Ask a CCCS counsellor a bankruptcy question

CCCS_Amanda

neverthesamedaytwice wrote: »

Hi

After a lot of deliberation and hair-pulling, I became bankrupt in January of this year.

I've been very fortunate, as I've been able to live back at my parent's home for the past 6 months while I get myself back on my feet. So far I haven't needed to enter into an IPA, due to low income. I have been told that I might be a candidate for early discharge, as my bankruptcy was relatively straightforward. As far as I'm aware, this early discharge could happen around September / October.

My current plan is to become self-employed.

My projected income from becoming self-employed is likely to be very variable. There will be months where I make a significant amount of money, and I imagine I'll need to use money earned during these months to support me during the more difficult months.

My current expenses are very low (because I'm living with my parents). I intend to move as soon as possible, which will obviously mean that they'll increase dramatically. I'd also need to be able to save a deposit.

Because my income could vary so drastically from month to month, being tied to a payment agreement could cripple me. Also, because my future expenses are going to increase - the question of whether I'll have any surplus income seems like it's very subjective.

I'm left wondering how an OR would go about working out if I need to enter into an IPA, when:

• projected income is variable
• I'll need to save money for essential living
• expenses are due to increase drastically in coming months, but are currently low
• business expenses to consider

I feel like I'm doomed to stay where I am until discharge - which might be possible, but I'm very keen to start rebuilding my life.

Sorry for the long post - thanks for reading, any advice much appreciated.

Luke

Hi luke,

Thanks for your post.

As starting a business is difficult under the best of circumstances, it will be even harder if you have to report to the OR with your income and expenditure.

Whilst you are an un-discharged bankrupt you have a duty to declare any change of circumstances to the OR. If you were to start making a profit in your business prior to being discharged then the OR would want 50% - 70% of your surplus income. If they were to set an Income Payment Arrangement (IPA) this could run for up to 3 years.

Also, I would be surprised if they would allow you to save a deposit, etc for a flat as this would be considered as a surplus.

The OR in your area would be able to give you detailed advice and let you know, from their point of view, where you stand.

I hope this helps.

Kind regards,
Amanda

CCCS_Amanda

Newbie06 wrote: »

Hi there,
spent a lot of yesterday and today trying to get through on the CCCS BR helpline but you are obviously very very busy...

I have a few questions.
1. After doing my income/expenditure budget with yourselves my surplus is only £3 and realistically there is no room for adjustment. If this is not enough surplus would it be ok to state that my parents will gift me £100 per month until my income increases?
2. Also another way I could up my income would be to take in a lodger, would this be an acceptable income to declare?
3. I am single and live alone, I am not fully aware of what B.I. is other than someone has to buy it... Would it be ok for my cousin to buy it (I trust here implicitly).
4. I own another house which is being reposessed next week, there is a council tax bill outstanding on this property - will I be able to include this in the BR.
5. And last but not least are there any circumstances under which I would not allowed to become bankrupt or become bankrupt and not be allowed to stay in the house I currently live (currently live in a small house mortgaged, which is in negative equity), my mortgage here is low as the house was cheap and it is actually cheaper than renting in the same area or in fact cheaper than renting in the surrounding area.

Thanks so much for answering...

Hi Newbie06,

The following should answer your questions:

1.After doing my income/expenditure budget with yourselves my surplus is 0nly £3 and realistically there is no room for adjustment. If this is not enough surplus would it be ok to state that my parents will gift me £100 per month until my income increases?

I am not sure why you would want to do this. If you have a balanced budget you can demonstrate that you are able to live within your means.

2. Also another way I could up my income would be to take in a lodger, would this be an acceptable income to declare?

If you want to take in a lodger (you are allowed to earn up to £4250.00 tax free) this will increase your surplus income and possibly result in you having an Income Payment Arrangement (IPA). If you are going to declare yourself bankrupt – again there is no real benefit for doing this as the rent would probably go to the OR.

3. I am single and live alone, I am not fully aware of what B.I. is other than someone has to buy it... Would it be ok for my cousin to buy it (I trust here implicitly).

Beneficial Interest (BI) is your interest in the proceeds of sale of the property. This is very different from the legal title to the property, which is held by the owner. If you have negative equity then your cousin would be able to buy the BI in your property for £1 plus £211 in fees. This would stop the OR selling your home later.

4. I own another house which is being reposessed next week, there is a council tax bill outstanding on this property - will I be able to include this in the BR.

Yes you will be able to include this in your bankruptcy if you are liable for the tax bill. The OR would also be able to include and possible shortfall from this property.

5. And last but not least are there any circumstances under which I would not allowed to become bankrupt or become bankrupt and not be allowed to stay in the house I currently live (currently live in a small house mortgaged, which is in negative equity), my mortgage here is low as the house was cheap and it is actually cheaper than renting in the same area or in fact cheaper than renting in the surrounding area.

It is difficult for me to say without knowing your full circumstances. If you are insolvent then you would be declared bankrupt. As far as not being able to stay in your current home – from what you have said it is unlikely that you would not be allowed to stay, as long as you have someone that can buy your BI, and as long as the housing is affordable.

I hope this helps. You can have a look at the Insolvency Service website at http://www.insolvency.gov.uk/. There is more information on BI and Bankruptcy in general.

Regards,
Amanda

CCCS_Amanda

spacealiens wrote: »

Hello,
I was going to apply for bankruptcy but decided against after being advised not to spend the £500 pounds myself but let my creditors do it.
I owe about £16k, all with the same bank, £2k overdraft, £2k credit card (Master) and £12k unsecured loan. I have no assets, no income at present and have moved to France.
I have some work starting in September but it will barely cover my outgoings. I got made redundant in February and for the past 3 months i have requested the bank to suspend payments to the loan and credit card but they say they will do this for only 3 more payments and then hand over things to a collection agency (Metropolitan?), i'm not sure what they mean by this and they were not forthcoming when i asked. I am getting about 4/5 calls from the bank a day, but there is never a reply when i pick up the phone.
My question is, what will the bank do?

Hi there spacealiens,

Thank you for your post.

The bank will probably issue a default notice and pass the debt to a Debt Collection Agency (DCA). The DCA will probably want to see a copy of your incomings and your outgoings to see what you have available for debt repayments on a monthly basis. If there is little or no money then you would just offer a token payment, of say £1, to the debt. Obviously, if your circumstances improve then you would increase your payment accordingly.

There is no guarantee that your bank will make you bankrupt as this is quite unusual.

I hope this helps.

Regards,
Amanda

CCCS_Matthew

tarchin wrote: »

Have posted this on BR forum but thought I would ask you also, hope this is ok

Hello, thanks for your attention and thanks to everyone whose posts have informed and encouraged me while dithering. (The SOA below is a true statement of affairs, but obviously requires some explanation due to deficit figure. I have been using "savings" to make up the difference (£395 per month), and now have only about 2/3 months worth left to go - unless I find employment, which I am trying to do. Even if I find a job I will still opt for BR (have had advice from National Debtline) - at usual rates this would increase income to 1100, increase expenditure to 1060 (council tax 65 & petrol extra 80), leaving surplus of 40 a month.

Question is how will OR view SOA: soon I will have nowhere near enough for basics if unemployed and this would be true even if I dumped the car - but that would mean could not get a job relevant to my experience.

I have actually been paying creditors about £90 a month between them for about 2 years, including one CCJ, rest are agreed. Decided to stop now as will need cash for BR and living.

Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 0
Partners monthly income after tax....... 0
Benefits................................ 620 (450 housing benefit, 170 jsa)
Other income............................ 0
Total monthly income.................... 620

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 500
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 45
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 170
Clothing................................ 10
Petrol/diesel........................... 35
Road tax................................ 15
Car Insurance........................... 15
Car maintenance (including MOT)......... 20
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 5
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Total monthly expenses.................. 915


Assets
Cash.................................... 1000
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 400
Other assets............................ 0
Total Assets............................ 1400

No Secured nor Hire Purchase Debts

Unsecured Debts (CC and loans - ccj) - no credit sought or used for over 2 years

Total unsecured debts...36600


Monthly Budget Summary
Total monthly income.................... 620
Expenses (including HP & secured debts). 915
Available for debt repayments........... -395
Monthly Unsecured debt repayments....... 0
Amount short for making debt repayments. -395

Personal Balance Sheet Summary
Total assets (things you own)........... 1,400
Total HP & Secured debt................. -0
Total Unsecured debt.................... -36,600
Net Assets.............................. -35,200

I want to submit petition asap - local court say probably won't need appointment, not many customers at the moment. All comments welcome - sorry it's so long. best wishes.

Hi there, thanks for posting.

Looking at your income, your JSA seems to be on the low side. Are you having social fund loans or anything else deducted? If you are over 25 you should get £64.30 a week (£279 a month) or if you are under 25 you should get £50.95 a week (£221 a month).

Your outgoings look fine, nothing there that is particularly high. The only potential issue with the budget is the fact it's in a deficit. We would tend to advise against bankruptcy where there is a deficit, as there have been cases where a judge has rejected a budget due to it being unsustainable. However, we're aware that in cases a judge will not see a deficit as being an issue providing the expenditure is realistic. So ultimately it’s down to discretion of the judge on the day.

There is nothing stopping you from petitioning for your bankruptcy if the judge doesn’t take issue with your budget. I would make it clear the OR that if you still have money in savings, that it’s needed to deal with your shortfall each month as you don’t want them to take interest in the money and ask it to be paid to the creditors.

Hope this helps,
Matthew.

FacingReality

I am roughly £57000 in debt through Credit Cards and a Loan from a 125% mortgate\loan (the mortgage bit was paid off). All debt is unsecured, I currently live in rented accommodation. I currently earn £2080 per month. I am paying minimum payments to all my debts.

I went to a debt advisor at the CAB and he suggested bankruptcy would be my best course of action. He didn't take a look at my outgoings at all, he said the point was how indebted I was, how long it would take me to pay things off.

I am planning to get married next year (my fiancee is aware of my debts). All the debts are mine and I want a fresh start so I am planning on taking his advice but still need a bit more advice before I take the plunge (if indeed I do). Getting further time from the CAB is proving difficult after my original appointment. I realise they are very busy so I am not complaining.

What is the likelihood of a bankruptcy being accepted or rejected? The CAB advisor seemed pretty certain it would go through.

If the application is rejected would I still be liable to pay the £510 costs?

As I am planning to move 90 miles from where I currently am, if bankrupt, would the Official Receiver ask questions when I manage to get another job nearer my new home, which will inevitably pay me about 30% lower than my current salary. Admittedly it will probably cost me over £500pm in petrol to commute to my current job which would go some way to offsetting the salary reduction.

If and when I move in with my fiancee, would her credit rating be affected at all? The house is hers, the mortgage is in her name. My name won't be going on to it. All debts are mine so I want her affected as little as I possibly can.

Would I be regarded as a tenant in her house for bankruptcy purposes?

Would her income determine a change in any IPA I would inevitably be required to do?

How far back in my finances would the OR look? If I took out of my bank account the little spare cash I currently have to put towards my wedding costs, would this be frowned upon by the OR?

If I do apply for bankruptcy should I take out any spare cash I have in my current account anyway? With the accounts frozen I would want cash to pay bills, etc. until I could get direct debits changed over to another bank account.

I shred all my bank account statements, etc. as a matter of course. Should I stop doing this to help give the OR a better idea of my finances?

If you can answer any or all of these questions then I would very much appreciate it.

Lazy_Line_Painter_Jane

Hi

I am planning to go BR in the next 3 months (I'm saving up for the fee) and I was just wondering about my car. I have a Ford Escort 96, second-hand, worth about £400. As a single parent, I need it for taking my girls to school and back as well as getting to and from work myself. Is this likely to be something that the OR would be interested in or is the value too low?

Thanks

Lazy Jane

philnicandamy

Lazy_Line_Painter_Jane wrote: »

Hi

I am planning to go BR in the next 3 months (I'm saving up for the fee) and I was just wondering about my car. I have a Ford Escort 96, second-hand, worth about £400. As a single parent, I need it for taking my girls to school and back as well as getting to and from work myself. Is this likely to be something that the OR would be interested in or is the value too low?

Thanks

Lazy Jane

Who's to say...no OR's the same unfortunatley....BUT the big thing going for you is that you need it for work etc such a low value you may be ok but cant guarantee (you need to say WHY you need the car as oppose to why you want to keep if that makes sense)

Lazy_Line_Painter_Jane

Thank you for your advice.

Lazy Jane

Kuggers

Hi. On the Insolvency website SOA form, you are asked to give tax details. The header states that you should enter your tax code and tax office address. The actual question states: "Give your current (or latest) Income Tax reference number." On my wage slip the "Tax Reference" is the code for the Tax Office (***/xx****). Should I enter my Tax Code or my Tax Reference on the form?

briggzy1

I owe 4 banks about £20,000 and pay £600 a month towards them but I get really bad depression and about 2 months ago something happened and i was really bad and ended up leaving my job . Now i am feeling a bit better i cannot find any work so i cant afford to pay any of my bills.
I still live with my parents and dont have anything of value. I have enough money to make one more months payments but after this i dont know what to do?:eek:
Does anyone have any advice for me please?