Joint debt and reasonable IVA terms?

Toobbloke

Hi all - apologies if this question has been dealt with. I have looked but can't find it.

The situation is this. My soon-to-be-ex wife and I took out a joint loan some years ago. She has since managed to get an IVA, and therefore I am being persued for the debt on my own.

Is it reasonable for an IVA to be set up in a way that would make another person financially unstable? Should there at least be some notice or communication of this?

I would add that the IVA terms appear to be that she pays absolutely nothing towards the debt - nothing has been paid for at least the last year. I fully understand that I am liable, and that I would pay whatever she was unable to in line with the IVA. It just seems to me that whoever managed the IVA took the opportunity to unload this as a joint and severally liable situation, and the creditor happily agreed.

I'd appreciate your thoughts.

TB

PNPSUKNET

lenders see you as a easy target to obtain funds from, it happens a lot and not much can really be done

Toobbloke

Thanks for that - I pretty much thought that would end up being the case.

It does seem slightly unethical for an IVA to be obtained in this manner though - it almost encourages people to abdicate any responsibility by allowing no payment at all. I understand that I have to pay it off, and I will, but in cases like these where perhaps someone isn't able to pay it off I would think that it simply encourages more IVA applications. It could even have the effect of people having to 'get in first' to get the better deal. I'm quite sure that if I was in the same position as she is, and got an IVA now, I wouldn't get the same (pay nothing) terms!

Ah well, lesson learned!

Radiantsoul

There is nothing you can do.
An IVA needs to be compared with bankruptcy. Presumably the creditors will get more out of an IVA than they would have done out of your ex's bankruptcy. If you choose to pursue an IVA they would look at it in the same way.

MIVAA

Hi Toobbloke,

You are jumping to the wrong conclusion here.

Just because the outstanding balance hasn't changed yet, it doesn't mean that your ex has "abdicate any responsibility" to repaying what she can afford to that creditor - or for that matter, any of her other creditors too.

You should speak to her IP, and try to establish the dividend she will be paying back to all her creditors.

Once you know this figure, you can enter into negotiations with the joint creditor, and search for a structured repayment of the balance still to be paid under your liability.

You may find that she is in actual fact repaying more than half of the overall debt over the full term of the IVA, but you are only liable for the remainder.

By the way, it is not unusual for a creditor to not receive any payments from an IVA within the first year, but that doesn't mean they will not be receiving any payments at all for the duration. The first year is 'costs heavy' so most of the initial IVA payments are used to off-set these costs, but over the subsequent years the creditors will be getting paid.

Speak to her IP and ask them what the dividend is expected to be and go from there.


MIVAA

Charco_2

What do you mean she pays NOTHING towards the debt? She has to be paying something!

If you mean that from the money she has paid thus far, nothing has made it as far as the joint debt then this is fairly normal. The IPs fees so far are dealt with first then the IP gets an anuual fee for monitoring the agreement. In the end it is likely your ex will have paid off something in the region of 25p to 40p in the £ (so 25 - 40% of the debt) You'll be expected to deal with the remaining 60 - 75% of the joint debt.

Toobbloke

Thanks for your comments so far. Just to clarify:

The IVA arrangement date was in October 2007. A statement I received today shows no payments whatsoever against the debt.

Will the IP give me any detail? I've been put off with DPA restrictions up until now.

Appreciate your help

TB

Charco_2

Yeah that's about right. Obviously they can't discuss someone-elses' case with you - even if you were/are married - unless your wife told them it was ok!

A lot of the early money paid into an IVA is eaten up in fees by the IP. After this the money starts to rest in an account opened by the IP on the debtors behalf. When sufficient funds are available, the IP will make a dispersement to each of the creditors depending on how much of the overall debt they own.

What would be of interest to you is the dividend your (ex)wife has proposed to her creditors.