My partner will suffer because of my IVA IVA Myth
Summary: My partner will suffer because of my IVA - This article discusses the implications of an individual IVA (Individual Voluntary Arrangement) for the partner/spouse of someone in an IVA.
Individual or joint IVA
Strictly speaking all IVA's are individual - the "I" in IVA stands for individual. However, for couples who live together and whose finances are necessarily interlocked, a joint IVA is as realistic option. Joint debts inevitably require a joint IVA, and if each partner has significant individual debts, then again a joint IVA makes most sense.
My debts are mine
For someone with debts in their own name, who has a partner or spouse, the individual IVA need not affect their partner. It is of course possible that the other half in the relationship has benefitted from the debts even though not in their own name. This may become relevant in calculating how the IVA might work. However an individual's IVA is their own debt solution, affecting their own credit rating but not that of their partner/spouse.
Will my partner's income be taken into account?
Creditors in an IVA are likely to want to know how the household finances work, as it will be assumed that both parties in the relationship will contribute proportionately (according to relative income levels) to the household bills. For example, if someone looking to propose an IVA was paying all the rent or mortgage, bills etc, whilst their partner/spouse who also worked was not, creditors would be justified in feeling they were not getting their debt (or more of it) than they might reasonably expect due to the unfair distribution of household expenses. However, the partners available income would normally be protected and not be used to pay the IVA proposer's individual debts.
What about our joint house?
In an IVA proposal disclosure of assets is necessary. When an individual proposes an IVA for their own debt but has a jointly owned property, details of any equity will need to be provided. However the partner's share of any equity is ring fenced and cannot be made available to repay their partners/spouses debts.
One presumes that an individual IVA will have some impact on the proposer's other half. However given that the repayment level on their debt is now affordable and there are no more threats of action against the proposer, it might be argued that the affect on the partner is positive rather than negative.