Joint or Interlocking IVA
If an individual has a financial connection to another person – for example their spouse, child or civil partner – it may be possible for them to propose what are known as interlocking IVAs to deal with their debts together.
Whilst interlocking IVAs consist of two separate proposals – one for each person – they result in one arrangement and one contribution will be made in offer of repayment to both person’s debts. This does not mean that the each individual is taking responsibility for the other’s debts and you would not become liable for any debt other than your own.
The main advantages of this are that the two individuals will be charged only one set of fees to the Arrangement and creditors may get a better return on what they owe than if two individual arrangements where proposed. It also allows those individuals to make one, combined monthly payment between them which can make it easier to manage, particularly if you are used to managing your finances together. It also offers the opportunity for people who have a strong financial connection with each other to deal with their debts together and can enable them to plan for their financial future more effectively.
One thing to consider is that the success of the arrangement has a reliance on both of the individual’s creditors approving the IVA and then both individual’s maintaining their obligations. There is a risk that if one person does not comply the other may be affected. However, it is sometimes possible to resolve this by proposing a variation to the Proposal to split the Arrangements and continue as two separate IVA’s to remove the dependency on each other.
See Variation Proposals for real case examples of this.
Important Information
Subject to eligibility and acceptance. Fees Payable. Debt write off applies to unsecured debts only and on successful completion of an IVA. If your IVA fails, it could lead to Bankruptcy, although this is rare and alternatives may be available. Your ability to obtain credit will be affected for the medium to long term. Homeowners may be required to release equity in their property, subject to certain criteria. If unable to release equity and equity is available an additional 12 months payments may be requested in compensation.
Financial Support Systems provides insolvency solutions to individuals, specialising in IVAs. We do not administer or provide advice relating to debt management products, such as Debt Management Plans. Advice and information on alternative options will be provided following an initial fact find where the individual(s) concerned meets the criteria for an IVA and wishes to pursue it further, as governed by our Insolvency Practitioners' regulators, the Institute of Chartered Accountants in England and Wales. All advice given on any alternative options is therefore provided in reasonable contemplation of an insolvency appointment.
The Money Advice Service is a free service set up by the Government to help people make the most of their money. If you would like to learn more click here.
The Association of Business Recovery Professional, known as R3, produce a booklet called "Dealing with money worries - A guide to your options". This is a very helpful summary of the various options for dealing with debt and a copy can be found at the following link. Please also see link to 'Voluntary Arrangements - A Guide for Creditors on Insolvency Practitioner Fees'.