Ask a CCCS counsellor a bankruptcy question

StepChange_Pavan

charleyfarley76 wrote: »

Hi I'm new to this forum but would just like to ask a question about bankruptcy but first some background info...

I have a beauty salon which is suffering a downturn at the moment and it has got to the point where I am unable to pay myself a wage. This in turn is affecting my ability to pay my personal credit cards etc. I am a sole trader and in total owe about £26,000 (overdraft, bank loan and 2 credit cards.)

It is highly likely that in the next few weeks I will have to close the salon and if I am not able to find employment will have to file for bankruptcy.

I have a question about 2 pieces of salon equipment that I have on finance for which my father is a guarantor. I would like to keep this equipment and my father has agreed to keep paying the payments until I sort myself out. However I wondered if this equipment would be seized, sold and used to pay off other debts?

Thank you for reading...

Hi there.

Thanks for your post and welcome to the forum!

Is the finance secured against the equipment? The Official Receiver may allow you to keep them, especially if they are required for you to be able to do your job and if your father is going to maintain the payments (although even if the loan/finance was included in your bankruptcy, your father would still be liable and chased for the remaining debt).

However, if you are going to cease trading, the OR may question why you need to keep the equipment. It is ultimately at the OR’s discretion and it would also depend on how much the items are worth.

As you are in the early stages of thinking about bankruptcy, it would be a good idea to get some free and impartial advice to ensure that this is your best option. If it is your only solution, our bankruptcy support team will be able to answer any specialist questions you may have

You can contact us for detailed advice by either using our online advice facility Debt Remedy, or calling our free Helpline to book a telephone appointment with a counsellor.

Debt Remedy will assist you in completing a financial statement which includes information on your household, employment, income, expenditure and debts. All this information is used as a basis to determine the options available to you to deal with your situation.

Once you’ve followed the process through and completed all the required information you will immediately be presented with an advice booklet, which will provide tailored advice for you based on your current circumstances. It will also provide advice on ways you may be able to improve your situation.

Alternatively if you would prefer to talk to a debt counsellor about your situation, you can book a telephone based appointment by calling our helpline free on 0800 138 1111. Lines are open Monday to Friday 08:00-20:00. If you do decide to call us, please have details ready regarding your income, expenditure and creditors, as this can help speed up the referral process. If you have all of the necessary information ready, it may be possible to refer you directly to a counsellor for immediate advice. Alternatively, we will arrange for an appointment to be booked at a time convenient for you.


Kind regards,
Pavan

charleyfarley76

Hi Pavan, thanks for replying so quickly!

I do definitely need to speak to an advisor as I'm so worried that becoming bankrupt will have a huge knock-on effect for my dad.

The finance is secured against the equipment and I would like to keep it as I do have a customer base and there's the possibility that I could become a mobile therapist rather than having a salon. I could then declare this income to the OR.

The finance is about £12,000 altogether and I've only signed up for it in the last 6 months. I thought it would give the salon a boost which it did initially but trade has died off again and I just can't cover everything.

My dad is happy to pay monthly payments but there is no way he could afford to settle it all in one go. I doubt if the equipment was sold it would return anything like that value.

Thanks again for your help, next step will be contacting CCCS.

StepChange_Pavan

charleyfarley76 wrote: »

Hi Pavan, thanks for replying so quickly!

I do definitely need to speak to an advisor as I'm so worried that becoming bankrupt will have a huge knock-on effect for my dad.

The finance is secured against the equipment and I would like to keep it as I do have a customer base and there's the possibility that I could become a mobile therapist rather than having a salon. I could then declare this income to the OR.

The finance is about £12,000 altogether and I've only signed up for it in the last 6 months. I thought it would give the salon a boost which it did initially but trade has died off again and I just can't cover everything.

My dad is happy to pay monthly payments but there is no way he could afford to settle it all in one go. I doubt if the equipment was sold it would return anything like that value.

Thanks again for your help, next step will be contacting CCCS.

Hi again,

It sounds as though you would need the equipment to continue earning a living even if you gave up the salon. You would need to prove to the OR that the tools are essential and that you (or your dad) can afford to maintain the payments.

If you do go bankrupt, it should only affect your dad in the sense that he will be liable for any debts that he has acted guarantor for. If he is willing to continue making these payments then it should be ok.

Like you’ve said, it’s a good idea to give us a ring so that one of our advisors can talk you through everything in more detail.

Good luck,
Pavan

graceyb13

Hi Ive been in debt nearly all my life and about 2 years ago i split from my partner. We had to remain in the same house as he owned it but my eldest daughter is severely disabled and the house is all set up for her and an extension is being built to accomodate her needs. When we split up tax credits acknowledged we were no longer a couple so i paid towrads the house, gas, electric etc. He has been in and out really for the past 2 years and i got myself into a lot of debt, catalogues, credit cards etc which i defaulted on and have been sending £5 per month for all 17 creditors. Hundreds of debt letters later there may be a possibility that we could get back together. However he is unaware of my £20,000 approx debt. If we do get back together the only income i will have in my own right will be child benefit , carers and dla (my daughters), no tax credits and nothing else. If i go bankcrupt, as i have been advised i will have to, will he have to be made aware of my debt? Will they take his earnings into consideration of my debt? I also have 4 mobile phone contracts in myname but other family members pay for them, will they be ok or will i have to get rid of them? What evidece will i have to provide of income (i dont keep paperwork and its all benefits really) and for how long a period? Its the only way for me to go i think as im being harrassed left right and centre after trying to do the right thing and send a payment every month (albeit a minimal amount). We cannot get back together until i have this sorted as i cant deal with the stress of it all. It worrys me that because i have been paying into a house where the bills werent in my name the or wont see any eveidence of it. Im an honest person just trying to get through life and this is crucifying me. I know 4 mobile phone contracts LOOKS extreme but i dont pay for them (bar 1). I tryed to go through the cccs website but it doesnt take into account the extra pay out i have looking after a severely disabled, doubly incontinent child :0(
Thanks, any help GREATLY APPRECIATED
Lisa x
I also owe tax credits for the joint claim i had with my ex partner....£1400, can that be put in the bankcruptcy?

g_123

Hi, N power have court date for a warrant of entry to fit a meter to my property. If they get the warranty does that mean that they will be straight round that day to fit the meter or would they write to us to give us a date? Any advice would be much appreciated. Thanks

jaxno5_2

hi i have unsecured debts of 52000 pound and have been struggling with this for several years but being ill last year just made the debt worse i am self employed and the debts are all in my name ,we have a mortgage of £166000 ,house value £190000.my wife has just trained as an accountant and works part time i do not want to loose my house or affect my wifes job but cannot pay these bills anymore as i am fighting a loosing battle what course of action do i take please advise

CCCS_Sue

graceyb13 wrote: »

Hi Ive been in debt nearly all my life and about 2 years ago i split from my partner. We had to remain in the same house as he owned it but my eldest daughter is severely disabled and the house is all set up for her and an extension is being built to accomodate her needs. When we split up tax credits acknowledged we were no longer a couple so i paid towrads the house, gas, electric etc. He has been in and out really for the past 2 years and i got myself into a lot of debt, catalogues, credit cards etc which i defaulted on and have been sending £5 per month for all 17 creditors. Hundreds of debt letters later there may be a possibility that we could get back together. However he is unaware of my £20,000 approx debt. If we do get back together the only income i will have in my own right will be child benefit , carers and dla (my daughters), no tax credits and nothing else. If i go bankcrupt, as i have been advised i will have to, will he have to be made aware of my debt? Will they take his earnings into consideration of my debt? I also have 4 mobile phone contracts in myname but other family members pay for them, will they be ok or will i have to get rid of them? What evidece will i have to provide of income (i dont keep paperwork and its all benefits really) and for how long a period? Its the only way for me to go i think as im being harrassed left right and centre after trying to do the right thing and send a payment every month (albeit a minimal amount). We cannot get back together until i have this sorted as i cant deal with the stress of it all. It worrys me that because i have been paying into a house where the bills werent in my name the or wont see any eveidence of it. Im an honest person just trying to get through life and this is crucifying me. I know 4 mobile phone contracts LOOKS extreme but i dont pay for them (bar 1). I tryed to go through the cccs website but it doesnt take into account the extra pay out i have looking after a severely disabled, doubly incontinent child :0(
Thanks, any help GREATLY APPRECIATED
Lisa x
I also owe tax credits for the joint claim i had with my ex partner....£1400, can that be put in the bankcruptcy?

Hi Lisa and thank you for your message

It must be a very worrying time for you, especially if you are trying to sort this out on your own without any support.

Ideally, it would be better if you could discuss this with your partner.
You need to both sit down together and look at ways to resolve your debt situation, especially as he owns the property you are living in.

Depending on whether you have made any contribution to the running of the household, and how long you have been living there, you could be seen as having some beneficial interest in the property.
So, before you decide on whether bankruptcy is your best option, I would recommend that you call us for an appointment to speak to one of our debt counsellors about your situation. Although you have already used our Debt Remedy facility, there are some points you need to look at before going ahead.
These would include any expenses incurred from looking after your disabled child, which you say you have not included on your initial budget. The DLA would need to show as money for her special needs.

If you go bankrupt and you are living with your partner, then his share of the bills he pays would need to be shown in your budget.
Your tax credit debt could be included but if it is in joint names with your ex, then he is joint and severally liable. If you are not able to pay, then they will pursue him for the whole debt.

Do you really need four mobile phones? Could you cancel the contracts and just keep one?

I would recommend that you make an appointment to speak to our Debt Remedy client support team. You can call free on 0800 197 1704. Lines are open from 08.00 until 20.00 Monday to Friday.
If bankruptcy is your best option, then we do have a specialist bankruptcy team who can offer further help and support.

Hope this helps

Kind regards
Sue

CCCS_Sue

g_123 wrote: »

Hi, N power have court date for a warrant of entry to fit a meter to my property. If they get the warranty does that mean that they will be straight round that day to fit the meter or would they write to us to give us a date? Any advice would be much appreciated. Thanks

Hi g_123 and thank you for your message

When you owe money to your energy supplier and you do not contact them to arrange payment, they have the right to disconnect your supply.
Rather than do this, they will fit a repayment meter where possible.
If you do not contact them to make an arrangement for them to fit it, then they will apply to the courts for a warrant to force entry into your property and they will charge to do this.

It is better if you can contact them before the court hearing and make arrangements to pay to avoid them having to force their way in to install the meter.
If they have already got the warrant, then I would recommend that you ring them and ask for a date when they will be installing it.

You have the right to challenge the installation of a pre payment meter.
If you can’t agree on a solution to the problem, then you can contact the energy regulator Ofgem.
Once installed, you will be expected to keep the meter for a minimum of 12 months or until you have paid the outstanding balance

The key thing is to contact them as soon as possible and make an arrangement to pay something.
I have attached a link to a leaflet from Npower which will give you further information on prepayment meters. It also has contact telephone numbers
http://www.npower.com/idc/groups/wcms_content/@wcms/@busi/documents/digitalassets/wcms_000972.pdf

If you would like help in making an offer of payment to Npower, you can call free on 0800 138 1111. Lines are open from 08.00 until 20.00 Monday to Friday

Regards
Sue

CCCS_Sue

jaxno5 wrote: »

hi i have unsecured debts of 52000 pound and have been struggling with this for several years but being ill last year just made the debt worse i am self employed and the debts are all in my name ,we have a mortgage of £166000 ,house value £190000.my wife has just trained as an accountant and works part time i do not want to loose my house or affect my wifes job but cannot pay these bills anymore as i am fighting a loosing battle what course of action do i take please advise

Hi jaxno5 and thank you for your message

In order for us to be able to provide you with advice on your financial situation you will need to either use our online advice facility Debt Remedy, or ring our free Helpline to book a telephone appointment with a counsellor.

Debt Remedy will assist you in completing a financial statement which includes information on your household, employment, income, expenditure and debts. All this information is used as a basis to determine the options available to you to deal with your situation.

Once you’ve followed the process through and completed all the required information you will immediately be presented with an advice booklet, which will provide tailored advice for you based on your current circumstances. It will also provide advice on ways you may be able to improve your situation.

Alternatively if you would prefer to talk to a debt counsellor about your situation, you can book a telephone based appointment by calling our helpline free on 0800 138 1111. Lines are open Monday to Friday 08:00-20:00

Kind Regards
Sue

SteveABC

Hi

Thanks very much for advice so far. I have a few more questions surrounding two scenarios I am currently considering. I need as much information as possible for me to make an informed decision about what I will do. The first (and preferred, I think) scenario is bankruptcy with a view to continuing to pay the secured debt to remain in, and keep my home. The second scenario is walking away from my home, finding rented accommodation, and declaring bankruptcy for the total debt (both secured and unsecured).

First scenario:

The house is in negative equity and I have had advice about the process of buying the beneficial interest off the Official Receiver, which I know is at his discretion. However, my secured loan payments are high and if the bankruptcy dealt with all the unsecured debt, I would still have difficulty paying the secured. If I took this route and:

(1) realised further down the line that I really couldn't pay the secured debt and I walked away and chose repossession, would I have to declare bankruptcy again, or would the resulting debt (i.e the negative equity once the lender was repaid from the sale) be added to the original bankruptcy debts?

(2) if the Official Receiver did not agree to the sale of the beneficial interest (I have already bought it following my estranged wife's bankruptcy) how much positive equity would the house need to return to for the OR to force a sale, and for how long would the OR look to doing that?

(3) one of the excluded items in the list the OR would not allow when considering if I could afford Income Payments is "excessive mortgage payments". If the OR decided they were excessive, where does this leave me, as I have to pay what I have to pay (if you see what I mean) - again, this returns me to the first point about affordability afterwards and having to declare bankruptcy twice. Is it possible to find out what is deemed excessive prior to bankruptcy, as it appears too late to be told afterwards?

(4) If I took this route, a family member has offered to help me to stay in my home by helping with part of the mortgage, which they would pay directly to the lender. I would not receive it as income, but would this complicate things as far as the OR is concerned? I could only afford to pay the mortgage with this help - otherwise, I think my only option is the second one, below.

The second scenario is losing my home and declaring bankruptcy for everything. I have had some information about this, but need really, to confirm the order I would have to do things. Please could you confirm:

(1) I would have to "walk away" from my home first and secure rented accommodation (i.e prior to bankruptcy)

(2) Then go through the bankruptcy process as soon as possible, - declare myself bankrupt and include all the secured and unsecured debt in my petition.

(3) Then, as soon as I have been made bankrupt, write to the secured lenders to advise them of the circumstances and give them the name and address of the OR to deal with.

(4) Would I then be chased by the secured lenders, or would they, by law, have to deal with the OR only? The mortgage lender would get most of their loan back following repossession, but the second secured lender would not (this is where most of the negative equity lies). The second secured lender is First Plus and I've heard they can be quite ruthless. Would they pursue me in the period after bankruptcy, but before the house is sold? I am assuming the secured debt would become unsecured following this process and all be dealt with by the bankruptcy, but is that only after the house is actually sold?

(5) If I signed a tenancy agreement prior to the bankruptcy, could the landlord force me out if he was notified of the bankruptcy by the OR, simply for my bankruptcy status, even if I am paying rent payments on time? Does the OR do this as part of their work?

Finally, I'm not clear on the difference between the OR and an IP. If I engaged an IP, what do I gain? Does the IP then do all (or part) of the work of the OR?

Sorry to ask so many questions, which I hope you understand. As I am considering two scenarios, it seems to get more complicated and leave me with further questions the more I think about them.

Many thanks.