Debt after discharge ??????

padiman

Hi I would like something clarifying please.

When I first posted on here that I am Bankrupt, I had a few congratulatory posts and a couple in particular said welcome to being debt free, and I think this is the view that a lot of people have of what going Bankrupt means , your debts are wiped out .

My experience to date is this, I have a mortgaged property with equity, this will obviously be sold and the spare money will be used to pay off the debts, however it will not be enough, so the OR told me that there will then be money taken from my wages until the debts are cleared, he did say it was about 50% of disposable cash left over each month. In fact my debts have INCREASED as a result, because of the scandalous Trustee Fees and we are talking at least £5,000.

I personally do not see this as being debt free, in fact to me it means 10 years plus of living on the breadline and STILL paying my debts.

So the question I have is

Why the congratulations ? and how am I debt free ?

Thanks

philnicandamy

padiman wrote: »

Hi I would like something clarifying please.

When I first posted on here that I am Bankrupt, I had a few congratulatory posts and a couple in particular said welcome to being debt free, and I think this is the view that a lot of people have of what going Bankrupt means , your debts are wiped out .Most of the time its as simple as that yes...

My experience to date is this, I have a mortgaged property with equity, this will obviously be sold and the spare money will be used to pay off the debts, however it will not be enough, so the OR told me that there will then be money taken from my wages until the debts are cleared, he did say it was about 50% of disposable cash left over each month. This is whats called an IPA and will only last 3yrs NOT until your debts are cleared so what the OR told you was incorrect....and then this only comes into effect if you have more than £100 a month surplus after your living expenses have been taken into account...plus an IPA is better than where you currently were before BR paying interest etc and any changes in financial circumstances could mean the IPA is increased if you get more cash decreased if you dont and if you drop below the £100 a month cancelled all together

I personally do not see this as being debt free, in fact to me it means 10 years plus of living on the breadline and STILL paying my debts.

So the question I have is

Why the congratulations ? and how am I debt free ?

Thanks

Hope this helps

fermi

As Phil has said....

The OR will be referring to an Income Payment Agreement (IPA).

These are intended to allow a bankrupt with disposable income to pay something back towards their former debts and the cost of the bankruptcy.

They have a legally defined maximum duration which is 3 years. They cannot run for longer than that, even if the costs of your debts and bankruptcy have not been covered.

You will NOT be paying for ten years.

dalip

The IPA is only for 36 mths and can be varied as in increased/decreased/suspended/dissolved. The reason for said IPA is so that some chappie earning £2,000 a mth with outgoings of £500 does not go bc and then go on to live the high life with a big big surpls income.

Bc is a last resort for most,who have fought against it. They are usually people who have had to go bc because of circumstance,illness,divorce,death.

Not to just wipe off a load of debt,then to carry on as before.

So to lots of posters we do say heres to debt free future. An IPA is not a debt as such it is an agreement to pay a fraction back to your creditors,after the OR fees that is.D

padiman

Okay that helps and has clarified something that was puzzling me, it does raise a question though, is it wise to congratulate people before you know the circumstances ? Also the OR didn't say it would be 10 years + that was my rough estimate before I knew what you have said above
How do they work out spare cash ? Am i allowed to have monthly bills such as mobile phone, or internet for example is anything allowed for me to save for my kids christmas etc ...

Also what about my credit file? will it be clear after discharge or after the IPA 3 years

Many thanks for your replies I feel a bit better now

philnicandamy

Of course....its a congratulations on getting through everything from the moment you decide bankruptcy is the only option to getting through the day at court...its not a case of "oh well done on wiping all your debts out"
have you had an official receiver interview yet? you would be allowed a mobile as long as its not excessive...internet is tricky some allow some dont

peachyprice

You will be allowed to have a reasonable standard of living without having to scrimp. Some things that are not essential, internet for example, will have to be paid for from your surplus. Why not post up your income and expenditure so we can advise what might and might not be allowed.

dalip

yes it is wise for the congrats.I had an IPA of £50 a mth based on my income,by god i would have paid that for 20 years compared to what i was trying to pay back!.

You are allowed lots of things like mobiles,haircuts,dentist,persciptions,pets ect. All OR's vary in what/amounts they allow so any advice on this here is just a guide. If you want more detailed advice pop your income/expenditure and how many in your household. We can then see what sortof IPA you might be looking at,if any.D

padiman

Yes I was made bankrupt in April by a creditor and had my interview at the Insolvency Service mid May.

padiman

Thank you

I take home approx £1500 a month ( depends on overtime)

rent 395
maintenance 580 ( this is an informal arrangement at mo)
water 15.80
gas n electric 45
council tax 80
car insurance 28
mobile 30 ( on contract)
tv licence 22
virgin 35 ( tv + phone + internet ) + phone calls ( usually pennies)

thats my monthly outgoings bill wise

then theres

petrol 60
food 100

then there are all sorts of other things like road tax, clothes, car maintenance etc ...

skylight

The IP fees and all debts related to the mortage etc will be included in your BR along with all your other debts. It does take a while to sort out as there are a great deal of loose ends that need sorting out.

*If* you have enough money left over in your wages, then an IPA will be put into place. BR is not a quick option to wipe out your debts but it does absolve your responsibility of them, which passes to the OR. There are OR fees for this (the IP ones) and the OR has a responsibility to gather as much money from your assets as possible (sale of equity and IPA) and distribute this amoungst your creditors.

It does take a whileto sort out though. Thats why you are BR for a year until automatic discharge. Everything shoudl be sorted by then.