Considering bankruptcy

Gray-Fox

Hi, I'm currently unemployed ansd am about 20k in debt from a professional training loan (law) and a couple oif other (much smaller) debts.

I'm considering bankruptcy as it seems like the best time (no assets, no income etc) however, a girl I know who is currently an unemployed undischarged bankrupt has just received an email from the receiver demanding that she pay back £50 per month for 36 months. This is an income payment agreement. She won't be paying it as she is still unemployed.

I'm quite perplexed by this as I thought that bankruptcy rid you totally of all your debts.

Can anyone help?

Darnit_2

Yes Gary-Fox we can help.
If you have excess income after they have taken into account your expenditure, you can be asked to pay a proportion of it towards your creditors for 3 years. However, it doesn't sound like your aquaintance has done it right. If you have no income, or little you shouldn't have to repay any.

dmg24

You are aware that this will have serious implications for your legal career?

Gray-Fox

Yes.

I no longer wish to pursue law. At least not for the foreseeable future.

alastairq

hi, perhaps something has been lost in the translation?

What Bankruptcy does, is allow the OR access to all your assets, for division between one's creditors.

The nett efect for the BR is, as you surmised, riddance of [included] debts.

The OR allows the BR a reasonable amount each month on which to live..[as seen in our SOA's]

A small amount of surplus money is also allowed..[[£100 a month??]

Any income over and above this is claimed by the OR [or a big percentage of it is]...to pay the OR's expenses, and to distribute between creditors.

This is an IPA [or IPO if court enforcement is req'd], and is payable for 36 months from inception [not necessarily date of BR].

There is another form of IPA [referred to as an NT IPA]....which claims the money the BR WOULD have paid in taxes....but the income tax for the year is included in the BR...so a BR pays Nil Tax for the year [subject to conditions].
This NT IPA last until the new tax year, when income tax is again collected.

Your friend was probably working/earning, and had surplus income, hence the 36 month IPA.....however, once unemployed, that IPA would be reviewed.
This can take time, based on OR's workload.


Any debts accrued post-BR still have to be sorted.

Gray-Fox

What about declaring bankruptcy before starting a job?

Is this possible/advisable?

tigerfeet2006

It is perfectly possible to petition before you find work or after you have found work.

Please make sure you take advice from one of the debt charities as your petition could be delayed if you don't.

Also have a read of the Bankruptcy Help sticky.