right to use money in an account to repay a debt you owe them. This is known as the right of set-off.

There can also be practical problems with continuing to use a joint account where one person owes money to the bank.

For this reason, if you are considering an IVA, you should get advice about your bank accounts before your IVA is set up.

Will an IVA affect my partner's credit rating?

Your IVA is recorded against you and does not automatically appear on your partner's credit file.

However, your partner's credit file could already be financially linked to yours if you have joint financial products, such as a joint mortgage, loan or bank account.

This means that your partner's ability to obtain credit may be affected indirectly because lenders may see a financial association between you.

Your partner's individual credit history is not automatically changed simply because you have an IVA.

What happens to our home if one or both of us have an IVA?

If you own your home, your property will need to be considered as part of an IVA.

This is particularly important where you and your partner jointly own the property.

The amount of equity in your home can affect the terms of an IVA. Depending on the circumstances, you may be expected to try to release available equity towards the arrangement.

The treatment of property and equity depends on the terms of the IVA and your individual circumstances, so homeowners should make sure they understand how their property could be affected before entering an arrangement.

Related guide: IVAs and your home

What happens if we separate or get divorced during an IVA?

A relationship breakdown can affect an IVA because your household income and expenditure may change.

For example, after separating:

• You may have to pay your household bills alone
• Your income may change
• You may move home
• Your partner may no longer contribute towards shared expenses
• Joint debts may still remain

If you separate while you have an IVA, you should tell your Insolvency Practitioner as soon as possible.

They can review your circumstances and explain what options are available.

Importantly, separating does not automatically remove either person's responsibility for a joint debt.

Can one partner have an IVA while the other doesn't?

Yes.

There is no requirement for both partners to have an IVA.

If only one person is struggling with debt, they may be able to enter an IVA while their partner continues to manage their own finances separately.

However, if you have joint debts, it is important to understand that your partner may remain liable for those debts even if they are included in your IVA.

A full assessment of both people's finances can help you understand the potential consequences.

Are linked IVAs suitable for everyone?

No.

An IVA is a formal and legally binding debt solution and is not automatically the best option simply because you and your partner have debts.

Other solutions could potentially be more appropriate depending on:

• How much you owe
• Your household income
• Your essential living costs
• Whether your debts are individual or joint
• Whether you own a property
• Whether you have significant assets
• Whether you have enough disposable income to make IVA payments

You should compare the available debt solutions before deciding whether an IVA is right for you.

Joint IVA alternatives

Depending on your circumstances, you may have other options for dealing with debt.

Debt Management Plan

A Debt Management Plan (DMP) is an informal arrangement where you make affordable payments towards your debts.

Unlike an IVA, a DMP is not legally binding and does not normally write off debt at the end.

A joint DMP may be possible where couples have shared debts.

Individual Voluntary Arrangement

An IVA is a formal, legally binding agreement with creditors. You make an agreed payment based on what you can afford, usually over several years.

At the end of a successful IVA, qualifying unsecured debt that remains unpaid may be written off.

Debt Relief Order

A Debt Relief Order (DRO) may be available to people who meet specific eligibility criteria, including limits relating to their debts, assets and disposable income.

It is generally aimed at people with relatively low levels of debt and limited assets.

Bankruptcy

Bankruptcy is another formal debt solution that can write off certain debts, although it can have significant consequences for assets, property and some aspects of your financial life.

The right option depends on your circumstances.

Is a joint or linked IVA right for me?

If you and your partner are struggling with debt, it is important to look at the whole household financial situation, particularly if you have joint debts.

A linked IVA may be appropriate where both partners have debts and an IVA is suitable for each person. However, there may be another debt solution that provides a better outcome.

Before deciding, make sure you understand:

• Which debts are joint
• Which debts belong to each person individually
• What could happen to joint debts
• How household income and expenditure will be assessed
• Whether your home or other assets could be affected
• What would happen if your circumstances changed

Getting independent debt advice can help you understand your options before making a decision.

Get help with joint debts and IVAs

If you and your partner are struggling with debt, you don't have to work out the best solution on your own.

An experienced debt adviser can look at your individual and joint debts, household income and expenditure and explain which solutions may be available.

An IVA can be an effective way of dealing with unaffordable unsecured debt for some people, but it is not suitable for everyone.

Before entering an IVA, make sure you understand how it could affect you, your partner, your joint debts and your home.