JOINT IVA | February 2024
Joint IVA

February 2024

Joint IVA in February 2024

IVA stands for individual voluntary arrangement. Individual voluntary arrangements are a type of formal and legally binding agreement formed between you and your creditors under which you agree to pay back your debts over a set period of time, usually five years.

An Individual Voluntary Arrangement may be an option for you if you’re having trouble repaying your debts. 

If you’re married or in joint debt, you might be wondering if an IVA is a debt solution available to you. 

This article will set out the central information you need to know about joint IVAs. However, before committing to any individual debt solution you should seek free debt advice or free debt counselling from a variety of sources to ensure you choose the best debt solution for both you and your partner.

Topics that you will find covered on this page

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What is a joint Individual Voluntary Arrangement (IVA)?

Like most debt solutions, joint IVAs can seem a little complex when you first encounter them as a concept – in fact, there’s lots of information online that will tell you that you can’t take out an IVA in joint names.

Strictly speaking, this is true. To get a joint individual voluntary arrangement, you and the other person involved will need to apply for separate IVAs. However, once the IVAs are set up, they can subsequently be linked together.

A joint or interlocking IVA is a debt management strategy for two individuals who both have debts to pay. Interlocking IVAs work particularly well for married people who are having difficulty repaying their obligations because it allows them to make just one joint payment that is reasonable for both of them.

When your two separate IVAs are joined together into one interlocking IVA, they can be handled as one, and affordable repayments can be made together. 

The same licensed insolvency practitioner (the professional that you will need to consult in order to set up your IVAs) will be able to manage the whole process for you – with one payment and combined paperwork.

Who is eligible for joint individual voluntary arrangements? 

Although it is generally married couples that take out a joint IVA, it is not necessary for people to have joint bank accounts – or be partners or in a relationship – to take out a joint IVA.

In order to qualify for a joint IVA, you and your partner will need to:

  • Owe at least two separate creditors
  • Owe more than £6,000
  • Have or have the potential to earn enough money to make a payment towards your debts each month

So long as you satisfy the criteria set out above, then you will likely be able to enter into a joint IVA with your spouse or partner. It is important to note that not all creditors will agree to an IVA, so it is important to seek professional advice before entering into one.

What are joint debts?

Joint debts are when two people have taken out a loan or credit agreement together. This means that both people are individually responsible for repaying the money they owe in full – even if only one person uses the money. This is known as being severally liable.

Can joint debts be included in an IVA?

Yes, in general, joint debts can be included in a joint IVA. This is because a joint IVA remains, in reality, two individual IVAs and, therefore, two individual legal agreements between you and your creditors to repay individual or joint debts.

What kind of debt can be included in interlocking IVAs?

IVAs are debt solutions designed specifically to support people with unsecured joint debts. You might require debt advice for your individual circumstances, but in general, the following debts can be included in interlocking IVAs:

  • Personal loans
  • Jointly owned credit cards and/or individual credit card debts (although all debts remain in the name of the primary cardholder)
  • Overdrafts
  • Council tax debt
  • Payday loan debt
  • Catalogue or store card debt
  • Energy and water bill debt
  • Tax credit or benefits overpayments
  • Outstanding bills
  • Income tax debt
  • Money owed to family or friends
apply for an iva

What kind of debt cannot be included in interlocking IVAs?

Secured joint debts that cannot be included in interlocking IVAs include:

  • Mortgage debt
  • Other secured loans
  • Hire purchase agreements
  • Student loans
  • Social fund loans
  • Debt incurred through fraud
  • Court fines
  • TV licence debt
  • Child support debt

"An Individual Voluntary Arrangement may be an option for you if you're having trouble repaying your debts."

Advantages of an interlocking Individual Voluntary Arrangement 

There are a number of advantages to setting up interlocking IVAs, including:

One affordable monthly payment

Rather than having to make a number of monthly payments towards your debt, your payments will be amalgamated into a form which will be affordable for both parties.

Stress-free debt management

As your IVAs will be linked together, you’ll only have to deal with one insolvency practitioner. This can make the process a lot less stressful and more manageable. Furthermore, under IVAs, you are subject to legal protection, which means that creditors cannot get in touch with you or take any further legal action against you or your partner once the arrangement has been approved.

IVA in joint names

Protected assets

An IVA can assist you in preserving your assets and any joint assets, such as your house. Because an IVA is a formal agreement between you and individuals or companies that you owe, they are not permitted to take any further action against you. You will not be compelled to sell your home if you are a homeowner (whether or not it is jointly owned).

Reduced interest and charges

Once your IVA has been set up, the interest and charges on your total debt will be frozen. This means that you’ll only have to repay the amount that you owe rather than the interest and charges that have been added on.

Full debt write off

If you have not paid off the full outstanding balance at the end of your joint IVA, any remaining debt that has not been paid off will be written off.

Disadvantages of an interlocking Individual Voluntary Arrangement

There are also some disadvantages to setting up an interlocking IVA, which include:

Credit rating

Because taking out IVAs generally means that you are breaking your credit agreement with a lender, it will be recorded on your credit file and will remain there for six years, which will likely make it more difficult to obtain credit in the future.

Shared responsibility

As you’re both responsible for repaying the debt, if one person doesn’t make their payments, then it could affect both people’s credit ratings.

Asset ownership

In the case that you own any assets jointly, such as a property, then these may have to be sold in order to repay your debt. If you’re a homeowner, the terms of your IVA could require you to release the equity tied up in your home to contribute to debt repayments.

will an iva affect my partner

If you come into money during the IVA, you will likely be expected to make a lump sum payment or even pay the full balance of the money that you owe.

Not all debts can be included

As stated above, not all debts can be included in an Individual Voluntary Arrangement. This means that you may still have some debt that you’re responsible for repaying, even after your IVA has been set up.

What happens if my partner and I split up?

In the case that you and your partner divorce while you’re both in an Individual Voluntary Arrangement, the terms of the agreement will still apply. This means that under the conditions of the IVA, you’ll be obligated to repay the debt. However, if your circumstances do change, you may be able to request a variation in the IVA.

It’s critical to seek expert assistance if you’re thinking about establishing an interlocking IVA. You may consult with a debt counsellor who will evaluate your unique circumstances and likely offer free advice on the best way forward.

What if I enter into an Individual Voluntary Arrangement for a joint debt, but my partner does not?

If you decide to enter into an Individual Voluntary Arrangement for a joint debt, but your partner does not, then you will be solely responsible for repaying that money. 

However, if your partner is able to help by making payments towards the debt, this may help to reduce the overall amount that you owe.

How will my debt solution affect my partner?

If you’re considering setting up an Individual Voluntary Arrangement, it’s essential to think about how it will affect your partner. As set out above, an IVA will be noted down on your credit file and therefore will affect your ability to get credit for six years which may make it difficult to obtain credit if you need it in the future.

Your partner may also be affected if you’re a homeowner and you have to release equity from your home to contribute to debt repayments. 

You should seek debt advice for your individual circumstances, as it’s important to note that even if your partner is not included in the IVA, they could still be affected by it and creditors may try to take action against them to recover the money they are owed.

Will an Individual Voluntary Arrangement impact my joint mortgage?

If you have a joint mortgage with your partner, then an Individual Voluntary Arrangement will not impact your mortgage. However, if you’re a homeowner and you have to release equity from your home to contribute to repayments, this could affect your ability to keep up with mortgage repayments.

How do I apply for an Individual Voluntary Arrangement?

Although an interlocking Individual Voluntary Arrangement for joint debts means additional calculations for the IP that supports you, most of the actual IVA application process is the same as applying for a regular Individual Voluntary Arrangement.

  • You’ll begin by speaking with your IP about your finances. Make sure you consult a licenced insolvency practitioner authorised and regulated by the insolvency practitioners association.
  • These talks are entirely private, and the person you talk to will use the data you give to estimate how much you owe, how much income you have, and how much it costs to live.
  • This data enables the IP to determine how much of your monthly IVA payments should be paid to each of your creditors. This information helps you IP develop an IVA proposal which will be sent to each of the businesses you owe.
  • After being sent the proposals drawn up by your IP, the companies you have joint debts with are given a period of time in which to respond, then invited to a ‘creditors meeting’. You don’t have to attend this meeting yourself, and in fact, in most cases your creditors won’t do so either. Assuming they do not take issue with what your IP has arranged – or if they don’t respond at all – then your IVA will be set up and go into effect.

Of course, your creditors may not agree. If they’re one of the main organisations you owe money to, disagreeing may prevent the IVA from proceeding – but more often than not, your Insolvency Practitioner will find a solution. Even if a creditor objects while owing a minimal proportion of the amount due, the IVA will proceed.

What happens if an Individual Voluntary Arrangement proposal is rejected?

Since your Individual Voluntary Arrangement proposals are put together with a view to becoming a single, interlocking Individual Voluntary Arrangement, it means that if one of the proposals is rejected, the whole joint IVA will fail.

joint names IVA

However, try not to be too concerned about rejection at this stage of the process. An experienced IP will know exactly what is likely to be approved or not, and so will help you to make the proposals as attractive as possible for your creditors.

Is a joint IVA the right debt solution for you?

If you are considering a joint IVA, it is vital to seek professional debt advice from a qualified debt adviser who is experienced in helping people manage their money. For example, Back To Top Money Helper is an independent service set up by the Government. They provide free counselling, adjustment and credit information services.

Any similar services will be able to assess your financial situation and advise you on whether a joint IVA is the best option for you. If you decide to go ahead with a joint IVA, your advisor will negotiate with your creditors on your behalf and draw up an agreement that outlines the terms of the arrangement.

Article author

Katy Davies

I am a keen reader and writer and have been helping to write and produce the legal content for the site since the launch.   I studied for a law degree at Manchester University and I use that theoretical experience, as well as my practical experience as a solicitor, to help produce legal content which I hope you find helpful.

Outside of work, I love the snow and am a keen snowboarder.  Most winters you will see me trying to get away for long weekends to the slopes in Switzerland or France.

Email – [email protected]

Frequently Asked Questions

Who is eligible for joint individual voluntary arrangements?

In order to qualify for a joint IVA, you and your partner will need to:

  • Owe at least two separate creditors
  • Owe more than £6,000
  • Have or have the potential to earn enough money to make a payment towards your debts each month
What are joint debts?

Joint debts are when two people have taken out a loan or credit agreement together. This means that both people are individually responsible for repaying the money they owe in full – even if only one person uses the money. This is known as being severally liable.

Can joint debts be included in an IVA?

Yes, in general, joint debts can be included in a joint IVA. This is because a joint IVA remains, in reality, two individual IVAs and, therefore, two individual legal agreements between you and your creditors to repay individual or joint debts.

Will an Individual Voluntary Arrangement impact my joint mortgage?

If you have a joint mortgage with your partner, then an Individual Voluntary Arrangement will not impact your mortgage. However, if you’re a homeowner and you have to release equity from your home to contribute to repayments, this could affect your ability to keep up with mortgage repayments.

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Disclaimer: Please be aware that this site is no longer under active management. As a result, we cannot assure the accuracy or relevance of the content provided. Visitors should use their discretion and consider the potential for outdated or inaccurate information before relying on any material found here.