IVA - effect on wife's credit status

sfjnet

I probably already know what you are going to tell me but...

I am almost certainly going to have to start an IVA because of £30K+ worth of personal debts that have gotten completely out of hand. All of the debt (and overdraft) are in my name only. My wife has her own bank account and aside from the mortgage on our house we don't share responsibility for any debt. I would like to know is if my starting an IVA will suddenly impact on my wife's credit status. She doesn't have or use a lot of credit but it would be comforting to know that she won't suddenly have it taken away because of my problems. Obviously we share the same surname and address so the link between us is clear. Should I/she be worried?

Thank you.

althas

If you are "financially linked" then yes it will. I have just found that out the hard way. A loan I took out (now part of my IVA) linked us with Experian (was a sole loan in my name). As we have a joint bank account (also part of the IVA), even though it is not on experian report and not in arrears etc, experian will NOT remove the financial link. When my wife applied for a loan it was declined as there was adverse info on her file. We joined the 1-month-free-see-your-credit-report-online thing, and found this link

I am furious as I was going to remove her name from the account before the IVA. And no the bank with not remove her name now, the only was is to pay the full amount of the overdraft off (and if I could do that I would not be in an IVA)

But to be all Zen like about it, I guess it is a good thing as it means we can do nothing till the IVA is over, but pray something does not happen before then

Good luck on things

Charco_2

Dont beat yourself up about Althas as I don't think your creditor would have removed the joint status of the loan/bank account anyway - even without the IVA.

SFJNet - it shouldn't be a problem for you. You're linked by a secured debt to your wife's credit report. If it was an UNSECURED DEBT then your wife would end up liable for the full debt while you entered the IVA. Your wife has credit currently in her own name and it is highly unlikely that any creditor is going to remove that from her simply because of a link to you - they'd probably have no reason to notice it provided she is maintaining her repayments! And provided she doesn't go looking for further credit.

skintflint103

Unusually I'm going with Charco on this , the only prob will be the IVA co will want to put a restriction on your property and want some future equity. They will ask your wife to agree to sign it. Don't!

sfjnet

skintflint103 wrote: »

Unusually I'm going with Charco on this , the only prob will be the IVA co will want to put a restriction on your property and want some future equity. They will ask your wife to agree to sign it. Don't!

Thanks for your input Skinflint - I'm just a bit foxed by your saying "Don't!" I assume the creditors/IVA company won't be too pleased if she refuses to sign -I would imagine they would reject the proposal (??)

Charco_2

The restriction is practically a "nothing" and certainly nothing for you to worry about.

If you have equity, or are likely to have equity at a later date, in your property then to have the IVA agreed you are are going to have to agree to address the equity at some stage. The restriction that your IP will put on your property is only to flag up if you attempt to sell your property at any stage during your IVA without informing your IP and maybe swanning off to Spain.

- The restriction does not give your IP the right to sell your house from underneath you!
- The restriction does NOT give your IP any claim to your wife's equity!
- The restriction does not give your IP any claim to YOUR equity for that matter! If you want to succesfully complete your IVA and you have realisabel equity then YOU'LL have to free it up, if you dont then the IVA may fail... The IP cannot force your hand!

Any equity you have to free from the property will be based on 85% of the value of your house...

Skint, I would love to know how you suggest a better way around this!?

skintflint103

A restriction is NOT a nothing! IP companies love to involve the other partner's assetts and income. I've come across so many case where someone owed only 2/3k and was 'invited' into the IVA so that the IP could increase the monthly payment from the second income. (You'll see it all on T.V. soon) 5 years bankrupt for a paltry sum that was under control!. Now charco will deny this, his employer pays him to. Your wife has a share in the property not the debt, signing is an assent of agreement. If you get a remortgage in an IVA it will be sub prime at sub prime rates. You'll need a broker solicitor etc and the lender will want a fee too. You ain't getting this at the Abbey, sorry Santander,who's paying ?Charco's mates? I don't think so. See a solicitor if they persist.

Charco_2

That's just wrong Skint

I don't know this person, and have no interest in misleading him. His wife should get independant legal advice (or ring a few companies to get a clearer picture) and they should not let it get in the way of MR finding a debt solution.

skintflint103

If you want to advise your friends to surrender their interest in their home I'm glad your not my friend. If you mate is happy to pay the creditors in the IVA why do they want a restriction registered. If it were joint debts then it's dificult to refuse. But hey the independent advice thing is good and it's funny how all of this didn't come up until I chanced to mention it.

Charco_2

It did come up before... On another thread that you were spouting rubbish on... The one where i commented that "a little knowledge is a dangerous thing"! But i was in a hurry there and what i meant to write was: IF YOU OR YOUR WIFE ARE CONCERNED, seek independent advice. Where would we be without you Skint? You're a hero, a National Treasure! But i'll say it again. The Restriction for the IP/IVA, is not so your IP can just sweep in and take your equity, and your wife's equity, and kick your dog, and overturn your baby's cradle. Your IP just wants to know (be alerted) if you try to pull a fly one and sell your asset without dealing with your debts... And if you do this, your IVA will fail - the IP has no interest in your asset and will not hunt you for it, he'll just fail your IVA and the creditors will come straight to you again. Besides overseeing that it is dealt with properly on behalf of your creditors, it has nothing else to do with him . You are not signing your wife's equity away, your wife is agreeing that YOU can realise YOUR share of the equity when the time comes. The cost of this will be borne by YOUR equity - if you have £30k equity then you'll release £15k (the solicitor's fees etc will come out of that) and you'll bring say £12k into your arrangement. Your wife will not be EXPECTED to release her equity for your debts...

adfax

Hi sfjnet

From my very recent experience of getting an IVA, both my wife and I signed a form for the land registry, which as already stated by Charco, places a restriction on the property which means that my IP is notified if I should (attempt) to sell the property. It doesn't mean anything more than that.

My wife also had to confirm that she understood the potential affect that bankruptcy (which may result from the failure of the IVA) could have on the property.

None of the bits of paper we signed gave the IP or the creditors any claim or automatic right to any equity that may or may not exist on the property - again, Charco is spot on with his comments above.

Whether other IPs do things differently I don't know. What I do know is that in order for my IP to proceed with my IVA we had to sign these bits of paper - without them it would not have proceeded.