Ask a CCCS counsellor a bankruptcy question

CCCS_Matthew

victoryhill wrote: »

[FONT=Verdana, Arial, Helvetica]We have recently been discharged from bankruptcy. We had a number of properties ( personal and Buy to Let ) that formed part of the bankruptcy estate that we no longer want any part of. We are now getting chased by one council for council tax due on the property after we were declared bankrupt, while the property was empty.[/FONT]

[FONT=Verdana, Arial, Helvetica]The council is saying that because the properties are still "officially" in our name and haven't supposedly been repossessed ( even though all the properties are now managed by the Property Law Act Receiver and have been since before we went bankrupt ) we are liable for the council tax on the two empty properties.[/FONT]

[FONT=Verdana, Arial, Helvetica]When I spoke to Northern Rock they said they have not officially repossessed the property and, as such, we are still the legal owners of the property. They plan to keep our properties ( 6 in total ) in this holding pattern for the next 6 years until such time as the value increases to where they can sell them and minimize their losses as the properties are all in negative equity.[/FONT]

[FONT=Verdana, Arial, Helvetica]My questions are these:[/FONT]

[FONT=Verdana, Arial, Helvetica]1. Why will Northern Rock not officially repossess our property when it seems other lenders will do so in similar circumstances ? Is it because if they do repossess the property it will be moved to a different part of their balance sheet and therefore not look so good ?[/FONT]

[FONT=Verdana, Arial, Helvetica]2. How can I possibly be liable for council tax on a property after being declared bankrupt while having no control over the management of the property and receiving no benefit ie income from the property ?[/FONT]

[FONT=Verdana, Arial, Helvetica]Further info:[/FONT]

[FONT=Verdana, Arial, Helvetica]1. The Official Receiver is saying that any Council Tax monies owed on our BTL property ( or any property I suppose ) AFTER we went bankrupt have to be paid to the council. In fact they said I should seek legal advice from an independent party to determine our liability but if they property is in our name then basically we are liable for the council tax.[/FONT]

[FONT=Verdana, Arial, Helvetica]2. The council themselves - they are saying they don't care what the circumstances are - as long as we're the "official" owners of the property we are liable for any council tax after the bankruptcy period has started. I stress after the bankruptcy period because they don't have to wait for the normal 12 month bankruptcy period before they can claim against the property - any money that is owed after you are officially declared bankrupt they can try and claim it from you.[/FONT]

[FONT=Verdana, Arial, Helvetica]I really feel like I am stuck in the Twilight Zone as I am being asked to pay for something related to a property I now have no control over.[/FONT]

[FONT=Verdana, Arial, Helvetica]Any help or advice would be appreciated.[/FONT]

Hi there, thanks for your question.

1) NR are within their rights to keep hold of the properties for as long as they want to in theory. If the mortgage owed on the property is more than it's worth, it's likely that they will want to wait until the market rises to prevent them losing any money. In most cases, selling it with a shortfall wouldn't be an issue as they could then chase you for the remainder. However, because you went bankrupt, any potential shortfall would be written off, so they would lose out.

2) As soon as you've been made bankrupt you become liable for any future council tax for properties you are responsible for. In theory, until NR do sell the houses, you are still the owner and therefore liable.

Illustrating that you are bankrupt to the council will not make a difference as far as liability for the council tax is concerned, you need to send proof that the properties have been repossessed. By doing so you can claim exemption 'Class L' which should remove liability from the date of repossession.

The issue here is that if NR are claiming they haven't officially repossessed the property, you're stuck between a rock and a hard place as the council will not acknowledge the exemption until you can prove the property has been repossessed. There are a couple of things you could consider doing though:

1) As NR haven't officially repossessed you could 'hand the keys back' which is where you go through the process of voluntary repossession. If you've already handed the keys back, send the council any correspondence that shows confirmation of the fact you no longer have the rights to sell the house, nor the ability to get in the house.

2) If you've removed all the furniture from the houses you should also be able to claim council tax exemption "Class C". This is on the grounds that the house cannot be lived in and therefore no one is liable for paying the council tax.

Failing all that, you may want to take advice from the Official Receiver. Whilst this a very frustrating position to be in, I can imagine this must happen to a lot of people when going bankrupt and therefore there must be some advice they can provide to help.

Hope this helps, and let me know how you get on.

Matthew.

EDIT :-

I've also just noticed that you can be exempt under "Class Q" which is where a trustee is liable for the property. As you have now been discharged from bankruptcy, surely a trustee has been appointed to deal with the properties you have until they are repossessed or sold? If so, you should send confirmation of the details of the trustee and the properties they have been appointed to deal with and this should also take away your personal liability for the council tax.

debtsrus

Hi, I have an appointment to present my BR petition to the Court this Wednesday 17th March.

Knowing the amount of time it could take to open an account and not wanting to find my self in a position where I have to ask for my Pension to be put on hold and Standing Orders suspended while I open a new account, I went ahead and opened an account with Barclay's. I opened the account face to face at my local branch and fully explained my position to them. They were very helpful I have to say and they confirmed that I would be able to hold an account with them as an undischarged bankrupt. I paid in £50 just to fund the account.

I now wonder if I have shot myself in the foot by opening this account too soon; reading through the documentation supplied by the Insolvency Service I understand that this account will be frozen.

My question is: Will the OR allow me to keep this account if I explain the circumstances to him or, in your experience will I have to go through the whole process again?

Thanks again for your help

annie_plum

Will my UK bank alow me to keep my account open if I no longer have a UK address and if I can will I still be able to use my card over the internet using my non UK address?
As my pension can only be paid in to a UK bank account I would be in a difficult position with no UK account if I change my address and they say I can no longer use the account.

icegirl

Hi there,

I'm currently using CCCS to help with a Debt Management Plan to handle my debts etc.

This morning I opened a letter from one of my Creditors, Creation, to find that they had charged me a total of £45 for a combination of interest, payment protection (i can't seem to cancel) plus late fee and a £10 charge for changing my address! This is starting to weigh quite heavily on me as I've got a number of debts which don't seem to be going down at all.

My partner and are about to move back to my parents due to problems with his job and not being able to afford the rent.

I looked on line at various things and Bankruptcy came up, from what I've read this is not something to be taken lightly however I did enter my detail onto a website and a lady from Debt Help Direct rang back and discussed my situation. They seemed to think that I would eligble for the bankruptcy after going through a short budget planner but told me that if they were to help me then it would be £1150 which i can pay back at £230 for five months. This seemed quite expensive price to me.

Are there any other options for me as the pressure of not paying off my debts is starting to weigh me down, I currently work part time with only a 20hr contract and although I have looked for work am unable to find anything that would better this at the moment.

Any help or advice would be much appreciated.

Many thanks.

Louise.

Esoog

Greetings,


For the counsellors;

do you have any idea how much equity there needs to be in your house before the official receiver makes you sell? I read somewhere that after the fees etc it has to be over £4000 - is this correct?

Just to note - me and my partner are not bankrupt, however her ex-husband is (and his name is still on the mortgage); I've been living there since March 2009 and paying all bills/mortgage with my partner - the ex-husband has not contributed towards the mortage at all since December 2008 at least (moved out in Feb 09). Does this mean I have a beneficial interest in the house also? And so the OR would need to factor in three beneficial interests, with two greater than his one?

Many thanks for any replies,

CCCS_Matthew

debtsrus wrote: »

Hi, I have an appointment to present my BR petition to the Court this Wednesday 17th March.

Knowing the amount of time it could take to open an account and not wanting to find my self in a position where I have to ask for my Pension to be put on hold and Standing Orders suspended while I open a new account, I went ahead and opened an account with Barclay's. I opened the account face to face at my local branch and fully explained my position to them. They were very helpful I have to say and they confirmed that I would be able to hold an account with them as an undischarged bankrupt. I paid in £50 just to fund the account.

I now wonder if I have shot myself in the foot by opening this account too soon; reading through the documentation supplied by the Insolvency Service I understand that this account will be frozen.

My question is: Will the OR allow me to keep this account if I explain the circumstances to him or, in your experience will I have to go through the whole process again?

Thanks again for your help

Hi there.

All bank accounts are frozen when you go bankrupt, but only for 48 hours. Once open again it is the banks dicretion to whether you can keep the account open, the decision isn't made by the official receiver.

Having a new account open ready before your bankruptcy is the best thing to do. Just make sure you take enough money out to cover you for a couple of days and then by the end of the week your new Barclays account should be fine to use!

Hope that helps and good luck for Wednesday.
Matthew.

CCCS_Matthew

annie_plum wrote: »

Will my UK bank alow me to keep my account open if I no longer have a UK address and if I can will I still be able to use my card over the internet using my non UK address?
As my pension can only be paid in to a UK bank account I would be in a difficult position with no UK account if I change my address and they say I can no longer use the account.

Hi Annie.

You would have to check with the bank with that one. Each bank has a different policy when it comes to eligibility for accounts, so it's hard for me to be able to say I'm afraid.

Regards,
Matthew.

CCCS_Matthew

icegirl wrote: »

Hi there,

I'm currently using CCCS to help with a Debt Management Plan to handle my debts etc.

This morning I opened a letter from one of my Creditors, Creation, to find that they had charged me a total of £45 for a combination of interest, payment protection (i can't seem to cancel) plus late fee and a £10 charge for changing my address! This is starting to weigh quite heavily on me as I've got a number of debts which don't seem to be going down at all.

My partner and are about to move back to my parents due to problems with his job and not being able to afford the rent.

I looked on line at various things and Bankruptcy came up, from what I've read this is not something to be taken lightly however I did enter my detail onto a website and a lady from Debt Help Direct rang back and discussed my situation. They seemed to think that I would eligble for the bankruptcy after going through a short budget planner but told me that if they were to help me then it would be £1150 which i can pay back at £230 for five months. This seemed quite expensive price to me.

Are there any other options for me as the pressure of not paying off my debts is starting to weigh me down, I currently work part time with only a 20hr contract and although I have looked for work am unable to find anything that would better this at the moment.

Any help or advice would be much appreciated.

Many thanks.

Louise.

Hi Louise, thanks for getting in touch.

The cost of going bankrupt is £510, it's a standard set amount paid to the county court (although it's going up to £600 in April). Don't be tempted to pay someone anyone any more than that. If you want to go banrkrupt, you have to petition for it yourself with your completed forms so the companies charging you extra won't be able to do anything on your behalf, you'll be just paying for the advice and help with forms.

If the DMP isn't working for you and you're thinking of going bankrupt, give us a call. We can talk you through the process in detail and answer any questions you have, and advise on the forms if necessary. As you know, CCCS don't charge anything for advice - so if you choose to go ahead with bankruptcy you'll just need to find the standard bankrutpcy fee.

Regards,
Matthew.

CCCS_Matthew

Esoog wrote: »

Greetings,


For the counsellors;

do you have any idea how much equity there needs to be in your house before the official receiver makes you sell? I read somewhere that after the fees etc it has to be over £4000 - is this correct?

Just to note - me and my partner are not bankrupt, however her ex-husband is (and his name is still on the mortgage); I've been living there since March 2009 and paying all bills/mortgage with my partner - the ex-husband has not contributed towards the mortage at all since December 2008 at least (moved out in Feb 09). Does this mean I have a beneficial interest in the house also? And so the OR would need to factor in three beneficial interests, with two greater than his one?

Many thanks for any replies,

Hi there, thanks for getting in touch.

The official receiver would only start to be interested in selling the property when it can be guaranteed that there would be money left after all the fees. Before selling however, the other person on the mortgage would always be given the opportunity to buy the agreed amount of beneficial interest back from the OR. Alternatively, if possible, a remortgage could also be looked at in order to 'release' the equity to the OR.

Beneficial Interest is built up over a number of years rather than months. With that in mind, it's fair to say the amount of BI you have is going to minimal if you've only been living in the house a year.

What is the value of the property at the moment, and what's left to pay on the mortgage as it stands?

Regards,
Matthew.

Esoog

What is the value of the property at the moment, and what's left to pay on the mortgage as it stands?

Left on the mortgage is £85k, plus £4k early repayment fee which the lender has said would need to be included.

Valuations as of this morning are £95k for one and £95-100K from another, which seems silly since there's bigger and better houses on the same "estate" in the mid-90s, I suspect they're trying to secure our business (can you say to the OR that the valuation is wrong?!).

Fees from the estate agent were quoted as £3k so lets say £92k all included so in theory there's £3000 equity if we take the lower one and send it. Now can we argue since he hasn't paid anything for well over a year the split is not equal (70/30!)? Leaving them with at worse case 50-50 £1500? Would they bother?

Also, is a surveyor going to give a more up front valuation? Ie one that isn't geared towards us selling our house with them? I've looked at some on-line valuations (not a source of authority I know) and the most they've come up with is £90k.

Thanks for your time and help