pension lump sum whilst bankrupt

wendybatch

Hi, my question is about pensions. I have a civil service pension and am hoping to take early retirement soon. I understood that pensions cannot be taken by the bankruptcy trustees, but I have been advised that if I receive my lump sum whilst I am bankrupt I will lose it. Is that right?
I am not bankrupt now but one of my creditors are threatening to make me bankrupt. I am leaving the country to live in Australia within the next 2 months and am considering whether to make myself bankrupt to clear all my debt before I go but am struggling to get independent advice as to if this is the right thing to do for me.
I had previously considered an IVA but decided that was not right for me. I was given the hard sell from IVA providers but am now having the same trouble with bankruptcy providers. They just seem to want to talk you into a particular course of action for their own monetary gain.
Some advice would be appreciated.

skylight

Right - pensions are a bit odd.

The pension pot cannot be touched (usually) or claimed by the OR at all, but any lump sum paid to you can be taken and any pension income can be included when working out an IPA, whilst BR.

I would leave your pension pot as it is and not claim off it until after BR. You can still pay into it (if its terms allow) when BR as long as its not silly amounts and the OR thinks you are using it to hide your money.

leveller2911

skylight wrote: »

Right - pensions are a bit odd.

The pension pot cannot be touched (usually) or claimed by the OR at all, but any lump sum paid to you can be taken and any pension income can be included when working out an IPA, whilst BR.

I would leave your pension pot as it is and not claim off it until after BR. You can still pay into it (if its terms allow) when BR as long as its not silly amounts and the OR thinks you are using it to hide your money.

Surely the right thing to do would be to use the lump sum to pay the creditors................Or am I missing something here..

Why couldn't the OP contact the creditor explain the situation with the lump sum,If I was a creditor I would rather be assured of getting my money back in say 2-3 yrs than the OP going BR and the creditor getting little or nothing.........

skylight

leveller2911 wrote: »

If I was a creditor I would rather be assured of getting my money back in say 2-3 yrs than the OP going BR and the creditor getting little or nothing.........

You would have thought, wouldn't you?

Its too logical for a creditor to want to know. They want paying now, not later. Most of us would not have been declared BR in the first place if creditors were logical and accepted realistic (and proveable) offers of payment. But thats life. Or business to them.

leveller2911

skylight wrote: »

You would have thought, wouldn't you?

Its too logical for a creditor to want to know. They want paying now, not later. Most of us would not have been declared BR in the first place if creditors were logical and accepted realistic (and proveable) offers of payment. But thats life. Or business to them.

However, I can also understand from a creditors view, especially small business run close to the edge anyway and it doesn't take much to tip them over.

My point is the OP CAN pay the creditor so why entertain going BR, is it so they can renege on the debt??.Does the OP really want to pay their debt.. Yes I understand that for most BR is a last resort but equally for some they just don't want to pay..

tigerfeet2006

But surely the pension pot is to support you while you are retired, so you can have a fairlt decent standard of living and not to pay debts. Why should you use your pension money to offer f&f to creditors and make the rest of your life difficult.

leveller2911

tigerfeet2006 wrote: »

But surely the pension pot is to support you while you are retired, so you can have a fairlt decent standard of living and not to pay debts. Why should you use your pension money to offer f&f to creditors and make the rest of your life difficult.

OK, suppose the creditor was near retirement age and the debtor was say 40 and in the debtor not paying the debt forces the creditor to work an extra 5yrs because they could no longer afford to retire...
Are you saying that if a person IS in a position to pay the debt off they shouldnt because it will mean their retirement won't be quite as financially secure???....

Im not trolling here, would just like know...

tigerfeet2006

How often though are creditors private individuals? They are generally big faceless banks, who we are supporting anyway.

leveller2911

tigerfeet2006 wrote: »

How often though are creditors private individuals? They are generally big faceless banks, who we are supporting anyway.

I use to subcontract to a small building company who had customers go br on them and most were not big banks and institutions .In the end the company I worked for went bust because they were owed so much money, the majority of which were householders.We had lots of times where we did council grant work, we did the work and the council use to give the grant money to the customer, endless times we didnt get paid , they spent the money, some even went on holiday with the money..

I agree a lot of cases are with big banks etc but I would also say many,many aren't theyre just small businesses who don't deserve it.

In my honest opinion BR is any easy way out for some people, I know persoanlly of one who maxed out on CC a month before going BR and nothing has happened.
Would you class a small business employing 6 staff , big business???