An Individual Voluntary Arrangement (IVA) is meant for clearing individual debts only. However, you might find yourself in a situation where both you and your spouse are in debt. You might want to get an IVA jointly with your partner in such cases. But, you must know a few things about this arrangement before proceeding. So, join us and discuss all the essential information you would need regarding a what is joint IVAs with our experts.
How does a Joint IVA Work?
An IVA works the same way in all cases. In other words, as its name suggests, it is an individual arrangement. So, you cannot apply for it jointly with another person. Therefore, “joint IVAs” is not the right term when both you and your spouse get an IVA. Even though people commonly know it by that name, you should call it an “interlocking IVA”.
You can also have an interlocking IVA with any person who is financially linked with you. So, it does not have to be your spouse in all cases. Regardless, two IVAs are considered interlocking only when they are applied simultaneously. Apart from that, the two applications must also contain the same financial statements.
Are You and Your Partner Eligible to Get an IVA?
If you want a “joint IVA”, both you and your partner or spouse should qualify for it. So, here are the criteria that both of you must fulfil to get an IVA advice:
- You must owe a total amount of at least £7,000 to multiple creditors. If your debt is less, you should look for other viable arrangements.
- Your debts must not be secured against your property.
- You must reside in England, Northern Ireland, or Wales. Residents of Scotland, you must go for a trust deed, which is a similar arrangement.
You can consider getting an IVA, only if you fulfill the aforementioned criteria. Other than that, you might also want to consider some other options as well.
How to Get an Interlocking IVA?
The application process for an Individual Voluntary Arrangement is the same in all cases. You have to set up an IVA with the help of an insolvency practitioner (IP), and your partner must do the same. Since it is a formal arrangement, you cannot proceed with it all by yourself. You and your partner have to provide financial detail, including income and expenditure to the IP.
The IP will create a repayment plan based on your financial situation and present it to your creditors. At least 75% of your creditors must approve the arrangement for it to be effective. After that, you and your partner would have to pay off your respective debts.
In an interlocking IVA, if your application is accepted, your partner’s application would usually be accepted too. You can then split the payments of your joint debts for completing the arrangement.
Can You Separate an Interlocked IVA?
You might want to separate your IVA from that of your partner due to various reasons. And, in case you are wondering, it is indeed possible to do so. But, in case you are separating from your partner, you might not necessarily have to split the IVAs. Depending on the terms of the arrangement, you might have to inform the IP of your decision. In any case, separating the IVAs usually would not fail the arrangement. And, you can proceed to complete your IVA after that.
When Should You Get an Interlocked IVA?
An interlocked IVA does not offer any special benefits to those who avail it. As we have seen, it works the same way as a regular IVA. However, you can benefit from it in certain cases. Especially so, when you and your partner or spouse have borrowed money together. In such situations, both of you can get an IVA and include this joint debt in the arrangement.
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What if you get an IVA for a joint debt and your partner does not? In that case, you would not have to pay the creditors after completing the arrangement. But, they can still demand repayment from your partner. So, your partner would have to deal with the creditors in such a situation. Therefore, it is not a bad idea to get an interlocked IVA for a joint debt.
Reach Out to Our Experts for Debt Advice
Are you thinking of getting a joint IVA? Then, you must proceed with that only after consulting a reliable step change expert. So, you must reach out to us to explore all the options and to find the right one for your situation.
