Joint - Homeowner - Fixed Term IVA
A Joint IVA, or interlocking IVA, is geared to assist two people who are struggling to maintain their unsecured debts and are looking to assist and support each other by combining their financial resources in order to become debt free. Whilst it is not a qualifying criteria to have joint debts, this type of IVA will be able to deal with Joint and Several Liabilities where necessary.
It is not a prerequisite for people entering into a Joint IVA to be married or even in a relationship, indeed, they could be friends or family. The main criteria is that they share a joint financial budget, where their joint income is used to cover the complete household expenditure, with what's left being used to clear the debts through the IVA. This approach can give a significant advantage to couples where one partner is earning a much lower income than the other and would struggle to afford an IVA without help from the other partner.
Couples falling into this category will typically own, or part own a property, such as their home, but it could equally be a share in their parents home or even a 'Buy To Let' property too. Which ever scenario they fall into, as a result of being property owners, they will be expected to agree to an 'Equity Clause' as part of their IVA.
Under the 'Equity Clause' the property will be valued towards the end of the 4 year of the IVA. If there is sufficient equity in their property, they will be expected to attempt to release it, then introduce the released equity into the arrangement. If, for whatever reason, they are unable to release the equity they will, instead, be expected to contribute a further 12 months payments into the IVA, in lieu of equity they were unable to release. If there is no equity or even negative equity, there will be no 12 month extension.
Normally an IVA will have a fixed term of 5 years, with the IVA payments being calculated to what is deemed affordable. But with this type of IVA, there is the potential for an additional 12 month extension in lieu of equity that couldn't be released from the property.
This means that this type of IVA could last of 6 years altogether.
Whilst that might seem unfair, it does have an upside for, by definition, the extension to the IVA can only happen if there is equity in the property which can't be released. Creditors have a sole opportunity to benefit from the equity before the IVA ends. If that equity can't be released, they lose their chance at getting hold of it for good, which means, irrespective of the value of equity held, if it can't be released it is protected for the future benefit of the applicant.
Summary:
This type of IVA is designed for Homeowners and will deal with two people's unsecured debts. The IVA consist of 5 years of affordable repayments, with the possibility of a remortgage after the 4th year, otherwise an extra 12 payments to the IVA in lieu of any unreleasable equity. It legally binds creditors to freezing interest and protects the property by stopping all legal action against the applicant, including bailiffs and charging orders.
To discuss this type of IVA in more detail with one of our IVA consultants simply call 0800 856 8569
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An IVA can help a single person or two people sharing joint living costs deal with their debts.
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