Ask a CCCS counsellor a bankruptcy question

Burgamo

Hi there

I have a debt (one of many) of just under £7k of Child Tax Credits overpayment. Does this debt have to be repaid in bankruptcy?

CCCS_Matthew

Magpie27 wrote: »

Hi I wonder if someone can help me please - DH has been advised that he should apply for bankruptcy, we are currently on a tenancy agreement together but this will end at the end of March when we will be starting a new tenancy agreement in a new house which will be in my name only with him listed as a co-habitor.

We have no assets together so I understand that the bankruptcy should not affect me however becuase we live together will this affect our tenancy? Do the courts have the right to inform our landlord even the tenancy is solely in my name? DH's commitment to the rent is half which I assume he will need to list on the application will the court have the right to question where we are living and suggest we move to anywhere cheaper - even though where we are moving to is not that excessive and my DD is 5.

Thanks

Hi there Magpie.

The OR wouldn't contact the landlord unless he/she were owed money which would have been included within the bankrutpcy.

He would need to put his share of the rent on the bankruptcy forms. The OR can ask for a contribution via an IPA if it's deemed the rent is far excessive for his needs, but this is unlikely. This tends only to be in cases where, for example, a single person is living in a 4 bedroomed house.

Hope this helps,
Matthew.

CCCS_Matthew

debtsrus wrote: »

Hi, I have a question about my flat. I'm will be submitting my petition for bankruptcy shortly; I have been renting a flat for the past 7 years and paid a deposit of £1000 at the commencement of the tenancy.

Do I need to declare this in my Statement of Affairs? Will the OR ask the landlord for this. What will my position be after bankruptcy viz a viz my tenancy?

Thanks

Debtsrus.

Hi there.

You wouldn't need to declare the bond in your petition, as it's not an asset (you're not guaranteed to get it back). For that reason, the OR couldn't ask for the bond back from your landlord. If you moved house before you've been dishcharged and you got the bond back you may need to disclose this to the OR, but it's more than likely that the money will be needed for another bond, so I can't really see this being an issue.

Regards,
Matthew.

CCCS_Matthew

Burgamo wrote: »

Hi there

I have a debt (one of many) of just under £7k of Child Tax Credits overpayment. Does this debt have to be repaid in bankruptcy?

Hi there.

If you are no longer claiming the tax credits then the overpayment would be included within your bankrutpcy. If you are still claiming and having deductions taken from your payments to repay the arrears then this may continue until the arrears have been cleared.

Regards,
Matthew.

PJohnson_2

Hi CCCS Team,

Just this month I've entered into my moratorium period for my DRO.

What I'm now trying to find out is the ammount I'm able to earn as a single person without it invalidating my DRO.

I'm currently recieving £550pcm on a mix of benifits and part-time work (less than 16hours per week). Full time work would change my income to about £900pcm.

I asked my DRO intermediary this very question and was informed that:

"A single person is allowed to spend £195pm on food, toiletries and cleaning; £28pm on clothing and footwear. To name but a few, so hopefully that gives you an idea of what you are allowed."

Well needless to say this did prove intresting but is there a list somewhere that outlines all this information so that I can add it all together and work out my earning potential before messing up my existing DRO.

Many thanks for any advice you can offer,

PJ

CCCS_Sarah

PJohnson wrote: »

Hi CCCS Team,

Just this month I've entered into my moratorium period for my DRO.

What I'm now trying to find out is the ammount I'm able to earn as a single person without it invalidating my DRO.

I'm currently recieving £550pcm on a mix of benifits and part-time work (less than 16hours per week). Full time work would change my income to about £900pcm.

I asked my DRO intermediary this very question and was informed that:

"A single person is allowed to spend £195pm on food, toiletries and cleaning; £28pm on clothing and footwear. To name but a few, so hopefully that gives you an idea of what you are allowed."

Well needless to say this did prove intresting but is there a list somewhere that outlines all this information so that I can add it all together and work out my earning potential before messing up my existing DRO.

Many thanks for any advice you can offer,

PJ

Hello,

Thank you for your message.

These are guideline figures that people within the industry use, but should only be used as a guideline. Your budget needs to reflect your situation and you should not have over £50 surplus.

Sarah

Magpie27

CCCS_Matthew wrote: »

Hi there Magpie.

The OR wouldn't contact the landlord unless he/she were owed money which would have been included within the bankrutpcy.

He would need to put his share of the rent on the bankruptcy forms. The OR can ask for a contribution via an IPA if it's deemed the rent is far excessive for his needs, but this is unlikely. This tends only to be in cases where, for example, a single person is living in a 4 bedroomed house.

Hope this helps,
Matthew.

Thanks Matthew that is really assuring about not informing the LL I don't think the rent is excessive it's a small 3 bed for 2 adults and 1 child at £950 PM, so hopefully this should be OK

diddly74

We have applied for an IVA, which was refused this week, as the creditors want further confirmation of our Tax Credits - not happy with proof of payment and award they want to see the whole letter to see how they are worked out.

So due to the refusal of our application (which has been going now for more than 3 months) I feel it is best both my husband and I go BR. Hubby isn't sure, and wants to wait and see what happens with the IVA - but it just feels like we are being messed around by the company we are with and I think that they are going to refuse us on the grounds of funds available. Anyway I have so many questions that are spinning round in my head that I can't settle.

The questions that are worrying me most are:

1. If the OR siezes our Bank account once we are declared bankcrupt then how do we live??? I am very confused on how it works with opening new accounts and transfering DDs and getting wages and tax credits paid in etc and with the OR siezing the accounts. I am a student Nurse, so do not technically get a wage and have a Student Account with Barclays.

2. Currently we are in negative equity with the house. The reason we decided on an IVA was that they don't take the house, but I have been reading that if in negative equity the OR will sell you back your house. What happens if you are have equity in your home but it is only a few thousand say £5000 which is a very low percentage of its actual worth?

3. Will the CCCS talk me through filling in the paperwork and such like when I speak to them on the phone?

In my gut I think BR is the way we should go (and always have but IVA seemed safer) but am so scared we will end up on the streets with no where to live with our 2 little girls.:( I am desperate for us to get out of this mess.

CCCS_Matthew

PJohnson wrote: »

Hi CCCS Team,

Just this month I've entered into my moratorium period for my DRO.

What I'm now trying to find out is the ammount I'm able to earn as a single person without it invalidating my DRO.

I'm currently recieving £550pcm on a mix of benifits and part-time work (less than 16hours per week). Full time work would change my income to about £900pcm.

I asked my DRO intermediary this very question and was informed that:

"A single person is allowed to spend £195pm on food, toiletries and cleaning; £28pm on clothing and footwear. To name but a few, so hopefully that gives you an idea of what you are allowed."

Well needless to say this did prove intresting but is there a list somewhere that outlines all this information so that I can add it all together and work out my earning potential before messing up my existing DRO.

Many thanks for any advice you can offer,

PJ

Hi PJ.

Their isn't a list of allowed costs readily available as you're budget should best reflect what you actually spend, rather than what you're allowed to spend.

However, if you are thinking of getting back into full-time work you might want to speak to your local CAB to see if they can do a "better off calculation" this is where they help work out the difference between your income now and what you would be getting if you earnt a certain amount. If you find full time work you will no longer get help with costs such asrent and council tax if you currently get these, and tax credits may also be affected. You will also have to consider how other expenditure will be affected such as travel costs etc.

The best thing to do is sit down and do yourself a new budget and work out exactly how much of an impact working full time is going to have. The key thing to remember is that the DRO will be revoked once you find you have more than £50 left over. If your new budget means you have less than £50, you should maybe call your intermediary and see whether the costs you have come up with are reasonable, and then you could consider proceeding with full time work.

Alternatively, if you didn't want to risk the DRO being revoked you could sit tight for 12 months with your current situation, and then consider looking at full time work (and spend what you like!) once the DRO has completed.

Hope that helps,
Matthew.

CCCS_Matthew

diddly74 wrote: »

We have applied for an IVA, which was refused this week, as the creditors want further confirmation of our Tax Credits - not happy with proof of payment and award they want to see the whole letter to see how they are worked out.

So due to the refusal of our application (which has been going now for more than 3 months) I feel it is best both my husband and I go BR. Hubby isn't sure, and wants to wait and see what happens with the IVA - but it just feels like we are being messed around by the company we are with and I think that they are going to refuse us on the grounds of funds available. Anyway I have so many questions that are spinning round in my head that I can't settle.

The questions that are worrying me most are:

1. If the OR siezes our Bank account once we are declared bankcrupt then how do we live??? I am very confused on how it works with opening new accounts and transfering DDs and getting wages and tax credits paid in etc and with the OR siezing the accounts. I am a student Nurse, so do not technically get a wage and have a Student Account with Barclays.

2. Currently we are in negative equity with the house. The reason we decided on an IVA was that they don't take the house, but I have been reading that if in negative equity the OR will sell you back your house. What happens if you are have equity in your home but it is only a few thousand say £5000 which is a very low percentage of its actual worth?

3. Will the CCCS talk me through filling in the paperwork and such like when I speak to them on the phone?

In my gut I think BR is the way we should go (and always have but IVA seemed safer) but am so scared we will end up on the streets with no where to live with our 2 little girls.:( I am desperate for us to get out of this mess.

Hi there. In answer to your questions...

1) The OR freezes all bank accounts for 48 hours only. They won't close them completely. It's down to the discretion of the bank whether or not they want to allow your account to remain open. If they say it's their policy not to allow an undischarged bankrupt an account, you should look at opening a basic account with Barclays or Co-op (as these are both bankrutpcy friendly accounts).

2) If the equity is only a few thousand then the OR would give you the option to either get a 3rd party to buy back the beneficial interest from the OR. If this cannot be done, the OR has up to 3 years to see what happens with the house and then make a decision. This could potentially mean that you could be asked to sell the property later on down the line on the assumption house prices start to increase. If you have £5k of equity now, you might find that there is £15-20k in a year or two. If there is no equity from the start you can buy back the interest in the house for £1 (plus £211 legal fee) which then prevents the house from being considered at a later date.

3) If we've advised you that BR is a viable option then you will provided the contacted details for the bankrutpcy support team who can help with questions and help with filling out of the paperwork if you get stuck.

Hope that helps!
Matthew.