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  • FIRST POST
    • MSE Andrea
    • By MSE Andrea 5th Nov 12, 5:58 PM
    • 8,871Posts
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    MSE Andrea
    Ask a StepChange (formerly CCCS) counsellor a bankruptcy question
    • #1
    • 5th Nov 12, 5:58 PM
    Ask a StepChange (formerly CCCS) counsellor a bankruptcy question 5th Nov 12 at 5:58 PM
    StepChange Debt Charity (formerly CCCS) has several counsellors answering questions in our forum.

    There are three ways to contact them:

    1 - To ask them a question please post it below and Allen, Linsi, Kirsty Rachael or Richard will post a reply here.

    2 - If you would prefer to ask a question in private you can send a private message to StepChange Private Messages and one of the counsellors will get back to you.

    3 – StepChange Debt Remedy is a free and confidential online debt advice tool. You can put a budget together at your pace, and you can also talk it over with an advisor through online chat.

    This thread continues from the previous Ask a counsellor a question thread one
    Last edited by MSE Andrea; 14-12-2016 at 1:40 PM.
    Could you do with a Money Makeover?


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Page 61
  • StepChange_Linsi
    Good morning,

    Welcome to the forum and thank you for your post.

    PPI refunds are treated a bit differently in bankruptcy and IVAs.

    IVA

    If a PPI refund is received while in an IVA, you must tell the insolvency practitioner. Normally you’d be expected to pay the refund into the IVA but you may be able to keep the interest.

    An insolvency practitioner will usually check for mis-sold PPI as part of the IVA. So if you have an IVA you can ask your provider if they’ve checked this. If they haven’t, you can make a claim but you’d need to tell the insolvency practitioner if you’re entitled to a refund.

    Bankruptcy

    If a PPI policy was taken out before you went bankrupt, the refund plus any interest permanently vest in the official receiver (OR) from the date of the bankruptcy order. This means the refund must be paid in full to the OR, even if you’ve been discharged. Failing to declare a refund to the OR is also an offence.

    The OR may also claim back any mis-sold PPI to raise extra funds for the bankruptcy estate. If you’ve declared bankruptcy, it’s not really worth reclaiming PPI which was taken out before a bankruptcy order because any refund you may be entitled to will belong to the OR.

    I hope this helps.

    Linsi

    Is it worth applying to see if you have PPI if you have been bankrupt or have an IVA?
    Originally posted by Cider girl
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • GMK66
    • By GMK66 12th Dec 17, 8:30 PM
    • 1 Posts
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    GMK66
    Bankrupcy and a Mortgage
    Hi,
    I went bankrupt in 2014, i was able to keep my house on an intrest only mortgage which was 30 000 in negative equity. I have recently split from my partner and im struggling to pay the mortgage on my own, the house is still 20-25 000 in negative equity. I would be greatful for advice on my options.
    Thanks
  • StepChange_Rachael
    Hi

    Thanks for your post and welcome to the forum.

    Any included debt taken out before a bankruptcy petition is included in bankruptcy. As a mortgage is an included debt, if you decided to sell the property or hand back the keys and there is a shortfall because of the negative equity, then this debt would be included in your bankruptcy and they wouldn’t be able to chase you for it.

    However, I’d suggest seeking advice based on your full financial situation before taking any drastic action with the property. I’d suggest making sure you’ve looked down every avenue. For example, checking your benefit entitlement, you might be eligible for support now your living situation has changed. I'd suggest checking if there's any expenditure that can be reduced realistically or thinking about options such as having a tenant to help with houshold bills. Anything that can increase the income or reduce the expenditure will help make the mortgage payments more managemable.

    You can check with Turn2us for financial advice and help including checking benefit entitlement. If ultimately the mortgage payment is too high after exhausting all other options then I’d suggest contacting the Insolvency Service to check that the shortfall would be included in the bankruptcy, however based on what you’ve mentioned it's my understanding that it would be.

    I hope this helps.

    Thanks
    Rachael




    Hi,
    I went bankrupt in 2014, i was able to keep my house on an intrest only mortgage which was 30 000 in negative equity. I have recently split from my partner and im struggling to pay the mortgage on my own, the house is still 20-25 000 in negative equity. I would be greatful for advice on my options.
    Thanks
    Originally posted by GMK66
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • Mk8000
    • By Mk8000 17th Dec 17, 10:15 AM
    • 1 Posts
    • 0 Thanks
    Mk8000
    Hi I am going to be going bankrupt when I have got the money together but what I really wanted to know was will there be any problem with the bankruptcy if the official receiver sees that I am paying off mine and my other half’s wedding as it will be seen on bank statements ? Me and my other half have a joint account and we are only on receiving benefits we are both on pip and universal credit and I get careers allwence for caring for her just worried they might say something if we have money to spend on wedding and not pay depts thanks.
  • StepChange_Linsi
    Hi

    Thanks for your post and welcome to the forum.

    Usually when you apply to go bankrupt the official receiver (OR) will work out what disposable income you have using their own budget guidelines and it’s unlikely that wedding costs would be an allowable expense.

    Having said this, if your income is made up solely of state benefits, an income payment arrangement (IPA) will not be made and the OR doesn’t need to make any checks into your expenses. If the OR doesn’t check your expenses you’d be able to budget for any costs you have.

    If you’ve borrowed any money or taken out any loans/credit agreements to pay for your wedding then these would be included as debts in your bankruptcy and you wouldn’t be able to continue paying them back.

    Should you need any more guidance about this you can contact the Insolvency Service Helpline on 0300 678 0015. You can also use our Debt Remedy tool to create a budget and make sure bankruptcy is the right solution for you. Here’s the link.

    All the best,

    Linsi

    Hi I am going to be going bankrupt when I have got the money together but what I really wanted to know was will there be any problem with the bankruptcy if the official receiver sees that I am paying off mine and my other half’s wedding as it will be seen on bank statements ? Me and my other half have a joint account and we are only on receiving benefits we are both on pip and universal credit and I get careers allwence for caring for her just worried they might say something if we have money to spend on wedding and not pay depts thanks.
    Originally posted by Mk8000
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • Trigger99
    • By Trigger99 19th Dec 17, 12:32 AM
    • 2 Posts
    • 0 Thanks
    Trigger99
    Bankruptcy advice for a couple
    I am preparing to declare bankruptcy because I am unable to pay a large HMRC demand.
    My question is about the implications fo my wife and our joint assets. My wife has no debt whatsover and no issues with HMRC. We jointly own (mortgaged) BTL properties which generate a monthly surplus but which are in negative equity. My question is whether HMRC can seize the properties? We have no other joint accounts or assets.

    Many thanks

    T
    • Flyright
    • By Flyright 19th Dec 17, 6:14 AM
    • 311 Posts
    • 171 Thanks
    Flyright
    Your interest in the BTL properties will become an asset in the bankruptcy and your share of the rental income derived from the properties will also form an asset in the bankruptcy.
  • StepChange_Allen
    I am preparing to declare bankruptcy because I am unable to pay a large HMRC demand.
    My question is about the implications fo my wife and our joint assets. My wife has no debt whatsover and no issues with HMRC. We jointly own (mortgaged) BTL properties which generate a monthly surplus but which are in negative equity. My question is whether HMRC can seize the properties? We have no other joint accounts or assets.

    Many thanks

    T
    Originally posted by Trigger99

    Hi T

    Thanks for posting.

    There's quite a lot to this, and I'd definitely recommend contacting Business Debtline before going ahead with bankruptcy as they're experts in advising self-employed people (including buy-to-let owners) on effects of bankruptcy. Their website is: www.businessdebtline.org

    I'm happy to give you as much advice as I can though, which I'll break down into a few bullet points:

    • You would remain as landlords and only your beneficial interest vests with the Official Receiver (OR) - in this case if it's in negative equity at the moment that's nothing right now
    • You can continue to collect the rent from the tenants, however your share (normally 50%) must be passed onto the OR. You'd be allowed to pay essentials like insurance but not the mortgage with that rental income
    • You wouldn't be allowed to pay your share of the mortgage as it wouldn't be an allowable expense in the bankruptcy. Your wife would be allowed to make the full payment, but if she couldn't afford to then the mortgage will fall into arrears
    • If it falls into arrears, the mortgage company can either take possession action in the county court or Appoint Law of Property Act (LPA) receivers to collect the rent from the tenants direct. If this happens, the OR will stop taking the rent and the tenants will have to pay the LPA receivers

    This is it in a nutshell from my understanding. I hope it's helpful, but as mentioned, please contact Business Debtline for further advice and to discuss the specifics for you.

    Best wishes

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • Trigger99
    • By Trigger99 20th Dec 17, 5:34 PM
    • 2 Posts
    • 0 Thanks
    Trigger99
    Thanks for all your advice - very helpful
    • Shellbob83
    • By Shellbob83 2nd Jan 18, 6:36 PM
    • 10 Posts
    • 0 Thanks
    Shellbob83
    Can anyone please help. My parents have given their house back to mortgage company with the plan to go bankrupt. They signed voluntary repossession papers that talks about still being responsible for any outstanding debts once the property is sold. Does this mean if they go bankrupt they will still be liable for any negative equity?
    • menageamoi
    • By menageamoi 2nd Jan 18, 7:14 PM
    • 29 Posts
    • 6 Thanks
    menageamoi
    No - the negative equity is included within the money they owe as part of the Bankruptcy. When you fill in the form you'll see that it effectively identifies any negative equity as "assets"
    • Shellbob83
    • By Shellbob83 2nd Jan 18, 7:35 PM
    • 10 Posts
    • 0 Thanks
    Shellbob83
    Thanks for the reassurance. It feels like such a scary process, I was just really worried we’d screwed up!
    • fatbelly
    • By fatbelly 2nd Jan 18, 10:31 PM
    • 11,773 Posts
    • 8,867 Thanks
    fatbelly
    Can anyone please help. My parents have given their house back to mortgage company with the plan to go bankrupt. They signed voluntary repossession papers that talks about still being responsible for any outstanding debts once the property is sold. Does this mean if they go bankrupt they will still be liable for any negative equity?
    Originally posted by Shellbob83
    The thing to avoid signing is a 'deed of acknowledgement'
    What is a Deed of Acknowledgement of a debt?
    If the property is sold, any shortfall on the mortgage loan (or any other loan that is secured on your home) is still a bankruptcy debt and you will be released from this debt on your discharge. This applies even if you have been discharged from your bankruptcy by the time your property is sold.

    Sometimes, after the date of the bankruptcy order a lender might ask you sign a document in which you agree to be responsible for the debt and any shortfall arising on the sale of the property. This is known as a deed of acknowledgement of a debt. If you sign it, the lender will be able to ask you to pay the debt after you have been discharged from your bankruptcy. If you are asked to sign a deed of acknowledgement you may wish to take legal advice before doing so. The lender can ask any joint borrowers who are not bankrupt to pay the shortfall in full, whether or not they have signed a deed of acknowledgement.
    I haven't heard of these being used since the sub-prime lenders went out of business nearly a decade ago. You should be OK.
    • Shellbob83
    • By Shellbob83 3rd Jan 18, 7:09 AM
    • 10 Posts
    • 0 Thanks
    Shellbob83
    They haven’t even started the bankruptcy process yet but the document they signed does say;

    ‘We irrevocably acknowledge that the power of sale, as referred to in the mortgage terms and conditions in force at the time the mortgage deed was executed, is still exercisable.’

    This bit worries me
  • StepChange_Linsi
    Good morning,

    Thanks for your post and welcome to the forum.

    A mortgage shortfall is a provable debt in bankruptcy, so your parents wouldn’t be liable for this debt after going bankrupt.

    To the best of our knowledge signing this document before applying for bankruptcy shouldn’t cause any issues down the line, but it’s not something I’ve come across before. I’d recommend getting some legal advice or speaking to the Insolvency Service before signing anything, just to make sure it won’t have a negative impact.

    If this document is a deed of acknowledgement, then as long as it’s signed before the bankruptcy order is approved the debt will still be written off.

    If your parents were to sign a deed of acknowledgement after the bankruptcy order, they’d effectively be creating a new debt so this wouldn’t be written off.

    I hope this helps,

    Linsi



    They haven’t even started the bankruptcy process yet but the document they signed does say;

    ‘We irrevocably acknowledge that the power of sale, as referred to in the mortgage terms and conditions in force at the time the mortgage deed was executed, is still exercisable.’

    This bit worries me
    Originally posted by Shellbob83
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • Shellbob83
    • By Shellbob83 3rd Jan 18, 5:39 PM
    • 10 Posts
    • 0 Thanks
    Shellbob83
    Thank you. I have read a few things that have said if it was signed before applying for bankruptcy it will be ok so think I’m just going to hope for the best!
    • BeeCat
    • By BeeCat 4th Jan 18, 9:18 PM
    • 3 Posts
    • 0 Thanks
    BeeCat
    How many times.....
    I cannot believe I am even having to ask this question but could somebody tell me how many times you can go bankrupt?

    Yes, I have done it twice before, and NO I am not proud.

    Mid 90s - Young and didn't know better.
    2008 - Should have known better.
    2018 - No choice!!

    After 2 years from hell i now find myself in a position i never thought i would be in again and can see NO way out. It's a long and complex story which has led to me having to resign from a job of over 30 years for health reasons.

    Please don't judge, i feel distraught and beside myself as it is. I never ever understood why somebody would take their own life because of money but now I can totally see why.
  • StepChange_Linsi
    Hi there,

    Thanks for your post and welcome to the forum.

    We’re always here to help and never to judge, so I’m glad you took the time to get in touch and explain your situation.

    There isn’t a limit to the number of times you can go bankrupt, but there’s a greater risk you’ll receive a bankruptcy restriction undertaking or order if you go bankrupt more than once. This means you’ll still be discharged (usually after 12 months), but the restrictions will continue to apply for a further 2 to 15 years.

    Although you’ve been bankrupt before I’d still recommend getting some advice just to make sure bankruptcy is the right option. You can do this online by using our Debt Remedy tool.

    Dealing with debt isn’t easy at the best of times and having to manage health conditions on top of debts isn’t easy. If you need any additional support regarding your physical or mental health you can speak to your GP or organisations such as Mind or the Samaritans.

    I hope this helps,

    Linsi

    I cannot believe I am even having to ask this question but could somebody tell me how many times you can go bankrupt?

    Yes, I have done it twice before, and NO I am not proud.

    Mid 90s - Young and didn't know better.
    2008 - Should have known better.
    2018 - No choice!!

    After 2 years from hell i now find myself in a position i never thought i would be in again and can see NO way out. It's a long and complex story which has led to me having to resign from a job of over 30 years for health reasons.

    Please don't judge, i feel distraught and beside myself as it is. I never ever understood why somebody would take their own life because of money but now I can totally see why.
    Originally posted by BeeCat
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
    • $izzle$
    • By $izzle$ 7th Jan 18, 1:33 PM
    • 12 Posts
    • 1 Thanks
    $izzle$
    IPA and slight income increase
    Good afternoon
    I declared bankruptcy in November and although on disability benefits i am required to pay £100 a month IPA as i am in receipt of my late husbands works pension.
    The pension increases every January usually by about £20 a month, however once I have informed Housing Benefit of this increase they adjust my benefit accordingly, which results in me being about £10 better off a month.
    Do i inform the IPA team of this first, in order for them to increase my payments, or do i inform housing benefit and then inform the IPA team of what is left after that?
    Also do i have to inform them of every little increase such as benefit increases of maybe a couple of pounds a month in April?

    Thanks for your help
  • StepChange_Allen
    Good afternoon
    I declared bankruptcy in November and although on disability benefits i am required to pay £100 a month IPA as i am in receipt of my late husbands works pension.
    The pension increases every January usually by about £20 a month, however once I have informed Housing Benefit of this increase they adjust my benefit accordingly, which results in me being about £10 better off a month.
    Do i inform the IPA team of this first, in order for them to increase my payments, or do i inform housing benefit and then inform the IPA team of what is left after that?
    Also do i have to inform them of every little increase such as benefit increases of maybe a couple of pounds a month in April?

    Thanks for your help
    Originally posted by $izzle$
    Hi there

    Thanks for posting.

    I'm not completely certain about this as we don't really get involved in post-bankruptcy advice, but common sense may suggest that you contact DWP first to have the housing benefit re-calculated first so that you know the real increase in your income before advising the official receiver (OR).

    I'm not sure how much of a change to your income is required to be declared but I'd advise to err on the side of caution for now and let them know of any changes; this way at least you're being completely transparent. They may take into account things like inflation in regards to your living costs like shopping and utilities, I'm not certain.

    I'd recommend contacting the Insolvency Service enquiry line to give a more definite answer to these questions; their contact details can be found here: www.gov.uk/the-insolvency-service

    I hope this helps

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
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