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If you are applying for an IVA and are living with a partner or spouse, we consider whether you need to include your partner’s income in your income and expenditure budget.

If you are living with a spouse or partner and you are applying for an individual voluntary arrangement (IVA), you will have to declare your partner’s income.

Your creditors will require information firstly to make sure that the amount you are proposing to repay them in the IVA (your disposable income) is calculated fairly based on you paying your fair share of the household expenses.

Your creditors will assess your disposable income by considering what percentage of the total household income you generate. They will require you to pay no more of the household expenses than is fair based on this percentage.

For example, if you generate fifty percent of the income, your creditors will expect you to pay for no more than fifty percent of the joint household expenses.

If you were to pay more than fifty percent in this example, your creditors would argue that your partner was not contributing a fair amount towards the household costs. This would depress the amount you have available for paying into your IVA and it would be unlikely that your creditors would reject the IVA proposal.

Should your partner pay towards your debt?

If all of the debt you want to include in your individual voluntary arrangement is in your name alone, you will perhaps argue that your partner should not have to contribute towards paying back these debts.

However, generally speaking your creditors will argue otherwise.

They will say that even though the debt is in your name, it is likely that both you and your partner have benefited from the expenditure.

For this reason they will normally only accept your IVA application if the amount you propose to repay is based on your household disposable income. That is the amount remaining after your total household expenditure is deducted from your total household income.

The only exception to this rule is where you have only just started living together with your partner and you can reasonably argue that they have not benefited from the expenditure and debts that you have built up.

Dealing with your partner’s debt

You can only include debts that are in your name (or in joint names with somebody else) in your individual voluntary arrangement.

If your partner has debts in their name which they are planning to keep paying, they are allowed to do this as long as the payments can be covered by their portion of the disposable income.

Of course, you must ensure that you have added sufficient budget in the household living expenditures to allow these payments to be made.

If not, your IVA payment will be too high and you will not have enough funds to maintain it once your partner has paid their debts each month.

If your partner’s portion of the disposable income is not sufficient to maintain their payments, you will not be allowed to subsidise them as you would be making a preferential payment to your partner’s creditors over and above your own.

In these circumstances, your partner may then have to consider carrying out their own debt management solution such as a debt management plan (DMP) or even starting an IVA themselves.

The easiest way to do this may be for both you and your partner to carry out what is known as interlocking IVAs so that only one payment per month is made based on your household disposable income.

Proof that you are paying as much as you can

Generally speaking, if you want to apply for an individual voluntary arrangement and you are living with a partner or spouse, you will have to declare both your incomes.

This is so that you can prove to your creditors that the IVA payments you are proposing are fair and you are doing as much as you can to repay as much as you can possibly afford.

If you have been together with your partner during the time when your debts were built up, you should also expect your creditors to want your partner to contribute towards your IVA.

This will mean IVA payments based on a household income and expenditure budget.

At the end of the day, an individual voluntary arrangement is a way of paying as much as you can towards your debt in a controlled and managed way. Providing information about your partner’s income and including this where reasonable will help show that you are doing your absolute best to repay what you owe.

Article Source: http://www.articlesbase.com/debt-consolidation-articles/do-i-have-to-include-my-partners-income-when-i-apply-for-an-iva-4673255.html

About the Author

James Falla is a debt adviser from BeatMyDebt.com in the UK. For more quality and unbiased information on Debt Management Plans, visit our website at http://www.beatmydebt.com