Ask a CCCS counsellor a bankruptcy question

CCCS_Sue

Teen_the_Drama_Queen wrote: »

Hi there

A question which I hope you can help with please....

We are looking to go into rented property and poss go BR (husband and self).... (negative equity with mortgage company, secured charge and various debts on credit cards etc. etc.).

We have cancelled the dd for the mortgage and the secured loan to come out early next month and will use the money (along with non payment of credit cards) to go into rented property. However, the landlords will need a ref... how do we stand if we miss a couple of mortgage payments, will we look like a bad risk.?

Also, do we move into rented property, put the house on the market (which will of course, if it sells, return a shortfall), do we then go BR, or do we go BR first and let the OR deal with the sale of the house in the bankruptcy proceedings? Not quite sure of the order to do things.

Many thanks in advance.

x

Hi Teen the Drama Queen and thank you for your message

This question does crop up quite frequently.

The answer is there is no right or wrong way.

However, there is a logical way to go about it which sometimes helps to structure it to help you through the process.

Firstly, you need to make sure that your new landlord is aware of the bankruptcy to ensure there is no clause in the tenancy which will terminate the rental agreement because you are going bankrupt. It would be a shame to find the perfect house and then have to leave because of the bankruptcy!

The next step would be to stop paying the mortgage and secured loans if you need the money for the bankruptcy fee and a deposit for your rented accommodation. (All missed payments will be included in the bankruptcy)

It is advisable however to maintain utilities such as council tax , TV licence gas / electric and house insurance a little longer as you may need to continue with these providers at the new house.

Selling the house could be difficult and may take a long time. There would also be fees involved from estate agents. If there is already negative equity in the property, there will be a shortfall after the sale.

You could consider handing the keys back to the lender.
To do this, you would need to put the keys in an envelope with a covering letter informing the mortgage lender you are voluntarily surrendering the property. Keep a copy of the letter and send recorded delivery or hand- deliver it to the branch.

You can then move into your property and declare yourself bankrupt.

It is important not to sign any documents. It is not so bad if they are signed pre bankruptcy but if you sign after the bankruptcy, you may find you have acknowledged the mortgage shortfall and you may be liable for it after the bankruptcy.
It is usually called a Deed of Acknowledgement.

As I said earlier, there is no right or wrong way and this is one of the logical ways to deal with it.

As this is a slightly complicated process it may be wise to call for an appointment to speak to one of our debt counsellors. The free helpline is 0800 138 1111. The counsellor will also discuss whether handing the keys back would be a better option than waiting for the sale of the property.

Lines are open 08.00 until 20.00 Monday to Friday.

Kind regards

Sue

Teen_the_Drama_Queen

Hi Sue

Many thanks for your reply, that answers things nicely, we will bear all that info in mind. If we do need help again (and I have a feeling we will ), we will indeed give the helpline a call :T.

Cheers

x

CCCS_Sue

Gray-Fox wrote: »

I am planning to go bankrupt soon as I'm out of work (though could be in PT work for a few months as of tomorrow) and I have unrepayable debts. I start a new career in June 2012 and I want this behind me. I have some capital now, but I'm buying all the stuff I need (like actual need, not just gfor the hell of it) for my home to prepare me for the time when I'm bankrupt. My sister is moving out from ym family home too, andit's likely I will have to give her the remainder of my cash (not a lot) to help her pay the deposit and rent. How will this pan out with the OR?

Hi Gray-Fox and thank you for your message

Any capital you spend prior to going bankrupt will be investigated by the OR.
If it is for essentials then it may be ok, but you would need to keep any receipts so that the OR can see exactly what the money was used for.
As for helping your sister, if the OR decided this wasn’t essential, then he could request that your sister pay the money back. It would be entirely at the OR’s discretion.

If you fail to keep records and the OR believes that you are not able to explain where the money went, you could be issued with a Bankruptcy Restriction Order (BRO). I have attached a link for you to a booklet from the Insolvency Services website which explains this in more detail.

http://www.insolvency.gov.uk/pdfs/guidanceleafletspdf/bro.pdf

Kind Regards

Sue

CCCS_Sue

OssieTT wrote: »

Hi
I have just discovered my wife is filing for BR. I had no idea. But in light of her spending habits can understand why she needs to make a clean break. She is indicating that I should do the same but I am really not keen.

Issues she is on the mortgage but has never paid a penny to the mortgage since it has been in existence I have always paid that. We have a a joint loan arrangement which she was responsible for, but has not been paying it since November leaving arrears, she has also told them she is going bankrupt so no surprise we were served repossession papers on Saturday which led to me discovering what had been going on.

I really do not want to give up the house, we have two settled kids, I have a relatively good job, and I could absorb the arrears and ask the court to consider a reasonable payment back to the loan company.

It is going to be a really tight struggle to cope but I think unless something disastrous comes along then we should be able whether the storm for a year. In that time my collective debts will be reduced, my wife hopefully will be coming out of BR.

Am I going to hit any major issues with my wife's BR which will impact and put at risk the house?Any help appreciated.

Hi OssieTT and thank you for your message

Did your wife take any professional advice before deciding to go bankrupt?
I would really recommend that you both call us for an appointment to discuss this in more detail as soon as possible.
In the meantime I have attached a link to the Insolvency Services website which will give you more information regarding property in bankruptcy.
http://www.insolvency.gov.uk/pdfs/guidanceleafletspdf/home.pdf

To make an appointment to speak to one of our counsellors, you can call free on 0800 138 1111.

We have a bankruptcy support team who can offer ongoing help and advice.

Kind regards
Sue

Noctula

Hi there,

We're currently organising ourselves in the move towards going bankrupt. I lost my job last year so went self employed in August (as a lone trader) - however, because we were already struggling financially at that point any money I brought in went straight out again and I never kept anything back for Tax and NI contributions. I'll be receiving my first Tax Return this April but if we go bankrupt before then is the tax I owe included in the total debt or will I still need to find a way of paying it?

Also, my two year old daughter has a savings account with a few hundred pounds in that I'm trustee of - would that be viewed as an asset of mine during the bankruptcy (as I'm trustee) or would that be left alone?

Thanks in advance.

Noctula.

StepChange_Pavan

Noctula wrote: »

Hi there,

We're currently organising ourselves in the move towards going bankrupt. I lost my job last year so went self employed in August (as a lone trader) - however, because we were already struggling financially at that point any money I brought in went straight out again and I never kept anything back for Tax and NI contributions. I'll be receiving my first Tax Return this April but if we go bankrupt before then is the tax I owe included in the total debt or will I still need to find a way of paying it?

Also, my two year old daughter has a savings account with a few hundred pounds in that I'm trustee of - would that be viewed as an asset of mine during the bankruptcy (as I'm trustee) or would that be left alone?

Thanks in advance.

Noctula.

Hi Noctula and thanks for your post.

Unfortunately this is a tricky one. We’ve called the Insolvency Service but they were quite vague and suggested that you contact your local tax office. Once you go bankrupt you will go on a nil tax code and your liabilities will be payable to the Official Receiver. Obviously any liabilities from before your bankruptcy would be included.

If you wanted to be sure you could wait until April to go bankrupt.

With regards to your daughter’s savings account, you would need to check the terms and conditions with the bank as it can vary.

Kind regards,
Pavan

Thespian_2

My wife and I have been on an IVA for 2 years but in August my hours were cut and my wife became ill and has been off sick since October.

Due to these changes in our circumstances we are now behind with our IVA and mortgage payments

Currently with our IVA, Mortgage and bills we have more going out than is coming in and are finding it extremely difficult to meet any of our living expenses.

We think that declaring ourselves Bankrupt is the only way to start again.

Is being unable to afford living expenses the time advisors would suggest Bankruptcy as the right option?

Thanks

Katie1981

Hi, Wondering if you a ( CCCS Debt Counsellor ) would be able to answer some questions for me...

I have an £8 k loan with Barclay, a £3k credit card bill and my £500 overdraft is maxed out, after years of trying to pull myself out of this deep pit, my partner and I have now parted! I work 15 hrs a week and now the overtime that I severly rely on has been cut! My partner previosly helped me significiantly with my bill repayments. I will now bring home £240 per month and that needs to pay for my 2 children and general living expences. I have no pocessions worth any money to help pay my debts.

I'm looking into Bankruptcy as my only option, My question to you is how do I go about declaring myself Bankrupt. Is it the right thing to do? What will happen to my wages? Will my employer find out?

Thank You in advance for any replies.

meemomo

My husband was made bankrupt in 2008 for just over £3,000 , we have today received a subject to contract letter about selling the house? Can anyone tell me what it means as I don't understand

debtinfo

Is it from the Official receiver or is it from a seperate trustee. Was £3,000 the total of all his debts or just the one he was made bankrupt for