How Do Joint IVAs Work?

Joint IVAs combine individual approved arrangements into a single interlocking IVA that can be handled on its own. The IP you work with will take care of all the paperwork, so it makes sense for you and your partner to deal with the same person.

An IVA is an alternative debt solution that enforces a legal agreement between you and your creditors. They’re set up and managed by someone qualified by the insolvency practitioners association and authorised and regulated by the financial conduct authority. An IVA lasts for 5 years, and any remaining debts you have at the end of it are written off.

An interlocking IVA works slightly differently from a standard one, as having joint debts and living costs with the person you cohabit with can confuse things.

Each person involved in the IVA will have a separate proposal detailing how much of the joint debts they can afford to pay off. It’ll also describe how much of their monthly income goes towards living expenses like rent and bills. You can then make a consolidated monthly payment to your creditors.

The Application Process for a Joint IVA

The process is much the same as if you were to apply for a standard IVA. The first step is to begin discussing your finances with your assigned IP.

Anything you discuss will be completely confidential, and it’s important to be as honest as possible to give them a correct overview of what joint debt you have, how much you owe, and your standard living costs.

The IP will then calculate how much you should be paying to your creditors each month. This information is collected and organised into a proposal which will then be sent to the companies you owe debts to.

Creditors Meeting

After your IVA proposals are sent to your creditors, they’ll respond and be invited to a creditors’ meeting. You won’t need to attend this meeting. If your creditors don’t have an issue with what your IP has proposed, the IVA will be set up with joint names on the arrangement.

What happens if a proposal for an IVA is turned down?

This type of arrangement combines two separate IVAs, which means that if one IVA proposal is rejected, the entire arrangement will fail. However, there’s no need to worry too much about this, as your insolvency practitioner will advise you on how to make your proposal attractive to creditors.

What Type of Debt Can Be Included?

Unsecured joint debt that is covered by this arrangement includes:

• Personal loans
• Joint and individual credit card debt
• Overdraft debts
• Council tax debts
• Outstanding balance on bills
• Income tax debts
• Personal debts to family or friends
• Debt incurred through bills
• Tax credit debt
• Benefits overpayments debt.

The Pros and Cons of a Joint IVA

Before applying for a joint IVA, it’s worth weighing up the pros and cons of this option.

Pros:

• It’s a legally-binding agreement that’s authorised and regulated by the Financial Conduct Authority
• You’ll have a licensed IP who can provide advice and handle all the paperwork involved
• No upfront fees
• Creditors can’t harass you for the duration of the IVA
• Interest charges are frozen during the IVA
• You’ll only be required to make one joint payment each month
• Your IP may offer flexibility if circumstances change, such as a separation during the IVA
• You won’t be forced to sell your joint assets
• Debt remaining at the end of the arrangement will be written off. 

Cons:

• Spending restrictions during the interlocking IVA
• Many exclusions to the type of debt involved
• Potential for rejection
• If you come into money during the IVA, you might be required to make a lump-sum payment
• The arrangement can fail if you are unable to make your monthly payments on time
• Like regular Individual Voluntary Arrangements, this type of solution will remain on your credit record for 6 years
• You can’t be or become the director of a limited company during the arrangement.

Where to Get Expert Debt Advice

You can get debt advice easily by contacting a qualified debt adviser. They’ll be able to provide friendly and unbiased advice about your situation and propose the best solution to help you make affordable repayments.