Some questions...

charlie666

We are currently filling in our SOA on the website insolvency direct, there are no options for Scottish courts, only English & Welsh but the local Sheriff Court told me where to get the forms....can we still file in Scotland? We've nearly finished it!

Can we still buy and sell things on eBay and have a PayPal account, or would this be frozen too?

We are still awaiting our claim pack for tax credits....should we put that we're not currently getting any benefits and just let the OR when the time comes?

We do not have hubby's last tax reference number or any of his figures for last year but we need these not only for filling out the SOA but also for our tax credits claim. All our paperwork is with our former accountant (the one who took us to court)

Thanks!

peachyprice

Do you live in Scotland Charlie?

It's a slightly different system I believe.

charlie666

yes, I certainly do peachy :cool: know any Scottish folk going through this?

peachyprice

Send a PM to coolcait, she's our Scottish expert

charlie666

Will do, thanks! :T

coolcait

Hiya charlie

First of all, like everyone on here, I'm so sorry that you find yourself in this situation. But you're in a great place for help and support.

Secondly, can I just say that I don't see myself as an 'expert'! I've learnt a fair bit about the Scottish system over the past year or so, but I'd always recommend that people have a chat with the likes of CAB, local Welfare Rights/local authority money advisers, CCCS, National Debtline etc.

It's hard to answer you properly at the moment, because we don't really know exactly what your position is. If you could have gone for a Time to Pay order on the debt to your accountant, is bankruptcy really the best option for you, for example? It would probably be easier to answer that question once we have your SoA, and know how much equity (if any) you have in your house.

If you just need some time to pay back your debts, and you have a decent amount of equity in your house (and want to keep the house) then the Debt Arrangement Scheme might be worth looking at: www.moneyscotland.gov.uk
It works along the lines of a Debt Management Plan. But, under Scottish law, it means that your creditors have to freeze interest, it protects your house, stops your creditors taking court action against you, and means that they have no legal right to ask you to pay them any more than the DAS has agreed to.

If it turns out that bankruptcy is the best option for you, you'll need to check that you are actually able to apply. The system is different in Scotland. You don't have to go to court; you send your application to the Accountant in Bankruptcy; you won't have to see anyone at all, much less your creditors; it 'only' costs £100 (it's a lot if you don't have it, but it's a huge sight less than what it costs in England and Wales! Sorry, NI posters, but I haven't picked up how much it costs for you - I'm not deliberately excluding you!:o ).

The disadvantage is that you have to meet some very specific points before you can apply for your own bankruptcy. And, from the little bit of information you have given us, I'm not sure that you do .

You own property, so you can't apply under the Low Income Low Asset rules (LILA)

And, although one of your creditors has taken you to court, that's not enough to apply for bankruptcy. You would need a Charge for Payment (you'd be able to recognise it, because it actually says 'Charge for Payment' at the top). It would also be served on you by Sheriff Officers. If you don't have this - or some other proof of 'apparent insolvency' (to use the jargon), then there would be no point in you applying for bankruptcy right now, because it would be rejected, and you'd lose your £100 fee.

I'm sorry to sound so negative, but I know that more than one FM has been caught on this dilemma in Scotland - they want to go bankrupt, but their own personal situation doesn't fit what the law requires them to show.

On the other side of the coin, I doubt if your creditor could make you bankrupt either. If he has gone for summary cause, then the debt is under £1500. You would need to owe him at least £3000 before he could petition for your bankruptcy. So, if you don't really want to go bankrupt, but think that your former accountant is going to bankrupt you anyway, then you can relax on that front.

As for your house, if you do go bankrupt, it's not inevitable that you lose your house. It all depends on how much equity is in there, and whether or not you can 'buy out the trustee's interest'. So, say there's £10,000 of equity in the house; the house is jointly owned; and only one of you is bankrupt... The 'trustee's interest' would be £5000. If you could manage to pay that, then you would be able to keep your house.

I'm afraid I have no idea about the ebay and paypal questions . At a guess, I doubt if they'd be frozen. When bank accounts are frozen, it's usually because the bank decides to do it. I haven't heard about ebay or paypal doing it . However, if you're earning a significant amount of money thorugh ebay/paypal, your trustee in bankruptcy might be interested in it.

If I've missed anything - and I'm pretty sure I have - let me know, and I'll try to answer it.

Good luck, and take care!

P.S. Sorry, that sounds a bit abrupt in places - it's not meant to be!

charlie666

Thanks for your reply coolcait, and I didn't think it was abrupt, lol!

I can't believe that with the level of debt we have that we'd be unable to file for BR, I realise that you probably don't have the full picture, so here is what we have written word for word in our SOA in the section that explains why we think we are eligible for BR:

It started with a client witholding the final stage payment on work i'd done on her property, I still had the materials to pay for on my trade accounts as well as other overheads, wages etc. I approached the bank for an overdraft on my business account, they refused.
We ended up getting a secured loan with Welcome Finance. They told us that within a few months we'd be able to combine the loan with our mortgage and reduce the payment. This did not happen as they stopped doing mortgages.
During this time bank charges were spiralling out of control despite our efforts to convince the bank to help us out. We successfully reclaimed some of our bank charges on other accounts, but the largest claim remains suspended due to the appeal case. The account was our personal a/c and the overdraft grew due mainly to charges. The o/d ended up at around £6k but we calculated around £10K in charges on the a/c, add this to the interest on Provident loans which we kept taking out (to cover wages because of the bank's lack of understanding) etc and the interest we'd like to charge them at the same rate they have enjoyed over the years and the figure is nearer to £30k.
Also, because I feared doing more private work and not getting paid for it again I had to go and sub-contract to larger companies, most of whom would pay a month in arrears, leading to further cashflow problems, one of them owed us over £6k and the day we were due to file at court to claim our money back, they went into administration, again the banks refused to help. We have heard that the same firm has recently re-established itself under a different name with different directors.
We even sold our good car to cover the boys' wages, when we banked the cheque, it was immediately eaten up by charges the bank had applied to our a/c and we basically got nothing for it! Our mortgage payments increased by around £100/mth when we came out of our fixed rate period. Due partly to our terrible credit rating and partly to the current financial climate we are unable to shop around for a better rate.
Basically, if the bank had helped us out when we first asked I would still be self-employed, we'd still have a decent car, we'd have done our house up and wouldn't be in the mess we're in now. I have gone from running a busy and successful joinery firm with 6 employees and 2 vans to being out of the house for 14hrs a day or more, working for a firm which has drastically reduced my pay over the last few months due to the recession and we can no longer meet our financial obligations.

Hope that gives a clearer picture of where we're at The Welcome secured loan was for £20k and we have many other smaller debts (which is why our SOA is taking so long to fill in, the accountant is just one of them, he also still has all our figures and paperwork and is unlikely to return them if we ask him meaning our tax credits claim form and our SOA may well be impossible to complete! :mad:
Edit: Oh, and our life insurances have lapsed, along with home and contents as well as a few other important DDs.
What do you think.....?

coolcait

charlie666 wrote: »

Thanks for your reply coolcait, and I didn't think it was abrupt, lol!

I can't believe that with the level of debt we have that we'd be unable to file for BR, I realise that you probably don't have the full picture, so here is what we have written word for word in our SOA in the section that explains why we think we are eligible for BR:

It started with a client witholding the final stage payment on work i'd done on her property, I still had the materials to pay for on my trade accounts as well as other overheads, wages etc. I approached the bank for an overdraft on my business account, they refused.
We ended up getting a secured loan with Welcome Finance. They told us that within a few months we'd be able to combine the loan with our mortgage and reduce the payment. This did not happen as they stopped doing mortgages.
During this time bank charges were spiralling out of control despite our efforts to convince the bank to help us out. We successfully reclaimed some of our bank charges on other accounts, but the largest claim remains suspended due to the appeal case. The account was our personal a/c and the overdraft grew due mainly to charges. The o/d ended up at around £6k but we calculated around £10K in charges on the a/c, add this to the interest on Provident loans which we kept taking out (to cover wages because of the bank's lack of understanding) etc and the interest we'd like to charge them at the same rate they have enjoyed over the years and the figure is nearer to £30k.
Also, because I feared doing more private work and not getting paid for it again I had to go and sub-contract to larger companies, most of whom would pay a month in arrears, leading to further cashflow problems, one of them owed us over £6k and the day we were due to file at court to claim our money back, they went into administration, again the banks refused to help. We have heard that the same firm has recently re-established itself under a different name with different directors.
We even sold our good car to cover the boys' wages, when we banked the cheque, it was immediately eaten up by charges the bank had applied to our a/c and we basically got nothing for it! Our mortgage payments increased by around £100/mth when we came out of our fixed rate period. Due partly to our terrible credit rating and partly to the current financial climate we are unable to shop around for a better rate.
Basically, if the bank had helped us out when we first asked I would still be self-employed, we'd still have a decent car, we'd have done our house up and wouldn't be in the mess we're in now. I have gone from running a busy and successful joinery firm with 6 employees and 2 vans to being out of the house for 14hrs a day or more, working for a firm which has drastically reduced my pay over the last few months due to the recession and we can no longer meet our financial obligations.

Hope that gives a clearer picture of where we're at The Welcome secured loan was for £20k and we have many other smaller debts (which is why our SOA is taking so long to fill in, the accountant is just one of them, he also still has all our figures and paperwork and is unlikely to return them if we ask him meaning our tax credits claim form and our SOA may well be impossible to complete! :mad:

What do you think.....?

Hiya again!

I'm glad I didn't sound abrupt! I find it hard to try to get all the info down without sounding that way!:o

Unfortunately, in Scotland, the level of debt isn't the deciding factor. If you meet the conditions, you can make yourself bankrupt if you have at least £1500 worth of debt. Or a creditor could make you bankrupt if you have at least £3000 worth of debt.

If you don't meet the conditions, then you couldn't make yourself bankrupt even if you had £1,500,000 of debt or more

If you haven't already read the Accountant in Bankruptcy's Debtors Guide, please have a look at it. It tells you what you need to do to make yourself bankrupt, and the conditions you have to meet:

http://www.aib.gov.uk/guidance/publications/debtbankruptcy/bankruptcypostapril08/poyo

In Scotland, you don't have to explain in your application why you have reached the stage of applying for bankruptcy, so it looks like you've been filling in the English forms, not the Scottish ones . If you do go for bankruptcy in Scotland, please make sure you use the right forms - you're probably best to ask the AiB for them.

But, don't worry, all your work in filling in the SoA won't go to waste - it will help you answer any questions from your trustee about why you ended up going for bankruptcy.

I'm really sorry I can't be more positive about your options right now But I wish you all the best anyway.

charlie666

Ok, thank you! It's better that we know this now than finding out further down the line
Will have a look at it all in the morning when my head's clearer.
Thanks again for advising
charlie

charlie666

Hello! We haven't been on in a while but we have a few more questions.

I have been to the CAB for some advice and we have an appointment with a money adviser in a couple of weeks' time.

The lady at the CAB asked me if we'd ever considered selling our house. She said that if we were to hand our keys back, that may not be the end of it....we may still be liable for any outstanding amount depending on what it sold for at auction. We have arrears on our mortgage as well as being in negative equity due to the current financial climate.
We were under the impression that people went BR because they could not pay their debts and had no other option....that you pay a certain amount into the BR fund based on your income, expenditure and circumstances and that if you kept the agreement you became debt-free at the time of discharge, whether it's a year or more.

Is this not the case? Is she talking about an IVA rather than BR?

We had a van on finance options which we defaulted on....it's a long story but the van was sold. For the last few weeks we have been trying to get a final figure for this debt to put in our form....but there is no trace of the account, either with the original company, the debt recovery company or anyone....as far as they are concerned the account doesn't exist. Which is fine with us.....BUT.....what if, a few months down the line, or even after we are discharged, they suddenly 'find' the account and the debt? Where do we....and they...stand then? Does the fact that our BR appears in the press, giving all creditors a chance to report our indebtedness to them, mean that they have had their chance and once it's gone that's that?

We were feeling level-headed and even relieved about this, but now we are confused all over again! I know we can ask these questions at our meeting with the money advisor but it's a fortnight away and we're stressing over this now We just want to get on with it so we can start answering the door and phone again!