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  • FIRST POST
    • robotwars69
    • By robotwars69 7th Sep 17, 1:49 AM
    • 7Posts
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    robotwars69
    Partner's income SoA
    • #1
    • 7th Sep 17, 1:49 AM
    Partner's income SoA 7th Sep 17 at 1:49 AM
    Hello everyone - I've been blitzing these forums and find so many different answers to this - could do with putting this straight once and for all!

    Background - I'll be filing for Bankruptcy only. 2 Adults, one child. Both self employed.

    Option A)
    As I understand it, on the SoA I put for household expenses and my personal expenses - ignoring personal expenses of my OH (such as mobiles etc). Because of this I keep reading that my OH's money is her own so I should put her wage down as ONLY the contributing amount.
    If this is so, should I also only allow for me and my daughter for things like clothing and haircuts etc?

    Option B)
    I put the whole expenses down on the SoA to be totally transparent to the OR, and put the total actual wage of my OH and leave it in their hands to work it out. If I did that, I'd worry they'd take my wife's total earnings then pull apart the expenses leaving us well short and a distorted reality and an unrealistic IPA.

    Lastly... We have a joint consolidation loan (£350) which will be left as my OH's responsibility, but of course, this isn't to be part of the outgoings as it will no longer be my debt. But if this isn't accounted for somewhere then I'm likely to end up with a £350 surplus to my calculations when in reality it isn't a surplus at all. So the only that I can see that counters that is deducting it from my wife's total income and declaring her income as the contributing amount.

    So rough total figures:

    My income after tax £1500
    OH income after tax £1050
    Child Support £80

    Total £2550 (+80 CB which I believe isn't calculated)

    Total Outgoings £2250
    Total deficit/surplus +£300

    BUT.... with my wife paying for her new responsibility of loan (£350) plus a small joint credit card also, plus phone, and bits and bobs which totals around £600... and I, therefore put her income as total contribution at £450. The new deficit surplus would be £-300.

    So, I'm totally confused as what to do. Obviously, with outgoing figures, I can tweak to a small extent within the boundaries of being as honest as honest gets with estimations. I want to avoid an IPA, and because we are both self employed, I believe we can manage our finances, both incoming and outgoing to get by without surplus. Getting stung with an IPA is my major concern, and the lack of clarity I have right now with how to correctly do the SoA is bothering me!

    Any help greatly appreciated!
    Thanks
Page 1
  • National Debtline
    • #2
    • 7th Sep 17, 2:31 PM
    • #2
    • 7th Sep 17, 2:31 PM
    Hi robotwars69

    The bankruptcy application asks for details of your whole household’s income and outgoings. That means they want you to declare all of your OH's income as well as your own, plus all of your household outgoings.

    It is correct that your OH will not have to contribute anything into your bankruptcy. The official receiver (OR) will use the information you provide to split the household bills proportionally and work out how much you personally have available to pay into your bankruptcy. In your situation, as your income is higher it is fair that you are paying a bigger share of the household outgoings.


    If your OH is going to struggle with the debts she is liable for it would be a good idea for her to seek some debt advice herself. She can get this from one of the free debt advice agencies. Good luck with the bankruptcy.

    Susie
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • debt doctor
    • By debt doctor 7th Sep 17, 3:11 PM
    • 4,113 Posts
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    debt doctor
    • #3
    • 7th Sep 17, 3:11 PM
    • #3
    • 7th Sep 17, 3:11 PM
    Hi,


    Indeed your partner should seek advice if they feel they cannot cope with their debts - but a non bankrupt partner needs to be allowed (in the SOA) to pay their contractual payments - including the joint debt.
    There is no case for forcing a non bankrupt in to default. Your partners income should only be apportioned in a fair manner against the household bills.
    The rest of her money is just that - her money. An IPA can only come from your spare income - no one else's.
    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
    • robotwars69
    • By robotwars69 8th Sep 17, 11:18 AM
    • 7 Posts
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    robotwars69
    • #4
    • 8th Sep 17, 11:18 AM
    • #4
    • 8th Sep 17, 11:18 AM
    Thank you Susie/DD for taking the time to replying.

    Still niggling though are these questions!

    "That means they want you to declare all of your OH's income as well as your own, plus all of your household outgoings" - except my partner's loan (which USED TO BE joint), is no longer joint so no longer considered by the OR as a 'household' outgoing?? If they decide that, and scrap it from the SoA then I'd be in that situation of a surplus which isn't true (officially as a household).

    Also...

    "...but a non bankrupt partner needs to be allowed (in the SOA) to pay their contractual payments - including the joint debt..." - again, that debt will no longer be joint??

    "There is no case for forcing a non bankrupt in to default. Your partners income should only be apportioned in a fair manner against the household bills."... same argument, are they going to claim that her loan is NOT a household bill?!

    It seems to me, if I have to declare her whole, complete salary, and her loan situation turns out not to be applicable on the SoA, then there's this deficit that isn't reflected?
    • debt doctor
    • By debt doctor 8th Sep 17, 12:03 PM
    • 4,113 Posts
    • 5,777 Thanks
    debt doctor
    • #5
    • 8th Sep 17, 12:03 PM
    • #5
    • 8th Sep 17, 12:03 PM
    In any event, the non bankrupt partner must be allowed to pay their own contractual debt repayments - unless that would prevent them paying a fair amount to the household bills.


    Whether you just supply income from the partner that proportionately covers the household bills - or - you supply all of the partners income and the insolvency service apportions their income across the household bills - the result should be the same.


    When your liability for the joint loan disappears then your partner still holds 100% liability. It remains a (now sole debt) debt that they lawfully have to pay out of their own income.


    The loan repayment is not part of household expenses - it is part of am non bankrupts normal additional costs. Your partners income is only to be assessed to the point that sufficient proportional income is provided to the household bills. The rest of their money is theirs to keep and spend how they wish, in this case, on the once joint loan that they are now solely responsible for.
    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
    • robotwars69
    • By robotwars69 8th Sep 17, 12:22 PM
    • 7 Posts
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    robotwars69
    • #6
    • 8th Sep 17, 12:22 PM
    • #6
    • 8th Sep 17, 12:22 PM
    Thank you again DD, I agree that the result should be the same, and indeed it is. I sort of want to clear up if that is acceptable to therefore do that calculation myself on the SoA and present my wife's income as the result of that i.e. £1050 minus contractual loans/agreements = £x (x being the amount I present).

    Following on from this, (hypothetically) my wife's money being her own - what if she were to start earning more money post SoA - does THAT change in circumstance (ability to contribute more to household) need to be presented - or do we assume that the outgoings agreed from the SoA are the same unless MY situation changes? In other words, if my wife manages to earn more and use that money for savings (i.e. NOT contributing more to household bills), does that have any repercussions? Just weighing up how to survive the best we can for that 12-month period, not sure what is allowed - i.e. could I unofficially 'help' my wife earn more? What if that went more extreme and it turned out I earned less and my wife more, or, say my wife's income increased, but then so do her costs before contribution to the family household?
    Sorry for bombarding you with so many questions, I just want to be really clear on what we can do as a family during these 12 month, within the law!

    Thanks
    • robotwars69
    • By robotwars69 8th Sep 17, 12:25 PM
    • 7 Posts
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    robotwars69
    • #7
    • 8th Sep 17, 12:25 PM
    • #7
    • 8th Sep 17, 12:25 PM
    And one more thing sorry! "The loan repayment is not part of household expenses - it is part of am non bankrupts normal additional costs" - is space for declaring a non-bankrupt's additional costs clearly provided in the SoA form then?

    Thanks again Really appreciate all your help!
    • debt doctor
    • By debt doctor 10th Sep 17, 6:27 PM
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    debt doctor
    • #8
    • 10th Sep 17, 6:27 PM
    • #8
    • 10th Sep 17, 6:27 PM
    If you do not provide your wife's full income - how will the OR know that the income has been correctly apportioned?
    If your wife starts earning more then her pro rata payments to household bills will increase - yours would decrease, making an IPA against you either possible or increased (if you had one)
    If your wife earns twice as much as you then she should pay twice as much as you to the household bills.
    No one should care what she has left after the pro rata household bills calculation, it's her money.
    Anything you have left in your calculation of income minus household bills and reasonable costs will be taken in an IPA.


    This is from the Technical manual:


    Section (i) Income received from spouse/civil partner/partner

    31.7.71 Income received from spouse/civil partner/partner
    It is reasonable to expect that within the household of the bankrupt and his/her family, the income received by a working spouse/civil partner/partner (all referred to as "partner" for the remainder of this section) or a partner who receives income from other independent means, will be used to contribute to the household expenditure in some way, for example by purchasing food, clothing for him/herself and any children, etc. The bankrupt may genuinely not know his/her partner’s income and/or the partner may not be willing to disclose it to the official receiver as they are not personally subject to the proceedings. Legal advice has been received that it is not a proper use of section 366 [note 6] to have a partner privately examined for the purpose of obtaining details of his/her income to establish whether an IPA/IPO may be obtained.







    31.7.72 Ascertaining partner’s income where bankrupt does not co-operate
    Where resistance to the disclosure of the partner's income is encountered, in the absence of any information to the contrary, it is appropriate for the official receiver to assume that the working partner pays for 50% of all household expenditure. This will enable an income payments calculation to be completed to ascertain whether there is any surplus, and the bankrupt’s share of that surplus, against which an IPA/IPO can be sought. It is likely that an assumption of this nature will provoke a response from the bankrupt and/or their partner and if the required information concerning the exact amount of the partner’s income is then received, the official receiver may re-calculate the income and expenditure of the bankrupt taking in to account this new information.


    31.7.73IPA/IPO payments to be equal to or less than the bankrupt’s surplus income (amended April 2012)
    As with state benefits which supplement earned income, whilst it is acceptable to include the income of the bankrupt's partner as part of the total income received into the household of the bankrupt, it should be noted that an IPA/IPO claim can only be made against the surplus arising from the bankrupt's income. Any calculation of surplus income for the purpose of obtaining an IPA/IPO should work out the surplus available having assessed total income and total expenditure of the bankrupt and his/her household and taking into account the outgoings of both the bankrupt and his/her partner. The extent of any surplus arising should then be apportioned according to the bankrupt’s share of the total income.


    For your last question, why not register for the bankruptcy, and fill out the forms? You can change anything at any time, saving the application as you go. No one sees it and you are not committed to going bankrupt until you make the final submission along with the fee.


    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
    • robotwars69
    • By robotwars69 10th Sep 17, 8:00 PM
    • 7 Posts
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    robotwars69
    • #9
    • 10th Sep 17, 8:00 PM
    • #9
    • 10th Sep 17, 8:00 PM
    Thank you once again DD - all becoming clear to me now thank you.

    Following on from that though... (looking at life post BR application) - with both me and my wife employed working in similar fields, and with a renewed focus on career paths, things are likely to shift to what is the current situation at the moment of declaring bankruptcy. One example of this is cashflow/up front costs issues on some of my work would prevent me from continuing my current business model.

    So two ponderings...!

    Firstly, I'm wondering...If a partner's income may be not disclosed (or even known by the BR himself) - and, if it's not proper use to investigate privately - how would my wife's wage/personal contracts/pre-household expenses even be forthcoming as a consideration to receive/increase an IPA, even if she did begin to earn more? Would it not be the case that the assumption of 50% contribution would act as sort of a cap, even if it turned out she earned loads more and decided to save (as a personal decision) rather than contribute to MORE than an assumed-fair 50% of household?

    Secondly - different situation...
    What if everything my wife earned was clear, known by me, and presented to the OR as changes in circumstance... my wife, for example could potentially earn 1200, me 1200 meeting our expenses of 2400...no IPA as is fairly likely to start with. Or, looking at an increase in income, my wife could earn, say, 3,500 and me just 100 (3%) - or even zero potentially - meaning a surplus of 1,350, but my share still below IPA threshold. Does (can!?) it work like this? Particularly if I decided that I were to use this 12 month period to research, study and prepare for new employment and/or better self-employment prospects for after the discharge, which I'm also considering?
    • silvercar
    • By silvercar 10th Sep 17, 8:54 PM
    • 35,870 Posts
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    silvercar
    I agree with your ponderings.

    If the non -bankrupt partner earns more than the bankrupt, there seems little incentive in the non- bankrupt agreeing to disclose earnings for 2 reasons:
    a) with no disclosure there will be no future disclosure required for a change in non bankrupt's income. "no disclosure" to "no disclosure" not being a change.
    b) the default assumption of the non bankrupt meeting only 50% of the outgoings with no disclosure of income is to the advantage of the lower earning bankrupt partner.
    c) if the non disclosing partner is not entering the discussion, there can be no need to validate choices made by the non bankrupt eg whether they need to run their own car.

    By similar ponderings, if the non-bankrupt earns less, there is every reason to disclose.
    • robotwars69
    • By robotwars69 10th Sep 17, 9:06 PM
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    robotwars69
    Whilst we're pondering, my wife's income being self employed, just like myself is erratic - and I could take various averages over varying lengths of time and come up with a final figure each one different - difficult to show and prove also with me removing myself from the joint account pre BR and also with such a lot of movement between paypal accounts and digital earning platforms, online purchasing of household expenditure on my OH's accounts etc. Am I right to assume whatever my figure I put here (based on truth, but the most favourable average one), the OR is likely to have to simply accept it? And also, for future, changes in her actual wage versus contribution is something I might even be unaware of and also therefore isn't in itself a change in my/household I/E?
    • silvercar
    • By silvercar 10th Sep 17, 9:35 PM
    • 35,870 Posts
    • 151,041 Thanks
    silvercar
    Whatever you use for your income and your share of the household expenses will have to be justifiable as the OR has every right to inspect and judge it. The OR doesn't have to accept anything, they can ask you to defend anything they think questionable. You want to be seen to be complying because you want to be discharged automatically at the end of the year, so little point in being difficult.
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