Ask a CCCS counsellor a bankruptcy question

StepChange_Pavan

Jane1962 wrote: »

Hi,

hoping someone can help me, my husband and I currently are in an IVA and we got a call from a company about going bankrupt... we paid the first installment but are unsure whether this is the right thing for us to do.
We own a house and have a mortgage and secured loan on it and I do not think there is any equity in the property. We both work for local government and are on decent wages. All the questions around going bankrupt seem to be aimed at people who are low paid or have no job and do not own a property and we have now got ourselves really confused about what is best for us to do. What would you advise?

Hi Jane1962 and thank you for your post.

I would be very wary of cold calls that offer debt solutions without knowing the details of your situation.

An IVA is a legally binding arrangement, so your best option would be to discuss any issues with your Insolvency Practitioner.

Hope this helps.

Kind regards
Pavan

JMV

I am hoping to get a bit (or a lot) of advice about BR...not sure where to start!

Maybe some background?

I am 51 years old (tomorrow) and I looked into entering into an IVA with Payplan a year ago, and had previously been to CAB in an effort to 'manage' my £50,000 debt...shortly after starting the process for the IVA my husband lost his job so any excess income was reduced drastically...

I live in a rented property (Housing Association) and the car broke down in April and we couldn't afford to fix it - it's probably only worth £100 scrap value at most...I have no jewellery or anything of value in the house - barring TV; DVD player and that kind of thing - nothing under 3 years old and nothing that cost more than £300 new...

I am self employed and run an online retail business (very little of the debt relates to the setting up of the business and the business has no creditors - in fact I have bled the business dry in an effort to meet my monthly commitments). I have a couple of websites and an Ebay shop...transactions are processed through PayPal - who I also use to process (telephone) credit card payments...

I haven't used any kind of credit card/overdraft or credit facilities since April 2009 - when I gave up my job to run my business full-time..which is when the recession hit and sales began to decrease!

As a side note I gave up my job (in Social Care) as the wages had begun to decrease (eaten away by Local Authority cutbacks on over time etc) over the previous 2 years and I was becoming ill with the stress of work place bullying and working with a "challenging" client group..I had already been off sick with stress for 7 months of the previous 3 year period and was facing disciplinary action for my sickness record... I had started my business as a way of trying to salvage my sanity and my worsening financial situation...

For the last 2 years my business has been doing ok...but really only well enough to provide me with a very modest income and keep me busy - modest income = £1,100 per month.

Sales in good months are about £5,000 per month - in bad months can be only £2,000...and we sometimes struggle to manage if we have consecutive 'bad' months...

I spoke to one of the advisors at Payplan about the possibility of going BR and my biggest worry has always been the loss of my business - she told me that she was pretty certain I could continue to trade - I am a sole trader and the business has no large assets (apart from me)...and only a few small assets in the form of equipment (Kitchen Equipment; computers; printers) and nothing worth more than £200...

Having made the decision to go BR I am now worrying myself sick that I will have to close my business and go on benefits or find another job in Social Care...

Here are my questions:

Business related

1. How likely is the OR to force me to close my business?
2. If I have to close my business - is there anything stopping my husband from begining to trade from the websites etc in his name - or would this be seen as 'dodgy'?
3. In the event I am allowed to continue trading - I am concerned that BR will affect my EBAY and PayPal accounts - as these are my principle sources of income/processing transactions...does anyone have experience of this?

Personal type Q's...

1. A friend is telling me to empty all my accounts and squirrel the money away (I have about £1,500 in total but these are basically my wages for the next month and my BR Fees) - I think this behaviour could be seen as fraudulent...
2. Same friend is saying I will need to change all my utility bills into my husband's name as this is credit and I'm not allowed credit...
3. Same friend is advising me NOT to declare my Papal account - or empty it and declare it with a NIL total...

I am sorry I have so many questions or if they are in the wrong place - I have looked at so many forums in the last week or two that I'm just more confused than I was when I made the decision!

One last question - I feel very confident that BR is right for me and feel confident that I am able to fill in the forms and present my 'case' to the courts - but I read somewhere that if you haven't sought advice from an IP the judge may refuse your BR and you'll lose your fee...have also heard that going through CAB can take months?

Any advice, thoughts, comments etc would be very much appreciated..

Thank you in advance

9-house

Can anyone offer oadvice or help? We bought our house back in 2003 not long after my husband got made redunadant and I found out I was expecting. we tried to sell our home but nothing happened. We then found tenants and went to live in a relatives property. after 9 months my husband found work. unfortunately the relatives who owned the house died and the family wanted us out to sell it. We had tenants in ours so moved to renting to be closer to my very poorly father. not even a month after moving in I was expecting again and found out our tenants had moved out without any notcice. We continued to rent as per our agreement and put our house on the market. After 6 months we had an offer that we accepted this was in 2006 we decided to carryi on with the rent and wiat for the sale to go through. months went past I got more and more pregnant and then the sale fell through (aparently we were holding the process up????!!!!) I was about to pop and we could not afford the rent and £1000 mortgege so moved back into our house. At that time we were struggling so were advised to enter a fixed rate interest only mortgage to help us to know exactly what we would be paying. Although we did not want to stay in the house we felt we had no option as other debts had started to mount. Last January I joined the CCCS and started a DMP and then my husband joined it with me. We have never missed any payments. We made one reduced mortgage payment in Sept 2009 but have almost cleared that. i want out we cant afford this house. It is currently on the market for £185000 (4 bed detached!) if we sell it our 'penalty' for early end to the fixed rate is £9000. (our mortgage is 186000 plus the £9000) we would also have estate agents and solicitor fees to pay. I t has been on the market for the last year ....several times we have gone to our lenders to ask for help and they cant and wont do anything. We know that if it sellls we will be faced with the bill for the remaining amount so we would then hope to do an iva or banruptcy maybe. the problem is that I am not prepared to plough another £18000 into the house until that deal ends and find due to our debt anyway we cant get a good deal if one at all and if the interest rates raise that will not help. unlike most we do not want our home! we want to get out. we have been told that we will be unable to rent if we go through the above and the best course of action is to go and find somewhere to rent if we can. then go for vol repo and then sort out iva / bankruptcy out. If we dont do that and we start reducing our mortgae payments we have been told that we will struggle to then find somewhere decent to rent. so we have found somwhere and we are ready to do it but just had to know if we have other options? and what anyone here thinks?
thanks

SIRUS_2

Hi Everyone - I have recently been declared bankrupt .I have since opened a basic bank account which does not allow any overdraft. Am I obliged to inform the new bank of my bankruptcy.
Thanking you.

philnicandamy

depends who the account is with...barclays and the co-op are the only bankrupt freindly banks

StepChange_Pavan

JMV wrote: »

I am hoping to get a bit (or a lot) of advice about BR...not sure where to start!

Maybe some background?

I am 51 years old (tomorrow) and I looked into entering into an IVA with Payplan a year ago, and had previously been to CAB in an effort to 'manage' my £50,000 debt...shortly after starting the process for the IVA my husband lost his job so any excess income was reduced drastically...

I live in a rented property (Housing Association) and the car broke down in April and we couldn't afford to fix it - it's probably only worth £100 scrap value at most...I have no jewellery or anything of value in the house - barring TV; DVD player and that kind of thing - nothing under 3 years old and nothing that cost more than £300 new...

I am self employed and run an online retail business (very little of the debt relates to the setting up of the business and the business has no creditors - in fact I have bled the business dry in an effort to meet my monthly commitments). I have a couple of websites and an Ebay shop...transactions are processed through PayPal - who I also use to process (telephone) credit card payments...

I haven't used any kind of credit card/overdraft or credit facilities since April 2009 - when I gave up my job to run my business full-time..which is when the recession hit and sales began to decrease!

As a side note I gave up my job (in Social Care) as the wages had begun to decrease (eaten away by Local Authority cutbacks on over time etc) over the previous 2 years and I was becoming ill with the stress of work place bullying and working with a "challenging" client group..I had already been off sick with stress for 7 months of the previous 3 year period and was facing disciplinary action for my sickness record... I had started my business as a way of trying to salvage my sanity and my worsening financial situation...

For the last 2 years my business has been doing ok...but really only well enough to provide me with a very modest income and keep me busy - modest income = £1,100 per month.

Sales in good months are about £5,000 per month - in bad months can be only £2,000...and we sometimes struggle to manage if we have consecutive 'bad' months...

I spoke to one of the advisors at Payplan about the possibility of going BR and my biggest worry has always been the loss of my business - she told me that she was pretty certain I could continue to trade - I am a sole trader and the business has no large assets (apart from me)...and only a few small assets in the form of equipment (Kitchen Equipment; computers; printers) and nothing worth more than £200...

Having made the decision to go BR I am now worrying myself sick that I will have to close my business and go on benefits or find another job in Social Care...

Here are my questions:

Business related

1. How likely is the OR to force me to close my business?
2. If I have to close my business - is there anything stopping my husband from begining to trade from the websites etc in his name - or would this be seen as 'dodgy'?
3. In the event I am allowed to continue trading - I am concerned that BR will affect my EBAY and PayPal accounts - as these are my principle sources of income/processing transactions...does anyone have experience of this?

Personal type Q's...

1. A friend is telling me to empty all my accounts and squirrel the money away (I have about £1,500 in total but these are basically my wages for the next month and my BR Fees) - I think this behaviour could be seen as fraudulent...
2. Same friend is saying I will need to change all my utility bills into my husband's name as this is credit and I'm not allowed credit...
3. Same friend is advising me NOT to declare my Papal account - or empty it and declare it with a NIL total...

I am sorry I have so many questions or if they are in the wrong place - I have looked at so many forums in the last week or two that I'm just more confused than I was when I made the decision!

One last question - I feel very confident that BR is right for me and feel confident that I am able to fill in the forms and present my 'case' to the courts - but I read somewhere that if you haven't sought advice from an IP the judge may refuse your BR and you'll lose your fee...have also heard that going through CAB can take months?

Any advice, thoughts, comments etc would be very much appreciated..

Thank you in advance

Hello JMV and thank you for your post.


I have tried to answer you questions in the order that they were asked:

1. As long as the business is profitable, it is unlikely that the OR will force you to close it.

2. You shouldn’t need to consider this as it sounds as though you have enough income coming in to support yourselves.

3. Bankruptcy won’t affect your Paypal account, but you will need to declare it and the Official Receiver will want to see what money is in there.

4. I would not recommend that you ‘hide’ money away as this would be fraudulent activity. You need to be honest with the OR and declare any money that you have. If it is set aside for your wages, explain this to them.

5. You won’t need to change the utility bills into your husband’s name provided that they are all up to date. If you have any arrears which will be included in the bankruptcy, you may wish to consider switching to avoid pre payment meters being installed.

6. As mentioned above, it is very important that you declare all of your accounts and any money in them. Failure to do this could result in a restriction order against you which would increase the length of your bankruptcy. You could empty the account, but you would need to prove what the money was spent on.

7. If the judge refuses your bankruptcy on the grounds that you haven’t sought advice, you wouldn’t lose your fee. It’s unlikely that this would happen if you are confident that this is your best option, but if you would like some free and independent advice, you can contact our free helpline on 0800 138 1111. We have a specialist bankruptcy support team that will be able to answer any other questions that you may have.

Also, you mentioned that you run an online retail business, but you didn’t mention whether or not you hold any stock. Any stock that you hold will be considered as an asset and will be ceased by the Official Receiver. You would need to consider this at the time that you petition for your bankruptcy. You would not lose any 'tools of your trade' that are required to due your job properly.

I hope I’ve managed to answer all of your questions fully, but like I mentioned you can contact our specialist bankruptcy team if you have more.

Kind regards
Pavan

StepChange_Pavan

9-house wrote: »

Can anyone offer oadvice or help? We bought our house back in 2003 not long after my husband got made redunadant and I found out I was expecting. we tried to sell our home but nothing happened. We then found tenants and went to live in a relatives property. after 9 months my husband found work. unfortunately the relatives who owned the house died and the family wanted us out to sell it. We had tenants in ours so moved to renting to be closer to my very poorly father. not even a month after moving in I was expecting again and found out our tenants had moved out without any notcice. We continued to rent as per our agreement and put our house on the market. After 6 months we had an offer that we accepted this was in 2006 we decided to carryi on with the rent and wiat for the sale to go through. months went past I got more and more pregnant and then the sale fell through (aparently we were holding the process up????!!!!) I was about to pop and we could not afford the rent and £1000 mortgege so moved back into our house. At that time we were struggling so were advised to enter a fixed rate interest only mortgage to help us to know exactly what we would be paying. Although we did not want to stay in the house we felt we had no option as other debts had started to mount. Last January I joined the CCCS and started a DMP and then my husband joined it with me. We have never missed any payments. We made one reduced mortgage payment in Sept 2009 but have almost cleared that. i want out we cant afford this house. It is currently on the market for £185000 (4 bed detached!) if we sell it our 'penalty' for early end to the fixed rate is £9000. (our mortgage is 186000 plus the £9000) we would also have estate agents and solicitor fees to pay. I t has been on the market for the last year ....several times we have gone to our lenders to ask for help and they cant and wont do anything. We know that if it sellls we will be faced with the bill for the remaining amount so we would then hope to do an iva or banruptcy maybe. the problem is that I am not prepared to plough another £18000 into the house until that deal ends and find due to our debt anyway we cant get a good deal if one at all and if the interest rates raise that will not help. unlike most we do not want our home! we want to get out. we have been told that we will be unable to rent if we go through the above and the best course of action is to go and find somewhere to rent if we can. then go for vol repo and then sort out iva / bankruptcy out. If we dont do that and we start reducing our mortgae payments we have been told that we will struggle to then find somewhere decent to rent. so we have found somwhere and we are ready to do it but just had to know if we have other options? and what anyone here thinks?
thanks

Hi 9-house and thank you for your post.

It sounds like you have already thought through all of your options. The most important thing is that you have a roof over your heads, and if you have already found somewhere, it would make sense to move in there first. However I would recommend that you check that bankruptcy wouldn’t affect your tenancy once you have moved in.

It is up to you whether you go for voluntary repossession or stop making payments and allow the lender to take the normal repossession route - which wouldn’t start until you had 3 months of arrears.

Either way, I would recommend that you call our support team to discuss your situation in more detail. As you are already on a DMP, we will be able to direct you to our bankruptcy support team who will be able to give you more specialist help and support.

Kind regards
Pavan

StepChange_Pavan

SIRUS wrote: »

Hi Everyone - I have recently been declared bankrupt .I have since opened a basic bank account which does not allow any overdraft. Am I obliged to inform the new bank of my bankruptcy.
Thanking you.

Hi SIRUS and thanks for your post.

Philnicandamy have kindly mentioned 2 of the banks that accept undischarged bankrupts.

However, since you have already declared yourself bankrupt, you don’t need to inform them, provided that they are not offering you a credit facility.

Kind regards
Pavan

JMV

CCCS_Pavan wrote: »

Also, you mentioned that you run an online retail business, but you didn’t mention whether or not you hold any stock. Any stock that you hold will be considered as an asset and will be ceased by the Official Receiver. You would need to consider this at the time that you petition for your bankruptcy. You would not lose any 'tools of your trade' that are required to due your job properly.

Thank you so much Pavan - it's very much appreciated - I should learn ot listen to my own common sense and not my friends' rambling

We do hold stock...some of it is out of date (soap & bath products) and some is in the form of raw materials (as we make the products)...in the main, though we have a lot of packaging material...we plan to try and use up as much as we can before BR and run the stock down. However, someone did say that you can sometimes negotiate to purchase the stock back from the OR...

Anyway, I don't want to take up more of your valuable time and am planning to phone one of the advice agencies mentioed.

Thank you again

StepChange_Pavan

JMV wrote: »

Thank you so much Pavan - it's very much appreciated - I should learn ot listen to my own common sense and not my friends' rambling

We do hold stock...some of it is out of date (soap & bath products) and some is in the form of raw materials (as we make the products)...in the main, though we have a lot of packaging material...we plan to try and use up as much as we can before BR and run the stock down. However, someone did say that you can sometimes negotiate to purchase the stock back from the OR...

Anyway, I don't want to take up more of your valuable time and am planning to phone one of the advice agencies mentioed.

Thank you again

Hi JMV,

Don’t worry about taking up our time – this is what we’re here for!


I wouldn’t imagine that they would be interested in the out of date stock, as this is unlikely to sell. With regards to the rest, you may be able to negotiate with the OR, but we generally recommend that you try and run the stock down as much as possible.

Kind regards
Pavan