www.iva.co.uk

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Hi all

Asking this question for a friend really... but please read on as it really might help them out.

My friend has been in a relationship for several years with a guy heavily in debt (credit cards and consolidation loan topping £20,000 I'd guess).

He has bulked at an IVA because this would mean that he would have to include her in the IVA, even though all the debts were accumulated before their relationship began.

They are coming down slowly, but it's really dragging them down now and he still refuses to even consider an IVA because it would have to include his partners income.

Is this correct? She earns the higher salary and pays 50% of all household bills etc, but is she liable for more if they go into an IVA?

Regards

Sharon

Hi Sharon

Not being an expert, I am not too sure, but as far as I knew it would only be your friend's partner's contributions to the household budget that would be taken into account as this will affect affordability. I say this because my son-in-law is in an IVA which is affected by my daughter's contributions to the household e.g that is why my son-in-laws IVA payments are higher than mine as I am a single person with only one source of income ... I hope this makes sense!

Debbie

Thanks Debbie

It sort of makes sense, I've told them that surely she would only have to be accounted for 50% of household bills and not more, as they are not her debts. But she would be expected to pay 50% of any bills within the house.

Sharon

I've just heard that she has been told by CCCS that her earnings would be taken into account for the full amount of the IVA?

That can't be right... can it?

Sharon x

I am no expert but I believe that her earnings will be taken into account to establish that he is paying for his share of the bills etc - she would not be expected to pay for his debt!

They are saying that she will have to pay more than 50% of all household bills.

They have said she must pay 70% of all household bills.

Surely this can't be right, it should be 50/50 no matter what?

Your advice or experience would be much appreciated....

Sharon x

agreed - a fair share of the bills although they % her income against the total income and expenditure for the house compared to yours and that is where the 70% is coming from - does she bring more home than you?

She brings home more than her partner (not me, asking this for a friend).

Her argument is that she has nothing to do with his debt and that they should split everything 50/50 rather than them taking the lions share of her income towards the bills.

They are living together and they pay 50/50 at the moment. Majority of debts were taken on before they got together and they have separate finances for everything. No joint accounts etc.

She earns around 30,000 PA and he earns 20,000 PA, hence the 70/30 split.

Regards

Sharon

This is such a tricky subject to broach when you are talking about new relationships, previous debts etc.

Maybe the best way to explain it is that ALL income into the house should be declared to show transparency, and whilst nobody would expect an innocent partner to pay for previous mistakes, it is equally unfair to ask businesses that have lent money, in good faith, to potentially write off debt because a new partner is expecting the bills to be shared in a disproportionate manner.

For example, £3k income in the house is made up of £2k her and £1k him. The bills are £1k per month so they agree to pay £500 per month each. In reality, and, crucially in the eyes of the creditors, he is subsidising her to the detriment of the creditors to whom he owes money.

Personally, whilst seeing both sides, I would not be happy, if I were owed money, to be told that I have to take less in the circumstances described. At the end of the day, IVA proposals are subject to the approval of the creditors, so in the end it doesn't mean that she has to pay his debts, it simply means that he has to cut his cloth accordingly if that is the product that he wishes to use to service his debts. If he, or she, is not happy with that then they have to decide to go down another route, whatever that may be.

Hope that this makes sense.

That's a great explanation of this commonly raised issue Size - I am going to cut and and paste it for future reference (trust that does not breach copyright!)

I am humbled and flattered to hear that Melanie, and you are free to use it as you wish!!

Regards.

But couldn't you take the view that they are just a flat share?

If your sharing a place with someone you'd only pay half the rent and half the bills.

In reality that's what they are doing, isn't it?

They are boyfriend and girlfriend as such... they just happen to be cohabiting?

Hi
It's not the fact that the innocent party is paying 50% of bills but earning 70% of the household income,it's the fact that the debtor is paying too much of their income for household expenses.The innocent partner doesn't have to contribute to the IVA but if they do not then creditors may well just reject the debtors IVA,or the IVA provider may well not propose it.
Creditors could also argue that the innocent party has benefited from the debtors spending.
Regards

The original post indicated that the relationship has been going on for several years. The creditors would not be unreasonable in thinking that he has met 50% of the household bills with 30% of the household income, in effect they are suffering because of that which, when you think about it, is not really fair.

You also have to consider the very pertinent question of whether she has had direct, as well as indirect, benefit from the debt outstanding. E.G has the debt been run up for home improvements, has there been a holiday taken etc etc?

Again, I reiterate that whilst it is a tricky subject, if a realtionship has been running for that long with the circumstances described, then if I were a creditor I would not be happy with an IVA proposal under a 50/50 split of bills.

Regards.

Hi
I think we are in agreement Size ?