What Is an IVA and How Will It Affect My Partner
If you've entered into an Individual Voluntary Arrangement (known as an IVA for short) with a debt collector, you may have questions. After all, many people rush through setting up an IVA to get the debt collector off their back without fully understanding what they are signing up for. And it's not uncommon for a spouse to reach out for more information about an IVA, hang up the phone, and realize they have no idea how or if it will affect their partner.
What Is an IVA?
An IVA is a contractual agreement to pay a debt over several years. IVAs typically last around 5 or 6 years. However, they may last longer if you miss payments. Conversely, if you make more than your required minimum payment each month, they may be shorter.
IVAs must be established by a qualified person, typically a lawyer or an accountant known as an insolvency practitioner (IP). The IP will negotiate a repayment agreement on your behalf with your creditors that will also include a fee for their services.
An IVA will include a monthly payment schedule that includes the IP's fee and an amount your creditors agree to receive each month. When you set up an IVA, you will make payments directly to the IP, who will then pay back the agreed-upon monthly amount directly to your creditors.
IVAs are not for everyone. You should know that IVAs have an extremely negative impact on your credit score. An IVA will remain on your credit history for six years, even if you satisfy your debt before then. Consequently, you may find it difficult to:
- Be approved for credit cards.
- Increase your credit limits.
- Obtain home, auto, or educational financing.
- Receive rental application approval.
- Secure some forms of employment.
Because of these effects, you should consider whether an IVA is the best solution for handling your debt and regaining control of your finances.
How Does an IVA Affect My Partner?
The first letter in IVA stands for Individual. It is an individual agreement that you, and only you, make payments towards your debt. However, while an IVA will not require your partner to make payments towards your debt, it will likely affect your partner in other ways.
When you set up an IVA, your IP will sit down with you and examine your:
- Your income
- Your partner's income
- Your household living expenses
- Your debts
- Your partner's debt obligations
Your IP and creditors may examine these items and expect your partner to make additional payments toward household expenses so that you can make greater contributions towards your debt.
Further, your IVA could also affect your partner's credit history if you have joint accounts. As a result, your partner could find it difficult to obtain credit and financing. So, if you're considering an IVA, you should sit down and discuss it with your partner first before working with an IP.
Can I Get a Joint IVA With My Partner?
If you and your partner have joint debt and wonder if you could obtain a joint IVA so that you and your partner could make joint payments, the answer is no. IVAs are individual arrangements. However, you can pursue what's known as an interlocking IVA. Doing so involves both you and your partner pursuing individual IVAs and then requesting that they be interlocked as the IP works to establish them.
Before you seek an interlocking IVA, you may want to seek advice from a financial professional. Obtaining one can be difficult. Additionally, depending on your situation, it may be more advantageous for only one of you to get an IVA and endure the brunt of the credit impact while the two of you arrange to pay more towards your joint debt.
Is There a Way I Can Get an IVA Without It Affecting My Partner?
You may be able to avoid your IVA negatively impacting your partner's credit history if and only if you do not have any joint accounts that are active. That includes joints with:
- Bank accounts
- Bank and private loans
- Credit cards
- Car loans
- Educational loans
- Business accounts or debts
Your partner could apply for what's called a Notice of Disassociation. This document can be added to your credit report that indicates you are no longer financially tied to them. You can file for a Notice even if you:
- Share the same last name as your partner
- Live with your partner
- Are legally married to or separated from your partner
Once you and your partner agree they should file a Notice of Disassociation, and you both should check your credit reports to ensure no active joint accounts are listed there. Then, you should contact each of the three credit reports directly to request a Notice of Disassociation be added to your file.
|Individual Voluntary Arrangement (IVA) Frequently Asked Questions|
|Will My IVA Affect My Husband’s/Wife’s Credit Rating?||No. Your IVA will not affect your partner’s credit ranking as your creditors are not permitted to make the credit file of your partner due to your financial activities.|
|What Happens If I Marry Someone With An IVA?||Due to IVA being an individual voluntary arrangement, this means that your partner has no liability for it hence they aren’t required to pay anything.|
|Should I Tell My Partner About IVA?||No. You are not required to tell your partner about your IVA as neither the creditor nor insolvency practitioner are permitted to discuss your debts with anyone but you.|
Tackling Your Debts With DoNotPay’s Assistance
Dealing with debt is stressful. And it can be very difficult to know the best way to approach it. After all, when you're swimming in debt, paying for professional advice or someone to advocate on your behalf may not be a feasible solution.
If you're dealing with debt and not sure where to turn, DoNotPay can help. Our debt collection resources can help keep debt collectors from using abusive or threatening tactics and help you verify your debts as well. To get started, you'll want to:
- Search “debt collection” on DoNotPay.
- Answer a series of questions about the debt collectors, including when you were contacted and how you were contacted, so we can determine if they have violated any debt collection laws.
- Decide which course of action you want to take based on our guidance, such as filing a debt verification request, demanding for the collectors to stop contacting you, or reporting them to a professional trade association.
Once you've completed these three steps, we'll get to work and help you determine what actions you should take.
What Debt Can DoNotPay Help Me With?
DoNotPay has helped people just like you deal with debt from agencies and lenders like:
Those are some of the companies for which our debt collection resources have been put to work. And this list grows every day as more and more people reach out for help getting the debt collectors off their backs while trying to figure out what they can realistically do to satisfy their debts while handling basic living expenses.
If you're considering an IVA, reach out to DoNotPay before taking this drastic step that may affect you and your partner. We can help you stop the calls and take the steps needed to negotiate a reasonable repayment plan or settlement offer.