Few Q's about bankruptcy

KatieKat_2

Hi, I am wondering if anyone can help me answer a few questions about bankrupcy, as I am considering it.

Bot DH and I are pretty deep into debt at the moment BECAUSE of a loan in my Father-in-laws name which we must pay. It accounts to half our salary! And on top of that we have a mortgage... and a daughter to clothe and feed. And the only way we've been able to afford it is by using credit cards, having no spare cash so relying on purchasing things on credit etc...

We've tried explaining the situation to the father-in-law but he doesn't care unless the money is paid each month.

So I am about £10,000 in debt, DH is £15,000 and we still owe his dad £15,000 over the next 3 years.

We're speaking to CCCs tomorrow about a DMP but obviously they cannot help us with the debt to DH's dad, and even on a DMP things are going to be pretty hard.

Main question 1. We do not have joint bank accounts, the mortgage is in DHs name, the car and secured loan are in his name... so if I declare bankruptcy for myself, they cannot touch any of the assetts in his name Correct?

Main question 2. DH is managing director and I am company secretary of a teeny tiny Limited company and we actaully sold it a few months ago but are still waiting to hand it over. Until then, my name is listed under the company, so would this be a problem (also we just sold it for a very small amount - less than £4,000 - which is going to go towards a few essential bills such as council tax and minor BUT VERY ESSENTIAL house repairs so that we can get more return on our house sale so that we can pay FIL off once and for all (and there are and were no company debts)

So we'd like to then rent a house with just DH's DMP to worry about if that is all possilbe

Main question 3. I am a legal British resident but not yet citizen. I am actually trying to get the money together to submit my application to become a Brit Citizen (of course we cut up all of our CCs a few months ago so we now need to actually save for things LOL) but there is a part on the applicatoin where it asks: Do you have any criminal convictions in the UK or any other country (incl. traffic offences) or any civil judgements made against you? Bankruptcy would not fall underneath this would it?

Last question/concern I heard that some people have their passports taken off them when they declare bankruptcy. Okay, as of now I only have an American one, but the whole idea really scares and worries me in case there is a family emergency in America (where most of my family still live) - but in the case of emergency my family abroad would fund my airfare costs etc

Yes, I am bitter (and actually physically ill) becuase of the mess we've found ourselves in trying to pay off FIL, but I think I would be okay with being bankrupt as I never intend to own a CC or the like again... and just stand up to FIL from now on.

Thanks in advance if anyone can answer my questions.

lynzpower

hello lovey

have you done an SOA before? Bankrupcy might not be the only option for you. If you look at southern scousers "first time poster" sticky, then you will bw able to see all you need to know for an SOA.

Welcome
lynz
xxx

KatieKat_2

Hi, thanks. I'll try to get an SOA up soon - should be fairly easy to do since I am preparing a SOA for CCCS anyway.

I have another question...

Is is possible to change/transfer a loan to a different borrower?! Is this heard of? The loan in my FIL's name that we have to pay is with GE Capital and they are SO unhelpful and so rude when we try to speak to them about it. They KNOW that we are paying as we've told them hundreds of times that FIL can't afford it (the loan goes back years and was meant to be a joint loan between FIL and my DH but only FILs name is on it)

That would be ideal since we could then include it in the DMP and maybe even be able to breathe again and stop living in fear of the inlaws

Toto

Hi there,

Do you have equity in your house? I would suggest bankruptcy as an absolute last resort and after all else has failed. If you are planning on selling the house to pay off your FIL, would that leave

a) enough money to negotiate F&F settlements with the other creditors at less than the amount owing?

or

enough spare income as you would no longer be paying back your FIL to pay the creditors on either an IVA or a DMP?

I am not sure from what you have said so far that bankruptcy is your only option, certainly not as you only seem to have £10k debt in your name. You could well settle that with the creditors for less. Same goes for your OH.

Toto

I am not sure about the legalities of borrowing money from a creditor knowing you would be unable to pay and entering into a DMP. I don't think that's possible. I know if you did end up going bankruptcy the OR would see that as being wrong and you may end up with a longer bankruptcy term.

jessicamb

Hi there

I dont think (well pretty certain) that you can be bankrupt and a company secretary or a director so your involvement with OHs business plans may need to change if you went down that route. Sorry I cant help with the rest of your questions but good luck.

KatieKat_2

Equity? I think we have about £10,000, but could be £20,000 if we can finish up the DIY which we need to do.

I also forgot, there is a secured loan in DH's name with £15,000 remaining, so assuming we get £20,000 profit on the sale of our house - (minus) £15,000 secured loan - (minus) £15,000 FIL's loan, we are still needing to find £10,000 to pay FIL at a rate of £500+ a month

And about our business, it was sold in March and the buyer paid a deposit and hopes to pay the remainder of the money this month... hopefully that is settled soon and I guess that as long as he has intent to buy it won't matter much??

Toto

So in actual fact you could be looking at negative equity with the secured loan. Do you have a settlement figure on the secured loan? Also don't forget that estate agents and solicitors fees need to be deducted from the total of the house sale. Not wishing to be negative but you should make sure you have all the figures accurate before you decide to sell, it might not be worth while.

I do think a SOA is needed for us to really help properly.

Emmzi

What would happen if you just stopped paying FIL loan? It doesn't look like anyone but him is liable on paper.

If you go bankrupt (both of you) he ranks as a creditor with everyone else and gets a percentage like all others IF he can prove you owe him money... if he is not being helpful, is this worth considering?

I guess it's really a question for hubby, as it's his dad. depends what loan was for, whether you'd feel you were conning him or not.

Wonder_Girl

Question 1 - not correct, you have a Beneficial interest in the property

2 - it shouldn't make a difference but i would call your local county court and ask to speak to the Official Receiver and ask them to be sure.

3, again not sure, worth asking the OR about this.

last question. it's only taken from you for a short time, like when you apply for a mortgage etc for admin reasons. if there were an emergency you could get it back quite quickly.

I don't however think this is your only option, please can you post an SOA for us so we can offer better advice? i posted an template here if it helps - http://forums.moneysavingexpert.com/showthread.html?t=216734

WG x

Toto

Emmzi does raise a good point, if you were both to go bankrupt he would be a creditor. You are not allowed to give a better deal to one creditor over another, so he would have to get the same pro-rata rate as the others (assuming there are assets/ surplus income). You also won't have the finances available to just not add him into the bankruptcy, you won't be able to pay him and I couldn't say how legal it would be to not mention it.

You said this was a joint loan, is the FIL paying anything towards it? I realise it's really hard to not pay debts especially when family are involved but at the end of the day, this is the risk your FIL took when he obtained the loan in his name. Even if it had of been a joint loan in both names the creditor would still come after him if your OH stopped paying.

As a point of interest you said you would pay £500 per month against £10,000 of this loan, that's an awful lot.