In its most simple form an IVA enables a single person with a serious debt problem the chance to become debt free whilst avoiding bankruptcy.
But, here at My IVA Adviser, we are regularly asked “Can two people that share a serious amount of debt, yet have only limited resources between them, use an IVA to become debt free?”
Well, the simple answer is yes they can.
A Joint IVA, or interlocking IVA as it is also referred to, allows two people to use their joint resources to tackle their joint debt problem together.
A Joint IVA provides the applicant with an alternative to Bankruptcy, especially in cases where two ’stand alone’ IVAs may not be plausible.
In truth the Insolvency Practitioner who acts as a nominee for the two IVA applicants, will actually propose two separate IVAs, but the two cases be treated as one in order to save on time and costs.
This cost sharing creates a large saving on the supervisory fees that are charged to the creditors, which in turn means they receive a greater amount of money from the IVA fund, which suits them just fine.
For an IVA Proposal to be acceptable to creditors the applicant’s circumstances must meet certain predetermined criteria to order to qualify them for an IVA.
- The applicant must have at least £12,000 unsecured debt.
- The debts must be owed to at least 2 different creditors.
- The applicant must be in employment.
- The applicant must have a disposable income sufficiently high to be able to repay at least 20% 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 £11,000 owed to 2 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 of £700.
Each person on their own would not have sufficient debt to qualify for an IVA, but together their debts amount to £22,000 which is high enough to qualify.
Also, neither could afford the minimum IVA repayment on their own, but by using team work, pooling both the disposable incomes and lumping their individual debts together, a joint IVA becomes a real possibility.
A joint 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 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 IVA guides.
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