Case study - couple - IVA
An Individual Voluntary Arrangement is as implied in the name an individual plan. However it is possible to present an IVA in an interlocking fashion, where couples present joint debts, joint income and expenditure and make one repayment in the IVA to cover both of them.
Take Graham and Sarah for example. Since they were married 10 years ago they have always regarded their income and outgoings in a joint way. They have a joint bank account where their respective salaries are paid into, and each has benefitted from the others' debts.
Is an IVA the right solution?
Graham & Sarah have been juggling debts for some time. Graham works full time and earns £1400/mth, whilst Sarah working part time earns around half that amount. They have 2 school aged children so with child benefit and a small amount of tax credits their total income into the household is around £2300. However their rent, bills, food, school costs, travel and all the extras that go into normal life amount to £2000/mth.
The debt problem
£300/mth left over for savings or treats would be a happy place to be. Unfortunately for Graham & Sarah they have acquired a fair amount of debt along the way. Graham has 3 credit cards with around £10000 of debt, Sarah has several store cards with around £5000 of debt, but they also have a joint loan and overdraft with their bank totalling £15000. They have £30000 of debt in all and only £300 available income to finance the debts.
The loan is about £250/mth and the cards between them involve minimum repayments of about £350/mth. They have been paying the minimum payments but then using their overdraft and cards to pay the other bills. The figures just don't add up.
There is little point in one of them undertaking an IVA – their debt problem ties them together – each has debt in their own name, but they are each responsible for the joint debts. The answer is for them to present all their debt along with combined income and expenditure. They can offer £300/mth jointly and their creditors are very likely to accept this arrangement. Graham & Sarah will make sure they can afford the £300 each month, living reasonably on their remaining income, and breaking the vicious financial circle that they found themselves in.
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