a friend in need (substantial debt)

julzdyer

JCS1 wrote: »

The items I have highlighted are assets, and the OR will take both of these into the BR estate.

i have found out since that his actual cash position is 1000 pounds in saving, with the tax refund to come

julzdyer

nervousmother wrote: »

Just to put in my pennys worth...
He is young and has a large surplus as hardly any outgoings. Use £500 of this months pay, put towards those savings and tax rebate and pay the PAYE and VAT bill. go on a DMP with payplan or some none profit organisation to clear off the other 22k worth of debt. With the amount of money he has left over he could afford to pay it and if i was in his position i would try to. Payplan can get the interest froze on the cards and loan.
Although the BR would be off his credit files by the time he is 30, if he is ever asked if he has was ever BR he would have to say yes, this can have effect on future employment and getting a mortgage

thanks for this great advice, this is something i will heartily recommend to him

i can liase with the tax and vat on his behalf, but i believe that the outcome may well be determined whether or not he can stay in employment, if not, then i suggest the decision to go BR will be necessary

julzdyer

Merry_Gentry wrote: »

The OR can go back several years, and will look into decisions from when the person became insolvent, not when they went bankrupt which can be very very different.

Basically he needs to be prepared to lose the rebate, his savings, and pay into a substantial IPA for three years if he decides to go bankrupt. And above all he needs to be honest - it doesn't seem that he needs to spend the rebate to live on when he has £3,500 in savings and any OR would see through something that transparent straight away.

thanks again Merry

so even if he went BR he may still be liable to an IPA of a high percentage of his net monthly income?

i have since found out that his dad has his savings, now at about a grand and the tax rebate is about 3k.

JCS1

If you check the sticky at the top of the page (or here http://forums.moneysavingexpert.com/showthread.html?t=1056083) there is a lot of useful information. There is a leaflet regarding IPA's - the OR will assess his income against reasonable outgoings, and assuming there is a surplus of more than £99 per month, he will have to pay a percentage of his surplus to the OR. He may also be subject to a Nil Tax Code.

Has he paid his father the £1,000 savings as repayment of a debt? The OR will write to his father and ask for this money, as it will be considred a preferential payment of a creditor. The OR may also investigate and recommend a BRO/BRU for this action.

Merry_Gentry

julzdyer wrote: »

thanks again Merry

so even if he went BR he may still be liable to an IPA of a high percentage of his net monthly income?

i have since found out that his dad has his savings, now at about a grand and the tax rebate is about 3k.

If he goes bankrupt he will be liable for a IPA of a percentage of his surplus. And even if the savings are only a grand, he still can't use the tax rebate to live on while he still has them - it would be blatantly obvious that he was trying to get away with keeping this money rather than giving it to the OR/creditors that he is bound to get into trouble.

julzdyer

JCS1 wrote: »

If you check the sticky at the top of the page (or here http://forums.moneysavingexpert.com/showthread.html?t=1056083) there is a lot of useful information. There is a leaflet regarding IPA's - the OR will assess his income against reasonable outgoings, and assuming there is a surplus of more than £99 per month, he will have to pay a percentage of his surplus to the OR. He may also be subject to a Nil Tax Code.

Has he paid his father the £1,000 savings as repayment of a debt? The OR will write to his father and ask for this money, as it will be considred a preferential payment of a creditor. The OR may also investigate and recommend a BRO/BRU for this action.

i think his father was holding it for him so he didnt spend it in case of emergencies!

Merry_Gentry

julzdyer wrote: »

i think his father was holding it for him so he didnt spend it in case of emergencies!

Then he needs to be ready to hand it over to the OR, because on first glance it looks like he is giving preferential treatment to a family member.

julzdyer

ok, the more i read on, the more i feel he needs to go back to CCCS with a revised SOA and leave it in their hands, is this the best option now?

can i attend with him?

Merry_Gentry

What did CCCS actually suggest? You say he contacted them but not what they actually said?

julzdyer

Merry_Gentry wrote: »

What did CCCS actually suggest? You say he contacted them but not what they actually said?

they suggested a debt management plan

i have advised another meeting with them and i will attend with him for clarification

i would assume that this is the best route currently

however, if his 3 month employment contract is not renewed then that will be different