Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_James · 19 August 2014 at 11:28AM

Willbedebtfree1day wrote: »

After struggling for a long time and due to ongoing health issues we have made the decision for my husband to go bankrupt. He owes around £65,000 and I owe around £20,000. We were on a dmp which we paid for around 3 years. But had to stop this 4.5 years ago when my husband became ill again. We then sold our house and cleared our mortage and secured debt. We have since then been renting and making token payment as our income and benefits only cover our basis living costs. But we think we could restart the dmp to repay my debts.

I earn a wage and we receive housing benefit, child benefit, child tax credit and working tax credit.

My husband has no income and is a stay at home husband. As he has no income would we need to provide proof of my income and as I pay all the bills would they need to see my bank statements. Due to husbands illness it has been easier and less stressful for him for me to deal with it all.

The only assets he has is motorbike worth about £750 and we have a computer worth about £1000 but over 2 years old.

Also is there any help we could get with the bankruptcy fee.

Thank you for your help
Willbedebtfree1day

Hi there,

Thanks for posting. I'd suggest getting in touch with us for advice on the next steps. We can help you plan a budget, either individually or on a joint basis. From there we can give advice about the best debt solution for your circumstances.

If bankruptcy is the best option for your husband we can give him advice and support through the application process - we've got a bankruptcy support team that are really supportive.

Also we can provide free DMPs when they're the best option, so we could have a look at that for your debts. Though we'll also consider the other possible options to deal with the debts too.

I'd recommend giving us a call and talking to an advisor: http://www.stepchange.org/Contactus.aspx. They'll go through the household budget with you and be able to talk you through your options and next steps.

Kind regards

James

kelpie99 · 1 September 2014 at 11:18AM

Hi,

I've just defaulted on debts due to a long period being unemployed.

I've taken advice from Stepchange etc and am waiting on tax liabilities being resolved so that I can declare bankruptcy under the LILA arrangement in Scotland.

I have two questions relating to letters recieved from creditors as I've never defaulted on anything before and am quite stressed out about it.

I asked them to communicate only in writing as I'm struggling with depression/anxiety and I'm really bad at speaking to people about this on the phone/in person, including debt remedy people which doesn't help I admit.

They've written back and said that they want me to provide medical records proving this, which i'll probably have to pay for but am not comfortable doing anyway. I've proof from years ago when prescribed antidepressants/CBT but now self-manage as neither of these were effective, and part of this is through a private psychotherapist because the NHS provision means waiting up to 18 months and is generally !!!!, which again, i don't want to have to disclose. Do I have to, and will this come up in the LILA process?

Secondly, one creditor wants permission to deal with Stepchange or at least permission to receive information on file with you. Am I obliged to do this and what are they seeking?

Finally, most creditors have accepted my token payment offer of £1 a month, but haven't said if they will freeze interest or penalties. Do they normally do this and will they go ahead and try to send bailiffs etc anyway without telling me?

thanks for your help, again.

StepChange_James · 2 September 2014 at 2:52PM

kelpie99 wrote: »

Hi,

I've just defaulted on debts due to a long period being unemployed.

I've taken advice from Stepchange etc and am waiting on tax liabilities being resolved so that I can declare bankruptcy under the LILA arrangement in Scotland.

I have two questions relating to letters recieved from creditors as I've never defaulted on anything before and am quite stressed out about it.

I asked them to communicate only in writing as I'm struggling with depression/anxiety and I'm really bad at speaking to people about this on the phone/in person, including debt remedy people which doesn't help I admit.

They've written back and said that they want me to provide medical records proving this, which i'll probably have to pay for but am not comfortable doing anyway. I've proof from years ago when prescribed antidepressants/CBT but now self-manage as neither of these were effective, and part of this is through a private psychotherapist because the NHS provision means waiting up to 18 months and is generally !!!!, which again, i don't want to have to disclose. Do I have to, and will this come up in the LILA process?

Secondly, one creditor wants permission to deal with Stepchange or at least permission to receive information on file with you. Am I obliged to do this and what are they seeking?

Finally, most creditors have accepted my token payment offer of £1 a month, but haven't said if they will freeze interest or penalties. Do they normally do this and will they go ahead and try to send bailiffs etc anyway without telling me?

thanks for your help, again.

Hi Kelpie,

I think requesting to communicate in writing rather than over the phone is a reasonable thing to ask regardless of your medical history, so I think it's fine to not send them the documents they've asked for. You're under no obligation to provide that kind of detail.

It's the same for a LILA application too, I can't imagine why you'd be asked to go into specifics about medical details.

With the creditor asking for permission from you to discuss your details with us, I think they might have got a bit confused. Unless you were on a debt management plan (which it doesn't sound like you are) we wouldn't communicate directly with your creditors.

They may want to see details of your income and expenditure but we don't need to be involved in that, as you'll have a copy in your advice booklet which you could copy and send on to them. Again you don't have to do this if you don't want to, but giving this information is a good way to prove what you can afford to offer as a payment.

If you'd like more specific advice then I'd recommend sending us an email with your client reference number to the details in your paperwork.

Kind regards

James

joules25 · 4 September 2014 at 9:56AM

Hi,

My partner and I have accumulated around £90,000 worth of credit card debt over the last few years. This started happening after my husband was made redundant twice in a few year and took quite a while to get work. We also got landed with a CSA order for 25% after being informed by his ex wife(who left him) that she would never claim money. By this time we had our kids in private school and I had stopped working to study.
He is currently earning around £100k and has the potential to earn up to £140k but our outgoings always exceed our incoming so we are constantly adding (although not so much now) to the debt.

Please advise whether an IVA would be the best option for us, or if not any suggestions please?

Many thanks

Former_StepChange_Rory · 5 September 2014 at 9:34AM

joules25 wrote: »

Hi,

My partner and I have accumulated around £90,000 worth of credit card debt over the last few years. This started happening after my husband was made redundant twice in a few year and took quite a while to get work. We also got landed with a CSA order for 25% after being informed by his ex wife(who left him) that she would never claim money. By this time we had our kids in private school and I had stopped working to study.
He is currently earning around £100k and has the potential to earn up to £140k but our outgoings always exceed our incoming so we are constantly adding (although not so much now) to the debt.

Please advise whether an IVA would be the best option for us, or if not any suggestions please?

Many thanks

Hi there,

Thanks for posting, welcome to the forum.

Firstly, I’m sorry to hear about your partner’s redundancy and I can understand just how tough it can be to get back on track after something like that happens.

Without having a good grasp of the whole situation it would be difficult for me to know if an IVA would be the right solution for you as it really depends on your full situation.

We would be more than happy to help find solutions and offer advice by looking at your budget and tailoring our advice for you.
One way you can do this is by using our free, anonymous Debt Remedy tool to put together a budget which we’ll use to create a personalised action plan and a recommended debt solution.

If you’d prefer to talk to us then you can do this by visiting the StepChange website for more information on how to get in touch.
As a charity, all our advice is free, impartial, confidential and based on what’s right for you.

I hope this helps, we look forward to speaking to you soon

Rory

SAZMAZ_2 · 18 September 2014 at 10:10AM

hi, i have an iva which is due to end in october. i have recently had a baby who is registered as disabled, my last mat pay is in october then i will be in receipt of benefits as my work have refused to allow me to return part time, which is required for my sons ongoing and future health needs. I own my own house which is now in a state of disrepair with damp/ leaks etc which i cannot afford to have fixed. I now live with my partner, we have no joint assets at all. I own a 15 year old car and that is all. I have cancelled the direct debit to the mortgage as i cannot afford it anymore and need the house to go, it is negative equity of appro 9k. i cannot rent it out due to its condition, i have gone through an income outgoing with the mortgage company but its just an exercise as i will not have any money to pay the mrgt and do not want the house anymore. Do i wait for the house to be repossessed and the shortfall to be finalised before BR or shall i apply for it as soon as my IVA is completed as i will owe 3 months worth of mrtg then, plus gas and electric pre payment standing charges of £200 each since ive moved out, also i have basic bank account with my IVA will this need to be closed as i am awaiting DWP to award my sons DLA to be paid into this account?

Monkeyballs · 18 September 2014 at 10:20AM

Hi,

I'm currently on a DMP with Step Change.

I am also on long term sick leave and my job is at risk, my boss has told me that I'll likely just lose my job and I'll need to claim benefits but that there is also the slim possibility of either a discretionary extended sick benefit (which would give me enough of an income in the short term to allow me to continue with my DMP) or even a redundancy package...

My question is this;

If I was to get redundancy would I be able to use this to give myself a monthly allowance and continue with my DMP (same current or slightly reduced monthly payments) in the hope I am 'healed' or am able to get another job? If it ran out before I was 'healed' or got a job would this be a problem if I went the DRO route? Would the OR be likely to object to me using my redundancy to live off instead of going the DRO route?

Basically I don't want to shoot myself in the foot LOL.

Thanks in advance

MB

StepChange_James · 19 September 2014 at 12:54PM

SAZMAZ wrote: »

hi, i have an iva which is due to end in october. i have recently had a baby who is registered as disabled, my last mat pay is in october then i will be in receipt of benefits as my work have refused to allow me to return part time, which is required for my sons ongoing and future health needs. I own my own house which is now in a state of disrepair with damp/ leaks etc which i cannot afford to have fixed. I now live with my partner, we have no joint assets at all. I own a 15 year old car and that is all. I have cancelled the direct debit to the mortgage as i cannot afford it anymore and need the house to go, it is negative equity of appro 9k. i cannot rent it out due to its condition, i have gone through an income outgoing with the mortgage company but its just an exercise as i will not have any money to pay the mrgt and do not want the house anymore. Do i wait for the house to be repossessed and the shortfall to be finalised before BR or shall i apply for it as soon as my IVA is completed as i will owe 3 months worth of mrtg then, plus gas and electric pre payment standing charges of £200 each since ive moved out, also i have basic bank account with my IVA will this need to be closed as i am awaiting DWP to award my sons DLA to be paid into this account?

Hi Sazmaz,

Thanks for getting in touch. It sounds like a very difficult situation to be in.

Mortgage and secured loan debts aren't included in bankruptcy until the property is sold and the shortfall on the negative equity is known. So at the point your IVA ends it sounds like there might not be a lot of debt that is covered by the bankruptcy.

It's hard to give advice without knowing more about your sitaution. As your IVA provider will have all your details already you might find it useful to seek out their advice.

When your IVA ends you'll have one less payment to make but given the circumstances you've described I can imagine that might not be enough extra money in your budget to make things manageable.

Shelter have a housing advice helpline which you might find useful to get some advice about dealing with the property and mortgage company: http://england.shelter.org.uk/get_advice/how_we_can_help/housing_advice_helpline.

All the best.

James

StepChange_James · 19 September 2014 at 1:02PM

Monkeyballs wrote: »

Hi,

I'm currently on a DMP with Step Change.

I am also on long term sick leave and my job is at risk, my boss has told me that I'll likely just lose my job and I'll need to claim benefits but that there is also the slim possibility of either a discretionary extended sick benefit (which would give me enough of an income in the short term to allow me to continue with my DMP) or even a redundancy package...

My question is this;

If I was to get redundancy would I be able to use this to give myself a monthly allowance and continue with my DMP (same current or slightly reduced monthly payments) in the hope I am 'healed' or am able to get another job? If it ran out before I was 'healed' or got a job would this be a problem if I went the DRO route? Would the OR be likely to object to me using my redundancy to live off instead of going the DRO route?

Basically I don't want to shoot myself in the foot LOL.

Thanks in advance

MB

Hi MB,

Redundancy payments are usually used to help people support themselves while they look for other work (or in your case recover first and then potentially start looking). It sounds to me that would be a sensible way for you to use any payout you were to receive.

Whether it would be useful to use a payout to continue payments on a DMP would be more debatable as paying less to creditors might mean you can make the money cover your living costs for longer. So we'd look to help you find the best approach for your circumstances.

Sorry to be a bit vague, but I'd recommend keeping in touch with us and whenever you find out anything new we'll be able to update your details and offer you some advice about the next steps.

It sound like you've read up a bit on DROs, so you'll know they have strict rules on how much you're allowed in assets to be eligible. If they think you've got rid of assets irresponsibly then it could mean you don't qualify or have the length of your DRO extended. I'd be very surprised if using your redundancy to support yourself while you were sick and out of work would be seen in this light though.

All the best.

James

victoryhill · 23 September 2014 at 3:13PM

Hi,

We went bankrupt in Dec 2008 with a number of properties in our portfolio.

I recently discovered that a CCJ was registered against my name in March 2011 for unpaid Service Charges while 2 of our properties were under LPA care.

For all our other properties any outstanding Service Charge was paid by the lender and now the LPA Receiver is saying the only things you are liable for after you go bankrupt is Council Tax ( which I knew ) and Service Charge / Ground Rent.

I wasn't aware of this until today.

Please can you confirm is this is, in fact, the case and, if so, if there's anything I can do about it ?

Thanks.

Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

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