IVA's With Joint Debts

Often those with debt difficulties have debts in their own name plus joint debts in a partners name. Depending upon circumstances, this can either hinder or help on the possibility of an IVA. Joint debts and IVAs are potentially complex. To get advice specific to your exact circumstances please call or request a call back, we'll clarify the situation for you.

Joint Debts Explained

Joint debts are when two or more parties have signed a credit or loan agreement together, or some other form of agreement for goods or services to be provided for the benefit of all parties. In most cases, all parties are individually responsible for the full amount of the debt. This is called joint and several liability. It is not true that, in such circumstances, each is liable for half the debt. If one person can (or won) pay, creditors can and will pursue the other for the full outstanding amount.

It does not matter the purpose of the loan, who spent the money, or who benefited from it. It does not matter who is, or has been, making repayments to date. If the debt is a joint one, it does not matter if the cause of the debt is the other person's financial irresponsibility. In the eyes of the law you are both legally responsible for the settlement of the entire debt.

Did You Know?
About 30% of the IVA's we prepare are for partners whose IVA's are linked to each other. 

My Partner's Debts

You are not liable for anyone else's debts unless you co-sign a credit agreement or are acting as guarantor. This is true even when you are married, have a civil partnership with, or live with them with shared financial responsibilities such as children to support, joint mortgage to pay etc. Conversely, someone else's debts can't be included in your IVA.

Joint Debts On Credit Cards

Often there is confusion about who is liable for credit card debts. Card cards are never issued in joint names. The credit agreement is with a primary cardholder, who may have requested an additional card for their spouse/partner. Any additional cardholder is simpley given the facility to use the the primary card holder's credit. All debts are in the primary cardholder's name. It does not matter which card is used.

Joint Liability & IVAs

In the case of joint debts, where one party enters an IVA, creditors can pursue the other party for the full outstanding balance of any joint debts. If there is a high level of shared debt then it may be possible for both parties to enter into separate IVAs. If a proportion of your debts are joint with your partner, then you can enter into a joint or linked IVA. The IVA process is the same as a single IVA proposal except that income and expenditure assessment takes into consideration the combined income and combined costs of living. Whether this is right for you is entirely dependant on your specific circumstances so please call us for advice.

Linked IVAs

There is no such thing as a joint IVA or a single IVA covering the debt repayments of two parties. When both parties qualify for an IVA due to some individual and some joint liability debts, linked IVA proposals can be made. Linked IVA's are separate, interlocking arrangements. Each is conditional upon the other and they are administered jointly for convenience. Both must be approved to proceed.

Joint debts but only one party qualifies for an IVA

If you have debts of say £16,000 and your partner has debts of £4,000 and there is an additional joint debt of £7,000 - You qualify for an IVA but your partner does not. You can't have an IVA for £23,000. You can potentially propose an IVA for the £16,000 of debts solely in your name. The household budget will have to allow for your non-IVA partner to continue making their monthly debt repayments, including those on the joint debts, in full.

In other words, your partners obligation to pay their own debts impacts your ability to make IVA payments on your own debts, so in that respect these other debts are a factor in your IVA.

Approx. 40% of our IVA clients have an IVA that links to a partner's IVA.

IVAs and joint debts, especially where the parties also have non-joint debts, can be complicated.

For clear advice specific to your own circumstances, please call us, or apply for an IVA today