At Wits End

[Minnie]

Hubby and I had a meeting with IP yesterday to discuss his IVA. Whilst I had always made it clear from the outset our finances are separate because obviously we are married creditors want to look at the household income and expenditure.

I appreciated the IP's straight talking but having looked at various scenarios as to how to get out of this mess I am absolutely at my wits end and feel I am being penalised big time for hubby's debts.

We may as well be in a joint IVA given how the finances are being looked into.

I am not responsible for hubby's debt. We are completely disassociated financially and whilst I want to support hubby's IVA the scrutiny into my own personal affairs and the questioning is destroying us.

We are both into our second marriage. He came to me with nothing and I am very protective of what I have worked damned hard over the years to achieve that he has not financially contributed to.

I am upset, angry; I feel helpless and don't know which way to turn in order to put this situation right and save my marriage, which is now on the brink.

[MelanieGiles]

The point is not whether you are actually responsible for your husband's debts, but the perception that creditors will have of your situation - ie they will believe that you have benefitted from some of this borrowed money.

This is an attitude which seems to have grown over the last couple of years, obviously as they strive to obtain even greater returns from insolvent customers.

Your IP was only trying to make you aware of this - as it is not their choice whether your husband's IVA is accepted, but firmly at the creditors door. They are asking the questions, which you have found intrusive, in order to place your husband in the best position to have his IVA accepted - assuming that this is the option he wishes to pursue.

Even the credit scoring agencies do not accept disassociation of married spouses unfortunately.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Minnie]

I do appreciate your advice Melanie and I am sure you can (well hopefully) understand my frustration.

Can I also ask in terms of income. If my salary increases again next year and from the sheet sent through by the IP this thereby increases what is seen as surplus income, will the IVA payment also increase even though the only reason there is this extra income is because of my pay rise? Surely I get to keep any increase in my salary?

I could understand the IVA payment increasing if hubby's salary increases?

I apologise if this sound as if it is all about me, me, me but if I don't survive this then hubby definately won't and we could end up losing the house.

[MelanieGiles]

No - once the IVA has been accepted, your own pay rises will not be included as increased income to effect a contributions rise for your husband, but the ratio in which you share the household bills may change as a result.

In my experience, and I have handled over 1,000 IVAs in my career, it is quite rare for me to take increased payments from clients who stay in the same jobs, as payrises are generally inflationary and merely meet cost of living rises. I would say I actually take increased payments from less than 5% of my clientbase, and this is always with the agreement of the client.

Please do not apologise - you are putting your relationship with your husband as of paramount importance, before considering how he can best pay his debts, and ought to be commended for this. It is the most important thing right now. Many people prioritise differently, indebtedness takes over their lives, and I have seen many marital breakups occuring from the fallout. Take your time to consider all options available to you, and of course continue posting on the forum where hopefully some of the other experts can offer some support.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Minnie]

If I am understanding this correctly then should my salary in 12 months have increased by £100.00 and hubby's by say £50.00 per month, this would just mean that his percentage of the household expenditure may reduce and whilst on paper the 'surplus' income would be £150.00 over and above what we are presently looking at it would only be hubby's £50.00 extra month and the potential change in percentage that would be changed?

Creditors would still benefit from this because where hubby would then be paying a lesser % this would, on paper, increase what they would see as hubby having spare per month to put towards his IVA. This would be the case even if hubby didn't get a pay rise.

On the sheet we had through from our IP I have calculated this scenario where I have increased the two salaries by the above amounts. This reduces hubbys % marginally so thereby when going through the list of expenditure it is seen that he has less of a commitment and more for his creditors. In terms of the figures the estimated pay increase was £50.00 per month and the decrease in % means there is an extra £45.00 per month for creditors. Thereby hubby only benefits by £5.00 per month from his pay increase.

The surplus figure remains the same at £150.00 over the current figure.

I think what is confusing me a little at the moment is the figure the IP is possibly going to use as a proposal to creditors is the total surplus income, which includes my income and expenditure. I am assuming this is being done because hubby on his own does not have sufficient enough surplus to put forward a realistic IVA proposal so my income and expenditure is being used to supplement a more realistice proposal.

With the above scenario in place he would put him in a better position to support the IVA from his own income and % of expenditure without perceived input from me.

[MelanieGiles]

The point goes back to my original post, Minnie, that creditors will perceive that you have benefitted from the monies borrowed by your husband.

Let me try and paint a hypothetical scenario:-

Postion Now:

Hubby earns £1,500 You earn £2,250. Hubby therefore earns 40% of the combined income and you owe 60%. This percentage is then applied to the shared household expenditure. So if you have expenditure of £3,000 per month, hubby pays £1,200 and you pay the difference.

I appreciate that this may not be how you actually manage your finances, but this is how they are generally viewed in insolvency or matrimonial law.

So for the purposes of the IVA, your hubby has £300 per month surplus income, and you have £450. If you have financial commitments of your own - lets say you have credit cards which you pay at £400 per month, this has to be deducted from your share firstly, leaving a small surplus which your husband's creditors will expect you to pay to them. So his payments are set at £350 per month.

Lets say that at the end of the first year you have both had payrises. So now your hubby takes home £1,700 and you take home £2,300. The ratio percentages change to 43% and 57%. Say your household expenditure has increased to £3,200. Hubby now pays £1,376 which after deduction from his earnings of £1,700 leaves him with increased payments of £324. Your surplus income has also increased by £76.

I would expect to see you still supporting your husband to enable him to maintain his payments of £350, but not that you pay over the full £76. You would need to use £26 to continue funding him, leaving the extra £50 untouched for yourself.

Hope this is not too complicated for you to see where I am coming from.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Minnie]

I understand (I think) the scenario you have painted.

However, in my case the situation would be the reverse. That said if I am understanding your scenario as long as hubby is able to maintain the originally agreed IVA proposal of, for arguments sake £350.00 per month then any pay rise I get would be unaffected.

If the pay rises meant his % increased and he could only support £330.00 per month into an IVA then £20.00 would come from me to ensure the agreed £350.00 per month was met?

What happens if pay rises mean his % decreases and he could therefore support an IVA following pay rises of say £375.00 per month - would this then be increased?

I hope you can appreciate that following our meeting with our IP yesterday my head is buzzing.

I want for us to do the right thing and not set ourselves on a road to failure but equally need to understand all the implications, particularly as my career is on the up and I am now in a position where I should receive an annual incremental rise as well as the inflation rise. As long as hubby's IVA is supported at the agreed amount, I would like to be able to keep my extra income so that may be we could have a holiday or just some time away.

[MelanieGiles]

Yes you assumptions on the numbers are correct. Your respective earnings will always dictate the percentgages of disposable income. Once your husband can support the contribution he is offering in his own right, there ought to be no further need for support from you.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Adam Davies]

Hi Minnie
I do feel for you,the situation is crazy as it should really just be your husbands disposble income paying his debts,but then I can see the creditors point of view.As Melanie states take your time and above all make sure that you leave yourself enough to live on before going ahead with your husbands IVA.From experience I can tell you that living on a tight,inflexible budget for five years is very,very tough and you have both got to be committed to it,otherwise,to be frank,you will not survive it.
Regards

Andy Davie
IVA.co.uk Spokesperson

About me:
http://www.iva.co.uk/andy_davie_profile.asp

IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp

[Minnie]

That was helpful Melanie - thank you.

I had this horrible feeling that as my salary increases over the next five years so would hubby's IVA payment as a result of this. Thereby giving me no incentive to continue to climb up the ladder and potentially ease some of the pressure.

I think we still have a little way to go as the other options that were discussed yesterday are not ones I am comfortable with and even though I have been on the internet virtually all of today looking at different ways of doing things, I still believe if the IVA proposal presently put together is agreed by creditors it will be manageable.

[Minnie]

Thank you Andie.

My concern with taking too much time is the increasing interest on the current level of debt, which stands at approximately £43k. The more time we take the more interest is being added on and as the ultimate figure proposed to repay won't alter it will render the IVA unattractive.

We also just want to get on with our lives - albeit on a tight budget and before this whole situation rips us apart, which is what it is now beginning to do. I don't want that and neither does hubby!