Ask a CCCS counsellor a bankruptcy question

poulterfan

My wife has built up debts - mainly to HMRC which she cant pay, also has £50k of credit card debts, which she is not behind with as yet.

The house is totally in my name, I pay the mortgage and bills and it was bought with equity from my last house, which was also in my name.

2 years ago I increased the mortgage on the house and lent her £40k , which I thought would settle her tax debts completely ( I did not know about the rest -largely dealt with online, so no bills!)

She is now facing bankruptcy. There is about £40k equity in the house, which I would fight to keep. Should she register the £40k loan as a debt to me? It was planned that she would pay me monthly to repay the increase in the mortgage amount, but this never happened.

Should this £40k be ignored, or claimed by me as a loan, or could it be said to represent her Beneficial Interest in the house settled, or prove she doesn't have any?

System

tango459 wrote: »

Hi

I have debt recovery letter from CCS Collect regarding a debt with the dept of works and pensions for a old social fund payment.

they are telling me that this cannot be included in bankruptcy and all I get is a 12 month grace period and once the backruptcy is discharged recovery proceedings will start again.

I was made bankrupt in march 2012 and currently undischarged

Can you tell me if this is correct

many thanks

Hi,

From March 2012, the same month you went bankrupt, social fund loans are not included in bankruptcy so it looks like they can ask you to pay this debt back.

Because your bankruptcy was at a similar time to this change taking place, it might be worth checking with your official receiver to make sure your bankruptcy was after this change came in. It looks like you were quite unlucky with your timing.

Usually social fund loans are deducted straight from your benefits, I presume this is no longer happening if your debt has been passed to a debt collector. If this is the case then you should be able to repay this debt in installments, which you can agree with the debt collector once you have been discharged.

If you have any problems with this debt collector then feel free to get in touch with us.

Thanks

Mat

System

steve77 wrote: »

My wife is due to go to court on wed for a bankruptcy hearing I have managed to scrape together enough to bring what they falsely say she owes below the £750.00 threshold. I have today contacted Lowells to make a payment and they have refused to take the payment my question is can they refuse my offer of part payment,

Cheers Steve

Hi Steve,

We've answered your PM on this one, so you should have a response in your inbox.

Thanks

Mat

System

poulterfan wrote: »

My wife has built up debts - mainly to HMRC which she cant pay, also has £50k of credit card debts, which she is not behind with as yet.

The house is totally in my name, I pay the mortgage and bills and it was bought with equity from my last house, which was also in my name.

2 years ago I increased the mortgage on the house and lent her £40k , which I thought would settle her tax debts completely ( I did not know about the rest -largely dealt with online, so no bills!)

She is now facing bankruptcy. There is about £40k equity in the house, which I would fight to keep. Should she register the £40k loan as a debt to me? It was planned that she would pay me monthly to repay the increase in the mortgage amount, but this never happened.

Should this £40k be ignored, or claimed by me as a loan, or could it be said to represent her Beneficial Interest in the house settled, or prove she doesn't have any?

It would be best to list the £40,000 loan on the bankruptcy application as a debt to you. You would then be seen as a creditor in bankruptcy. This would mean that you may receive payment from the courts if they collect money from your wife.

The courts would look at beneficial interest as a separate issue, to see if they consider your partner to have contributed towards buying the house even if she isn’t named as an owner of the property. The courts will usually appoint somebody called an Official Receiver to look into these sorts of things and they will make a decision on whether they think your partner has any beneficial interest in the property.

These decisions are made taking lots of information into account, so it is hard to speculate how they would deal with your situation. If you would like more information you could speak to the Insolvency Service about this, here is their contact page: http://www.bis.gov.uk/insolvency/contact-us.

Regards

Mat

JoshJ

My wife and I were both declared bankrupt over 3 years ago and are due to end our payments to the receivers office in March/April next year.

We currently live in rented accommodation but would like a fresh start and wondered where the best place to go to for advice on what options may be available to us to rebuilding our credit ratings?

soontobesensible

I would just like to know, are creditors able to come back at you and reclaim the money that is owed to them once you have beeen discharged from bankruptcy?
Thank You!

System

JoshJ wrote: »

My wife and I were both declared bankrupt over 3 years ago and are due to end our payments to the receivers office in March/April next year.

We currently live in rented accommodation but would like a fresh start and wondered where the best place to go to for advice on what options may be available to us to rebuilding our credit ratings?

Hi Josh,

Congratulations on getting near the end of your payments. There is no easy way to improve your credit rating but there are lots of little things you can do that will help. The best place to look is this article on the main site: http://www.moneysavingexpert.com/loans/credit-rating-credit-score#improve.

Unfortunately your credit history will show your bankruptcy for six years from the date you went bankrupt, so taking the steps recommended in the above article will help but your credit history will still not be great due to the record of bankruptcy.

There are companies online who promise lots of things about being able to improve your credit rating. Like many things online, these services don’t live up to their promises. Most will be charging you a fee to doing the things that you can do yourself if you follow the tips on this site.

Thanks

Mat

System

soontobesensible wrote: »

I would just like to know, are creditors able to come back at you and reclaim the money that is owed to them once you have beeen discharged from bankruptcy?
Thank You!

Hello again,

All the debts included in bankruptcy would be written off once you are discharged.

As we've suggested before, you would probably benefit from speaking to us on the phone as we can give you more specific answers when we have more details about your situation.

Thanks

sjhopewell

Hello CCCS,

I have decided to go bankrupt after a long slog, but the questions I have are regarding my home, which is currently in negative equity. The house has a current value of £190k with an outstanding mortgage of £225k

Will the OR definitely let me keep it, or could they still add it to the bankruptcy pot?

If I keep it, how will it affect my credit report?

I gather that all of the unsecured debts will be classed as settled/satisfied, and no defaults can be posted after the point of bankruptcy, but what about the house?

Currently, on my Experian credit report, I get a '6' status posted every month (i.e. in arrears but on a payment plan). Will I still continue to get '6' statuses every month? Or will the mortgage no longer be registered on my credit report going forward? What would happen if I let it fall into the bankruptcy as a contingent debt a few years in the future?

I don't want to keep the house, if it will still continue to give me black marks on my credit report even I keep to my payment plan. I appreciate I will have to wait 6 years for the bankruptcy to move off my credit report, but I would hate to extend this period by maintaining a house that has a sum in arrears.

Thanks in advance for any advice

System

sjhopewell wrote: »

Hello CCCS,

I have decided to go bankrupt after a long slog, but the questions I have are regarding my home, which is currently in negative equity. The house has a current value of £190k with an outstanding mortgage of £225k

Will the OR definitely let me keep it, or could they still add it to the bankruptcy pot?

If I keep it, how will it affect my credit report?

I gather that all of the unsecured debts will be classed as settled/satisfied, and no defaults can be posted after the point of bankruptcy, but what about the house?

Currently, on my Experian credit report, I get a '6' status posted every month (i.e. in arrears but on a payment plan). Will I still continue to get '6' statuses every month? Or will the mortgage no longer be registered on my credit report going forward? What would happen if I let it fall into the bankruptcy as a contingent debt a few years in the future?

I don't want to keep the house, if it will still continue to give me black marks on my credit report even I keep to my payment plan. I appreciate I will have to wait 6 years for the bankruptcy to move off my credit report, but I would hate to extend this period by maintaining a house that has a sum in arrears.

Thanks in advance for any advice

Hello,

The insolvency service have a useful leaflet about what happens to your property when you go bankrupt here: http://webarchive.nationalarchives.gov.uk/+/http://www.insolvency.gov.uk/pdfs/guidanceleafletspdf/home.pdf. If the courts agree with your valuation then it is quite unlikely they would want the property to be sold, as there would be no profit from the sale to pay to your creditors.

Going bankrupt is just about the worst thing you can have registered on your credit history, so you will have a poor credit score for six years following your bankruptcy. If you stay in the property and maintain your mortgage then the bankruptcy won’t have any effect on how the mortgage reports onto your credit history. The payment history section of credit reports, the section where they put a 6 every month, usually only contains two years of information so will more than likely be clear before the bankruptcy record drops off your file.

Bankruptcy is a big step to take, it may be worth getting some advice before making a final decision. You can get advice from us by using our advice tool Debt Remedy (http://www.cccs.co.uk/ref/drcu) or by calling our helpline on 0800 138 1111 (free including from mobiles). We’re open Monday to Friday 8am - 8pm and Saturdays 9am – 3pm.

Whichever method you use, if we recommend bankruptcy we can provide ongoing support through the bankruptcy process, which can be really useful for help completing the application and preparing to go to court.

Hope this helps.

Mat