When both partners have debts, or one partner's debts are putting pressure on the whole household, it isn't always obvious who should be in an IVA. This guide looks at couples, property on the coast and salaried office work, all of which come up often in this part of Tyneside.
Couples and IVAs: one partner or both?
An IVA is personal. It only covers debts in your own name and joint debts you share with someone else. If you and your partner both have significant debts, there are a few ways to approach it.
Linked IVAs
Where both partners need an IVA, two linked IVAs can be set up, each with its own proposal, but using a single household budget. This avoids paying for things twice and makes sure each payment reflects the real household position.
How a partner's income is counted
If only you are entering an IVA, your partner's debts aren't affected. However, household costs are usually shared, so their income is taken into account when working out how much you can afford. They aren't expected to pay your creditors, but they're expected to contribute their fair share of rent or mortgage, food and bills.
Joint debts
If you include a joint loan or credit card in your IVA, the lender can still ask your partner to repay the full balance. That's often the deciding factor in whether one or two IVAs make more sense.
Higher property values on the coast
Homes in Tynemouth, Cullercoats and parts of Whitley Bay tend to be worth more than those elsewhere in North Tyneside. If you own a property here, you may have more equity than you think, and that affects your IVA in two ways.
- Creditors will expect the proposal to deal with the equity, usually through a review around six months before the IVA ends.
- If there's substantial equity now, releasing some of it with independent mortgage advice might clear your debts without any form of insolvency.
Leasehold flats and service charges
Many newer coastal developments and converted buildings are leasehold flats with service charges and ground rent. Service charge arrears owed to a freeholder or management company need care, because a landlord can take action under the lease. Keep your ongoing charges up to date, include them in your budget and get advice about any arrears before your proposal is finalised.
Our guide to IVAs and your home explains the year-five equity process in full.
Office jobs, salaries and pension contributions
North Tyneside has a large number of office-based jobs, including at Cobalt Business Park and in public sector organisations. A regular salary is a good foundation for an IVA, because creditors can see the payment is sustainable. A few things are worth checking:
- Pension contributions: normal workplace contributions are usually accepted. Large extra contributions may be questioned, as they reduce what's available for creditors.
- Salary sacrifice schemes: things like a cycle-to-work scheme or a salary-sacrifice car can be queried if they look like non-essential spending.
- Employment contracts: some roles in financial services and the public sector require you to declare formal insolvency, so check before you apply.
Redundancy or restructuring at work
Large office employers in North Tyneside restructure from time to time, and a redundancy payment during an IVA needs handling carefully. Tell your supervisor as soon as you know. Part of a lump sum may need to go into the IVA, but you'll normally be allowed to keep enough to cover essential costs while you look for work, and your monthly payment can be reviewed once your new income is known.
Council tax and bills in North Tyneside
Council tax arrears owed to North Tyneside Council can usually go into an IVA, while your current council tax stays in your budget. If one of you has recently moved out, remember to update the council so the bill reflects who actually lives in the property.
Moving home within North Tyneside during an IVA
Five years is a long time, and many households move during an IVA. Moving isn't a problem in itself, but there are rules to follow.
- Selling a home you own: tell your supervisor before you put it on the market. Some or all of the equity may need to go into the IVA.
- Downsizing: moving somewhere cheaper can free up money, which may increase what goes to creditors or shorten the IVA.
- Starting a new tenancy: letting agents often run credit checks, so be open about the IVA and be ready to offer a guarantor.
Whatever you do, keep your supervisor up to date with your address. Missing letters about your annual review is an avoidable way for an IVA to run into trouble.
Are there better alternatives for my household?
If your combined income is healthy and the debts are manageable over a few years, a Debt Management Plan may be gentler. If the debts are mainly in one partner's name and the other has no debt, an IVA for one person may be enough. Use our IVA calculator for a rough illustration, or compare every debt solution.
Getting started from Wallsend to Whitley Bay
We're based in Newcastle and work entirely by phone and email, so wherever you are in North Tyneside, there's no need to travel. If you're a couple, it helps if both of you can be available for the first call. Send the form at the top of the page and choose a time that suits you both.
Free, impartial advice is also available from local Citizens Advice services and MoneyHelper.
Questions couples often ask
Will my IVA show on my partner's credit file?
Not directly. But if you have joint accounts or a joint mortgage, lenders may see a financial link between you on your credit files.
What happens if we separate during the IVA?
Tell your supervisor. Your budget will be reviewed to reflect your new circumstances, and the payment can be adjusted. If one of you moves out of North Tyneside, the new address and housing costs will be taken into account.