The option of an Individual Voluntary Arrangement (IVA) allows someone with a serious financial problem become debt free whilst avoiding bankruptcy. But can two people that share a serious amount of debt, but have only limited resources between them, use an Individual Voluntary Arrangement (IVA) to become debt free?
A Joint Individual Voluntary Arrangement (IVA) as it is referred to, allows two people use their joint resources and add their debts together, to qualify for a Joint Individual Voluntary Arrangement (IVA) when a single Individual Voluntary Arrangement (IVA) might otherwise be unaffordable.
A Joint Individual Voluntary Arrangement (IVA) provides a debtor with an alternative to Bankruptcy, especially in cases where two ’stand alone’ Individual Voluntary Arrangements (IVAs) may not be plausible.
In truth the Insolvency Practitioner who acts as a Nominee for the two Individual Voluntary Arrangement (IVA) applicants, will actually propose two individual Individual Voluntary Arrangements (IVAs). Only after the Individual Voluntary Arrangements (IVAs) have been accepted by the creditors, will the two cases be treated as one. This cost sharing creates a large saving on fees charged to the creditors, which in turn means they receive a greater amount of money from the Individual Voluntary Arrangement (IVA) fund.
For an Individual Voluntary Arrangement (IVA) Proposal to be acceptable to creditors the debtor’s circumstances must meet certain criteria.
- The debtor must have at least £15,000 unsecured debt.
- The debt must be owed to at least 4 different creditors.
- The debtor must be in employment.
- The debtor must have a disposable income sufficiently high to be able to repay at least 25% of the debt, plus costs.
Here is an example of an imaginary case where a Joint Individual Voluntary Arrangement (IVA) might be suitable:
A couple live together. Each has a personal unsecured debt of £13,000 owed to 4 creditors. Their monthly repayments adds up to £350 each person, or £700 between them. One works Part time, the other full time. Both incomes generate enough money to cover their household expenses, but once all their costs are deducted from their joint incomes, they are left with just £350 which is not enough to maintain their expected debt repayments.
Each person on their own would not have sufficient debt to qualify for an Individual Voluntary Arrangement (IVA), but together their debts amount to £26,000 which is high enough to qualify.
Also, neither could afford the minimum repayment into an Individual Voluntary Arrangement (IVA) on their own, but by using team work, pooling both the disposable income and their individual debts together, a joint Individual Voluntary Arrangement (IVA) becomes a real possibility.
A joint Individual Voluntary Arrangement (IVA) does not require the two people involved to be married.
It can be any two people who share the same living costs.
Getting into debt as a couple is easy, but it’s nice to know there is a debt solution
that offers you a way out together.
For further information on Joint Individual Voluntary Arrangements (IVAs), and how they work call the specialist team at My IVA Adviser on 0800 088 7503. or click here for a chance to download any of our 6 free Individual Voluntary Arrangement (IVA) guides.