considering bancrupcy

greytdog_2 · 22 February 2007 at 9:47AM

ok a little advice please - our debts are made up of negative equity which as we didnt buy another house have gone onto loans/credit cards.

Having three kids and being unable to work for about 8 years (couldnt get/afford childcare).

A few cars that were bought again on credit cards (due to already being maxed out on loans so no one would give us the money) that then broke down and meant we had to buy alternatives having not paid off the last ones.

The costs of family holidays (some her some abroad but only camping not extravegant)also put on credit card.

Living in a house for a number of years that cost a fortune in bills (12 years ago council tax £135 a month, gas £70 electric £90 etc etc (me not working at this time). Unable to move as house provided by employer. Husband not able to do overtime as there was none available.

Eventually got moved to another house but it was a mess and had no carpets, curtains had to decorate every room etc etc so had to buy all of these and my old sofa gave up the ghost so had to buy another one etc etc.

I suffered post natal depression and general depression due to the money and we both hid/ignored the situation for a while. Went to the works financial advisor who told us we were stupid, shouted at us and then said our bills/outgoings we had brought along were useless and that unless we were able to provide a receipt for ever 1p we had spent then she wouldnt help us. She then went on to say that we would never get a house and we would all have to live on baked beans and toast and charity shop clothes for the rest of our lives and that when my husbands retired and the employer takes the house back we would be homeless and the council would not help as it is all our fault. We then drove home feeling totally sucidal and decided there was no point going on in life. We told my parents that the kids would be better off without us and would they look after them as they would have a better life. My parents talked us out of doing anything silly but is has meant that nearly 8 years on the debt has just mounted and mounted as we were scared to get advice.

my thoughts are that an OR will look at the above (cant give them specific dates or costs) and say that we would be liable or something and it would cost us a fortune in BRO or similar. Anyone with any ideas or advice?

shameless-about-money · 22 February 2007 at 10:54AM

It would be unlikely that you would get a BRO. However, even if you did it wouldn't cost you anything. The only payment in bankruptcy would be an IPA and if given would be a payment of 50%-60% of your surplus income for 36 months.

backontheup · 22 February 2007 at 11:06AM

Hi Grey

Sorry to hear that things are so rotten. And that so-called Financial Advisor needs a good old fashioned boot up the a*se!! How dare she\he talk to you like that!?!?!

Going BR wouldn't be half as bad as the sort of stress that you are currently having to cope with. I doubt that you would get a BRO, but even if you did - life goes on. And your children will have less stressed out parents

greytdog_2 · 22 February 2007 at 2:30PM

thank you both of you - does anyone know where you stand with pensions as my husband is due to retire in 12 years (i know thats a while away) but he will receive a large lump sum and this is what we are banking on to buy a property. Can you still pay into a pension? would they be able to take the lump sum or some of it?

shameless-about-money · 22 February 2007 at 2:46PM

The pension is safe from the OR.

However, if your surplus income warrants it you will be given an IPA for 36 months. Your payments into your pension plan will not be allowed as "expenses" from the calculation but you could still pay your contributions from your own % of your surplus.

greytdog_2 · 22 February 2007 at 4:01PM

ahh so basically you are not allowed to pay into the pension unless it comes out of your groceries allowance or similar? - this would mean we were toatally screwed as the pension scheme takes direct from the salary and is 12% of pre tax salary amount - we would never cover this and so would not get the lump sum at the end etc etc - will have to say on DMP then for next 12+ years.

thank you for your help anyway

greytdog_2 · 22 February 2007 at 4:03PM

backontheup wrote:

Hi Grey

Sorry to hear that things are so rotten. And that so-called Financial Advisor needs a good old fashioned boot up the a*se!! How dare she\he talk to you like that!?!?!

yes and the lady who took over from her who is our current advisor is lovely but states the previous one has boasted to her about how many stupid clients left in tears from the office and how it serves them right for getting into a mess with their finances and perhaps it would teach them a lesson! :mad: :eek:

backontheup · 22 February 2007 at 4:05PM

greytdog wrote:

ahh so basically you are not allowed to pay into the pension unless it comes out of your groceries allowance or similar? - this would mean we were toatally screwed as the pension scheme takes direct from the salary and is 12% of pre tax salary amount - we would never cover this and so would not get the lump sum at the end etc etc - will have to say on DMP then for next 12+ years.

thank you for your help anyway

I would take legal advice on this. Because it is deducted at source, and i guess it is a scheme where his employee matches his contributions.

I am not sure about this, but I am certain that there is a way around it. But you need some solid legal advice on this.

Dithering_Dad · 22 February 2007 at 4:21PM

Pension contributions in company schemes are gross of TAX and NI and so do not form any part of your net pay. Loans and court orders are garnished from net pay so, by definition, cannot touch your pension payments. So you can still contribute to your company pension.

Pension contributions into personal schemes such as stakeholder pensions are net of tax - they are paid out of your net pay and have the tax added back by the pension provider. In this case you would struggle to contribute towards your pension scheme.

Hope this helps.

p.s. if I were thinking of going bankrupt and had a company pension I'd think of increasing the amount I paid into it....

greytdog_2 · 22 February 2007 at 4:40PM

thanks dithering dad - basically yes its a company/employer pension that it taken at at source so sound like we would be able to keep this then - will get some more advice as the pension lump sum seems to be the only light at the end of the tunnel at the moment

shameless-about-money · 22 February 2007 at 5:00PM

So with a Company pension you won't have any problems!

The OR will not be able to touch any of your pension 12 years down the line - the OR has no claim on any of it. Ask at the CAB if you don't believe me!

considering bancrupcy

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