New, looking for more specific advice about IVA vs. BR

Bakeybadoo · 11 February 2007 at 10:34PM

I don't want to clog the board up and double post, and I got some great advice from the members in response to this thread but I also wanted an opinion on which option would be best for us - IVA or bankruptcy, so I've headed in here.

My OP is: http://forums.moneysavingexpert.com/showthread.html?t=374183

Also, I have a few questions about BR:

*Is there a minimum amount of disposable income you have to be living on, to become eligible for BR? I worked out we have around £274. Would that mean the OR would think we had enough to pay the debts?

*What debts are NOT 'written off' by BR?

*Where can I find information on the exact step-by-step process of BR?

*Can myself and my husband file for BR? I assume it's done seperately? For individual debts?

shameless-about-money · 11 February 2007 at 11:41PM

First of all I have had a look at your OP.

How on earth are your listing fees for Ebay £80 per month? I have sold loads of stuff on Ebay and my highest monthly payment for listing and selling fees was only £40. What are you doing? What are you selling?

To make yourself bankrupt you need to be insolvent and unable to pay your creditors. It has nothing to do with surplus income. You must be getting confused with any IPA that might be given. An IPA will be given if your monthly disposable income is over £100.

You cannot write off your uni debts - student loans must be paid.

You must go bankrupt individually.

Process -

Fill in the forms.

Make an appointment at your nearest County Court - unless you are in London

Attend Court, pay your fees, be declared bankrupt.

That's it, in a nutshell.

Bakeybadoo · 11 February 2007 at 11:43PM

Thanks for that info, much appreciated.

We have two eBay accounts, we sell quite a lot each month, well we did until we started to run out of things to sell. They won't let us sell the kids...;)

So, unable to pay your creditors, meaning all or just most?

shameless-about-money · 11 February 2007 at 11:49PM

If you have a car on a loan you are usually allowed to keep it as long as you can afford the repayments and that the value of the vehicle is not too high.

Which creditors/loans are you worried about exactly?

shameless-about-money · 11 February 2007 at 11:54PM

This is for the whole household, if only one of you goes bankrupt these figures would have to be halved.

However, you would lose the amounts marked in red as outgoings. Your contract phones may have to go. I doubt they would allow the cable tv package and the £80 into the children's accounts would not be allowed either.

Outgoings:

£450 - Rent
£90 - Council Tax
£100 - Electric
£22 - TV Licence
£70 - Cable tv/phone/broadband package
£70 - Contract phone
£20 - CCJ payment
£15 - Old DWP debt payment
£10 - Old Barclaycard payment£400 - Food/household items
£100 - Petrol
£80 - Average eBay fees - sometimes nothing, sometimes less
£50 - Bank charges (average, seems every month lately)
£80 - Into kids savings account
£70 - Catalogue payment
£100 - Provident= Total £1727.

How much is your car actually worth now?

You haven't accounted for the income from Ebay!

Bakeybadoo · 11 February 2007 at 11:54PM

Well actually the car has to go back since we cannot afford to pay it at all.

All of the creditors worry us. We can't afford to pay them all a nominal amount and those we are paying, we aren't making any headway.

We have several who are just adding and adding their charges to the account every month, despite us requesting several times for them to freeze that.

I just don't see a way out of this at all and so am assuming BR would be the best option for us. I just wanted someone else to tell me their take on what way we should proceed.

Bakeybadoo · 11 February 2007 at 11:58PM

shameless-about-money wrote:

This is for the whole household, if only one of you goes bankrupt these figures would have to be halved.

Is it generally halved? Otherwise since all our money is mashed together in one account, I would have no way of telling which one of us paid for what exactly.

I am thinking we'd both take the BR route in all probability.

However, you would lose the amounts marked in red as outgoings.

I'm probably being really thick but by 'lose' you mean, they would be debts that would be written off?

We basically want a fresh start. Although we are only paying a few debts, the others won't just go away. They are chasing us and the debts are getting bigger and bigger and we have no real means to pay them off.

How much is your car actually worth now?

How much we'd get for it, if we sold it? Probably around £5000.

shameless-about-money · 12 February 2007 at 12:08AM

If only one of you goes bankrupt your household expenses can only be claimed at 50% of the actual bill.

So. your rent would be £225
Council tax would be £45
housekeeping would be £200

If one of you goes bankrupt, say yourself, then only the debts in YOUR name can be included in the bankruptcy.

Your income would be calculated as YOUR income plus YOUR State Benefits and the income/expenditure worked out for YOU alone, leaving YOUR surplus income.

Now does it make sense?

shameless-about-money · 12 February 2007 at 12:11AM

The bankrupty fee is £325 Bankruptcy Fee + £150 Court Fee. You can have the Court Fee waived by completing a form to see if you qualify but you MUST pay the £325.

In bankruptcy so much money is spent on the OR and the bankruptcy itself that your creditors will most likely get nothing at all in any payments.

Bakeybadoo · 12 February 2007 at 11:06AM

I'm back again this morning with more questions I'm afraid, most greatful for your help this far but please stick with me a while longer!

*What happens to things like contract phone and cable package? I'm fine losing them of course but does it just get cancelled?

*What would happen to the car agreement? It's on HP. Again, I'm obviously fine with it ending and understand the car would go back but I just want to know what would happen.

*How do I find out exactly who I owe what to? For most debts, we have no paperwork, not so much as a card number either. Lots have been passed to outside collection agencies but who, I've no idea.

*What happens once you are BR. I've heard you still have to pay so much of your income to debts? How do they decide which ones?

*After BR, do you have to inform the OR if you have money over so much coming in or a drastic change in circumstances?

*We have a current account with an overdraft (up to it's limit). That account would obviously be closed but would the overdraft be written off?

*We recently opened a basic Barclays account, would be allowed to keep that and keep it working throughout the BR process. We have Direct Debits that need to be paid (to non-debts) and my benefit money goes in and so does my husbands wages.

*Is there a minimum amount of debt you have to be in before they consider granting BR? Obviously we are trying to give our car back so if that goes back, that would shave £13700 odd off our total debt. A huge chunk but we still couldn't afford to pay off the remainder of our debt.

*I know CCJ's aren't wiped off but is everything else eligible to be considered?

*I understand you need to have sort professional advice prior to filing, to show you've understood the implications, who is best to go to for that advice?

Ok, I think I'm done and I apologise for the third degree!

shameless-about-money · 12 February 2007 at 11:33AM

No problem!

*What happens to things like contract phone and cable package? I'm fine losing them of course but does it just get cancelled?

Your phone contract for one is £35 so should be ok to keep it. Unless you want to change to PAYG.

*What would happen to the car agreement? It's on HP. Again, I'm obviously fine with it ending and understand the car would go back but I just want to know what would happen.

The car would go back to the creditor and would be sold at auction, but in any event the whole of the debt would be wiped out by the bankruptcy

*What happens once you are BR. I've heard you still have to pay so much of your income to debts? How do they decide which ones?

If you have a surplus income above £100 you would be given an IPA. So, if your surplus income was £100 your IPA will be £50, if your surplus income is calculated as £200 your IPA would be £100 per month, etc. It goes to the OR not to your creditors as such. They don't choose which creditor to pay. If there is sufficient money to pay any creditor it is worked out pro-rata ie, by percentage of whom you owe the most to, down to the least. An IPA is payable for 36 months.

*After BR, do you have to inform the OR if you have money over so much coming in or a drastic change in circumstances?

Your income is monitored by the OR, initially by your SoA. If there are ANY changes in your circumstances, either you get a new job or lose a job and your income goes up or down you are required by law to inform the OR within 21 days of the change.

*We have a current account with an overdraft (up to it's limit). That account would obviously be closed but would the overdraft be written off?

Yes the overdraft would be written off.

*We recently opened a basic Barclays account, would be allowed to keep that and keep it working throughout the BR process. We have Direct Debits that need to be paid (to non-debts) and my benefit money goes in and so does my husbands wages.

There is a section on the bankruptcy form that you tick to tell them that it is a basic account, and it is not usually closed.

*Is there a minimum amount of debt you have to be in before they consider granting BR? Obviously we are trying to give our car back so if that goes back, that would shave £13700 odd off our total debt. A huge chunk but we still couldn't afford to pay off the remainder of our debt.

Really over about £5000

*I know CCJ's aren't wiped off but is everything else eligible to be considered?

CCJ's ARE wiped off! They are no different to any other debt. The only debt that is not allowed to be written off is any student loan!

*I understand you need to have sort professional advice prior to filing, to show you've understood the implications, who is best to go to for that advice?

You can go to the financial advisor at the CAB - it is to make sure that there is no way out other than bankruptcy, that you have thought carefully about it and not just jumped in with both feet without thinking.

Do remember that if only ONE of you goes bankrupt, you MUST have separate bank accounts, etc.

New, looking for more specific advice about IVA vs. BR

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