Listing family as a creditor on SOA

antarctica

Hello all

Just wondered, if you list a family member as a creditor when you go BR (my OH listed his sister and his mum) then when you make payments to the OR under an IPA how is that money distributed?

Do your family get their fair whack of it, none of it, or are they in the queue behind the creditors ie banks etc?

Thank you folks

A
x

maxmycardagain

I doubt the OR will accept a family member as a creditor, even if you have a formally drawn up agreement, as for payments from IPAs, if they see 5p in the pound they will be very very lucky.....

antarctica

That would be a shame, oh well.

debtinfo

The OR does except family members as creditors, in fact they insist upon it. A debt is incurred when you take money and agree to repay it at some point. Id does nt matter whether this is written down or not.

As regards what happens to money
1) Any costs in realising the money are paid first.
2) The OR's costs are then paid
3a) If less than about £600 remains it goes into a fund that pays out to all the big creditors who claim in many bankruptcys but receive a payout in only a few.
3b) If more than about £600 remains then preferential creditors (employees mainly) are paid out first than all other creditors with pro rata with no other preference. The creditors have to prove the debt at this point to be paid

antarctica

Hi debtinfo

When you say it goes into a fund - does that include all of the tax (from us being in a nil tax code)

Also how much are the OR's costs?

What do you mean by preferential creditors?

Thanks

A
x

JCS1

Nil Tax Codes are included as an asset.

OR fees started at £1,715, but probably gone up a bit since I last knew for sure. The OR fees you pay at court go towards this too.

Preferential creditors tend to be employees who are owed wages, etc.

antarctica

Oh I see, all our creditors are banks apart from two members of OH's family.

Wow, the OR will probably be the only one to get any cash out of us in that case!

wurzella

Question on that nil tax code thing. I'm self employed and HMRC is one of my creditors. Therefore I'll be on a nil tax code until next april 5th right? So the OR will take all the money I should pay in taxes in the meantime as an asset? How can that work because if he sets up a payment agreement I will only be able to pay it until april 5th?

JCS1

wurzella wrote: »

Question on that nil tax code thing. I'm self employed and HMRC is one of my creditors. Therefore I'll be on a nil tax code until next april 5th right? So the OR will take all the money I should pay in taxes in the meantime as an asset? How can that work because if he sets up a payment agreement I will only be able to pay it until april 5th?

Any tax you owe up to the date of the BR is written of on your BR. Youw would then need to pay any tax from that date to 5th April to the OR.

Nil tax codes only last for the remainder of the current tax year or until your change employment.

wurzella

Right, that makes sense now. Thanks