Considering one of us going Bankrupt and the other person doing a dmp

Willbedebtfree1day · 18 August 2014 at 4:14PM

After struggling for a long time and due to my husbands ongoing health issues, which are not going to go away, but have good and bad times, 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. Fours years ago we then sold our house and cleared our mortage and secured debt and moved. We did have some equity and offered some creditors full and final settlements but it was not enough and none of them excepted. Due to moving to another part of the country and trying to find a job which took some time we lived on the equity and there is nothing left. We have since then been renting and making token payment as our income and benefits only cover our basic 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.

All our household bills and rent are upto date and paid on time every month. But we will never be able to clear the debt in my husbands name. Also when looking at the forms for bankruptcy it mentions have you sold property within last 5 years. We had to sell or we would have had it repossessed due to the second charge. Would it be better to apply for the bankruptcy after 5 years as we dont want to get into trouble, but hoped our situation regarding health would improve and we would be able to restart dmp and reduce debts.

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. We would appreciate any helpful advice.

Thank you for your help
Willbedebtfree1day

Tixy · 19 August 2014 at 2:20PM

Hi

Have you spoken to one of the debt advice charities yet? If not then I would definitely recommend that you do.

Having sold your house shouldn't be a problem, it sounds like the money was used for priority items (i.e. rent etc).

In terms of the bankruptcy fees you could take a look here - Charities who help with BR Fees
The other option may be to delay starting your DMP until you have managed to save enough for the bankruptcy fees.

dancingfairy · 19 August 2014 at 3:49PM

You will definitely need to get advice if you want to go bankrupt but just to clarify - when you said your husband has debts of 65k, are any of them joint as if he goes bankrupt then they will fall to you to pay (I'm not sure if you included any of them twice if they are joint?).
In terms of the house, I wouldn't worry too much. Yes, the OR will probably want to look into it. What they will care about is what it sold deliberately below market value, was the money stashed somewhere, was it spent recklessly? They only really want to check that you haven't sold the house and have done something to stop your creditors getting the money. If it's been spent on essentials and priorities like rent, food and clothes then you should be fine. Even if they did have a problem with it, my understanding is that all they can do is impose a BRU on you which just binds you to your bankruptcy longer ie you have to wait longer to get discharged and you can't get credit for longer etc etc.
As your husband is the one going bankrupt and he is on benefits then I think the OR would want to see how the household bills are being split and that he is contributing into the houshold budget. More to get an idea of your household income/expenses overall and to check again there is nothing dodgy going on than anything else. As he is on benefits though he shouldn't have to have a payment arrangement. You may also qualify for a reduced fee if he is on benefits (I'm not sure how it works with one partner on benefits and the other working).
In terms of going bankrupt it might be worth both of you going bankrupt rather than one going bankrupt and the other going on a dmp as your credit file will be trashed by the debt and a dmp anyway?
Have a chat through all your issues with Stepchange or National Debtline or your local CAB.
regards
df

National_Debtline · 19 August 2014 at 4:09PM

Hello there,

You're more than welcome to get in touch. Dancingfairy's post covers everything I was going to say, and I would certainly echo the idea of both of you becoming bankrupt. Of course it's difficult to say what would be the best route forward given the limited amount of information on the post but it does appear that you've been dealing with debts for a long time - and perhaps both of you drawing a line in the sand could be a useful option.

Very best wishes,

David @ National Debtline.

longtermplanner · 19 August 2014 at 7:17PM

Willbedebtfree1day wrote: »

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

I agree with the others to consider both going bankrupt and having a clean start for your family, rather than you struggling on with a DMP.

One thing to add, what matters is the second hand value of any assets. I but that laptop is worth very little if you tried to sell it. In which case the OR won't be interested in it at all.

Willbedebtfree1day · 21 August 2014 at 8:39AM

Thank you so much for the replies. We have one debt that is joint for just under a £1000 which I know I will be responsible for. We have made the decision that I wont go backrupt but we could afford a dmp for me. My debts are made up of a loan, credit card and the joint overdraft.

I have previously got a cca for the credit card and the document they sent me was for a previous address so previous card I no longer had, so I'm hoping as it has been a few years of me making token payments and they dont appear to have the correct documentation I will be able to get them to take a full and final once we have sorted out the bankruptcy for hubby.

Also would i be able to include the joint debt in my dmp straight away or would i need to wait until they had been advised about hubby as wouldnt want to mess up his bankruptcy.

I have another question regarding insurance we have bike insurance, contents insurance and pet insurance. Does any one have any advise about how insurance is affected when someone else in the house goes bankrupt. We plan to pay the bike insurance in full next time as it will be due for renewal prior to the time we plan for hubby to go bankrupt.

Would I just phone the other two up and advise them once it has happened and see what they say.

Thank you in advance for your help, before we do anything we will get advise but I am just trying to get things straight in my head.

tigerfeet2006 · 22 August 2014 at 1:18AM

Just a quickie but as he is not working there is a possibility he could lose the motorbike. Does he have an absolute need for it, is it essential or is it a convienience (sp?)

Willbedebtfree1day · 22 August 2014 at 8:21AM

It is our only vehicle. Brought as a cheap way for him to get to family as they have had some major health issues lately and hubby couldn't get there and they live in the countryside no bus to them and also we hope one day he may be able to work again. It's a 15 year old bike. Do you think they would let me buy it from them. Thanks

Willbedebtfree1day · 29 August 2014 at 5:21PM

Hello and hope you can help us. As you can see we are planning on Hubby going bankrupt, but this wont be until next year.

Hubby has today received a letter from RBS who recently asked him to contact them regarding payment. I wrote and advised them that Hubby is not working and can only make token payments which we have been doing.

The letter asks for an I&E form to be completed and details of the other debts. As previously advised Hubby has no income and all the bills including the token payments are made from my money.

Should I just write back and advise them again that hubby has no income and cant pay anymore.

They have also asked for reason for financial difficulties including wanting a copy of his medical certificate if due to ill-health. We dont have one of these, but even if we did would we have to send them a copy. Hubbys illness is ongoing and he has good and bad days and not helped by the stress of debts hence the bankruptcy.

The letter has Hubby really worried and I just want to get it replied to so he is not stressing about it.

We also want to give us some time until we are ready to proceed.

Thank you for your help

alastairq · 29 August 2014 at 5:36PM

Don't worry, it is a standard procedure that many creditors follow.

They are 'ticking-the-boxes' to show they are concerned over the debt issues....showing 'care'.

I found Tesco & RBS both immediately placed me on token payments, without me asking them first....[both are the same company].....unlike some others, like MBNA, who make vultures look saintly.

They are seeking supportive evidence your Hubby has financial issues.....fill the forms in, send them back...be honest, and remember,they are looking at Hubby's income & outgoings....as he is the account holder.

Without reading all this thread, your question re- the vehicle? Yes, you can purchase the OR's interest in the vehicle.....don't forget, you can negotiate....and be brutally honest with regards to describing it...you need the lowest valuation possible?

[I had 3 vehicles...ie 2 cars and a bike...plus several other V5cs associated with what I described as, 'boxes-of-bits'.....part of my 'hobby', if you like.....the biggest car was exempted-as-an-asset, and I purchased the OR's interest in the other two.....the OR ignored the boxes of bits as being of no useful value.]

Willbedebtfree1day · 29 August 2014 at 7:22PM

Thanks for the reply, Hubby has no income at the moment everything is in my name. So should I fill it in saying paid by wife, on the outgoings and list his debts showing token payment made by wife.

Just trying to get it clear in my mind before I deal with the letter, thank you.

Considering one of us going Bankrupt and the other person doing a dmp

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