www.iva.co.uk

I am currently in an IVA and I am seeking some advice please.

When my IVA was agreed it was on the following basis:

My income £2500
Wife's income (child benefit and child tax credits) £120
Total income £2620
Expenditure £2315
Surplus (paid into IVA) £305

My wife has her own debts of about £10,000 - but she is unable to enter into any sort of arrangement with her creditors due to her profession (although not working at the moment).

Quite reasonably, I was not allowed to put an allowance for my wife's debts into my SOA for the IVA (as her income only accounts for about 4% of the total income), and therefore my brother has been paying her debt for the past 12 months or so.

She is now looking to return to work on a part time basis next spring, and we expect her income to be about £850 per month.

I am not sure how this will be viewed by my IP and how much of this extra they may expect to receive. There seem to be so many variables and factors that I can come up with just about any figure from £0 to £500!

Our revised I&E would be as follows:

My income £2500
Wife's income £930 (we will lose tax credits from April)
Total income £3430

Total expenditure £2315

Surplus £1115

An added complication is that we have a disabled son for whom we receive about £400 a month (to round figures) - this is made up of about £200 DLA and £200 carers' allowance (paid to my wife). If my wife returns to work we would lose the carers' allowance. In my IVA proposal this money was ignored - it went in as £400 income and £400 expenditure.

Given that my income is 73% of the total, would my IP expect 73% of the combined surplus - ie £813. Leaving my wife just £301. This would represent an increase in my IVA payment of over £500.

Taking into account the loss of carers' allowance, my wife would only have £100 a month to pay to her creditors which is not enough, and quite honestly it wouldn't be worth her going out to work for £1200 a year, particuarly allowing for extra petrol costs each month due to her working!

Are we able to negotiate on this - one of the main reasons for my wife returning to work is so she can clear her debt and not rely on my brother. Given that this is a change in her income (and my IVA only makes references to changes in my income), could we simply offer them an extra £100 per month (which would increase my payment and hence the return to my creditors by about 33%)? The rationale behind this figure is:

Change in wife's income £850
Loss of tax credits -£40
Loss of carers' allowance -£200
Net change in income £610

Repayment of wife's debt £400

Net extra surplus £210

I would expect to keep 50% of this on the basis of keeping half of any increase in income.

Could we say that you accept this and get an extra 33%, or my wife won't bother and you won't even get that?

Or can we simply say it is my wife's income, it is nothing to do with me and they can't have a penny anyway?

One final factor is that when I was first discussing my IVA proposal the issue of my wife's debt was discussed, and prior to my brother agreeing to pay for this the IP did suggest that an option might be for my wife to get a job and it could be argued that she had taken this purely to service her debt (at the time this was not an option for us). Is there any precedent for this type of arrangement actually being accepted?

Sorry for the long and possibly rambling post ... but any advice would be appreciated.

Hi
I think you would need to complete a fresh income and expenditure form, allow for any increases in expenditure with your wife working. I would then imagine that your wife could keep her share of any disposable income and your payments would increase.
However it will all depend ow your IVA is written and the view of your own IP.
I would be interested to know the outcome
Good luck
Regards

Hi - you and your wife will be expected to pay a proportionate amount of the household expenditure. So if you earn 70% of the household income you will be responsible for 70% of the bills. Your savings from your wife contributing more to the bills will then be paid across to creditors. Your wife's petrol and debts can then be paid out of her disposable income (what's left after her share of the bills have been allowed for).

Thank you both for your replies; I think you are both saying more or less the same thing, which is pretty much the position that I expect my IP would take.

However, my wife's position is unmovable on this - and if push came to shove she simply would not return to work as it would not be worth it. Her position is:

1. She has her own debt, and her main motivation for going to work is to pay this off quicker. If this is not going to happen then she won't bother!

2. When my IVA was being discussed, and the need to pay off my wife's debt was discussed, the suggestion that was put forward that either (a) we get someone else to pay it or (b) she gets a job specifically to pay this off. Whilst this discussion is not documented anywhere, they did suggest option (b) which at the time was not feasable for us.

Taking this point a step further, my brother is paying off £400 a month on behalf of my wife. Taking this to its logical (or illogicial?) conclusion, my IP could see this as an extra £400 household income and therefore count this as additional income that had to be counted as being available to my creditors, and therefore expect this to go to my IVA. Clearly this does not happen as the money from my brother is purely for the purpose of repaying my wife's debt. If they are prepared to accept this arrangement, then there is no reason for them not to accept my wife working to repay her debt (rather than accept a handout from my brother).

3. My wife says (quite correctly) that she is in no way legally obliged to disclose to me any income that she is receiving - if hypothetically she had a bank account that I was not aware of then she isn't doing anything wrong in not telling me about that income. (I would add that this is not something that I would be comfortable with). As she says, there is no legal reason why she should know that I have an IVA.

4. Ultimately - given the fact that my wife wouldn't return to work if the situation was not favourable to her - then surely we are in quite a strong position to say to my IP and creditors that here is an extra £100 or so a month and this is all you are getting.

I do very much appreciate the need to be co-operative with my IP and creditors, and also to maximise the return to my creditors. However, my wife is absolutely firm that if she is going to go to work it is to allow her to repay her debt first and foremost, and if that is not going to be allowed then she won't bother, and therefore my creditors won't get anything extra.

Hi - this is always a contentious point! If your wife doesn't declare her income the ip will assume bills are split 50/50 which in your situation will leave you worse off. If your wife cannot afford to pull her weight on the bills front and pay her debts then your ip will take the stance that you are subsidising her to return full repayment to her creditors while penalising your own with a lower dividend...and he would be right! The money from your brother would not be included as income as it would not be available for any other purpose ie if it went into iva rather than debts your brother would simply stop...so there isn't a comparison between this and your wife's income. Regards your wife suggesting you lie, does she realise if caught your iva would fail and you could be staring at br which would do her no good either. And it is pretty implausible that you wouldn't know your wife had a job...either by her schedule or the fact of her having any money! Ultimately, your wife will have benefitted from your debts over the years and the creditors will view this as a shared responsibility to repay them. Your iva will not seek any of you wife's disposable income but it isn't right she expects you to pick up all the bills and let your debts suffer while she sorts herself out.

IVAs are all about balance and trust - between client and the IP. The law states that individuals are responsible for their own debts, so to this end your wife should not have to pay anything towards your creditors, but neither should you contribute towards hers.

Unless you have a differing ratio of meeting shared expenditure - the usual splits are either 50/50 or in proportion to salaries earned. No-one can argue that the second option is unfair, so once your wife does return to work then she will need to fund her debt repayments from the balance of her disposable income. I cannot see how this can affect your IVA, as your disposable income if anything should rise rather than fall.

What you doing up this time of night Melanie.
Still pining for Gavin?

He was robbed! Clearly the best male dancer in the whole competition, but I must admit my eyes will be glued to the Saracens Boxing Day match, where his nimble feet will once again be on the ground that he knows best!!!

What on earth are we ladies going to do now with no Strictly, X Factor or I'm a Celeb - I am going to have to find some intellectual stuff to watch until Dancing on Ice starts in January!

I think there is certainly room for agreement here that would be acceptable to all concerned. There must only be about 2 years left on your wife's debt so why not allow her to repay this and then support your IVA? Do the I&E as normal and if your creditors are being slightly prejudiced at the moment, this would right itself later. The dividend would be at least the same and your wife would be unaffected.

Just an update - the 'work' my wife was looking to return to was to stand for the local council in local elections.

On reflection the 'income' that is discussed above is classed as an 'allowance' to cover the costs of being a councillor.

On working it out, after paying the expenses of being a councillor she won't have much surplus - not even enough to cover her own debt. However, she still wants to be a councillor even though there won't actually be any financial benefit (allowing for the loss of Carers' Allowance).

I have posted on another thread to ask how this should be treated?

It is really a nothing thing. Inform your IP and if she does have a small surplus left this would be used to reduce the amount of help she needs to repay her creditors.