How taking out an Individual Voluntary Arrangement might financially affect your partner

Individual Voluntary Arrangement

 

Taking out an Individual Voluntary Arrangement won’t directly affect your partner financially, as they’re not expected to contribute towards repayments, but it can affect them indirectly in several ways.

 

Disposable income

Your partner will be expected to pay a fair proportion of household living expenses, which is calculated relative to their income. For example, if their salary constitutes 40% of the total household income, they’ll be expected to contribute this percentage towards general expenses such as food and utilities. This is done to prevent people declaring that they alone pay all living expenses, which would reduce the figure available for repayments under the IVA.

Credit reports

If you hold joint accounts or have joint liabilities with your partner, taking out an IVA could have an effect on their credit rating. A note will be placed on your credit file when you take out the IVA, and it remains there for six years.

Should your partner request a loan or new credit, lenders might be reluctant to lend to them based on the fact that you are financially linked. The electoral roll is used to confirm your partner’s identity and will show that they are financially linked to someone with an IVA.

Equity in property

One of the terms of the IVA might be that you have to put forward some equity in your property as part of the repayment schedule. If the property is jointly owned your partner’s equity isn’t affected directly, but the overall amount available for you both to borrow against the property is reduced.

The majority of couples are linked financially in some way, whether by a joint mortgage or simply a joint bank account, but your partner can’t be held directly responsible for your debts.

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