The Bankruptcy Club & Supporters Club

sandralovescats

desmonds wrote:

Hi

My wife has no earnings. The only money she gets is child benefit and child tax credits based on my income.

My wife is a full time mum.

The OR has split the household expenditure down the middle and in doing so has included these child benefits and tax credits.

So the mortgage, council tax etc etc is split down the middle so although my wife has no way of paying her half apart an IPA has been decided.

The OR has added my income of £1500 and my wife's benefits which is about £500 based on my last years earnings.

So they are using a total monthly income of £2000 and have come up with a an IPA figure of £170 per month for 3 years.

It states on the Insolvency website that as a matter of public policy state benefit cannot be used to form part of an IPA which is what they are doing.

What can I do?

Desmonds

That is what I thought!

I would dispute the issue with the OR. If your wife's only income is working tax credit and child benefit, which are both State Benefits, then they ought to be deducted from any calculations. Alternatively, since it is YOUR bankruptcy, the OR should not be including HER income at all ! Since she technically has no income of her own, and it is your responsibility to pay for everything, the OR should have included all income but also allowed for ALL expenditure too.

If you have a problem with your particular OR you can contact the OR office for your area which can be found on the insolvency.org.uk website.

I will leave others to answer your questions on property since it is an area I know very little about.

smokey112

desmonds wrote:

Hi Ang,

Am I correct that any equityin the house less than £1000 pounds the OR has no interest in the property?

I have been advised to sort the house out straightaway and not leave it to gain any equity.

The OR is keeping very quite and I suspect that they are hoping that in 2-3 years time befire the IPA ends they may revalue the house and wallop me for any additional equity.

At the moment there is hardly anything in equity and now is the best time for my wife to buy my interest.

So you reckon this £2750 could be eaten up further which would leave nearly nothing.

Keep the advise coming please

Desmonds

Hi Desmonds

from all that I have read then you should be able to reach a settlement with the OR regarding the BI. The sooner you get it settled then the more piece of mind you will have - our OR is really quite good - I got till last month to pay £500 for my BI and that was from October last year (they did say at the start that was to be settled within 6 months).

Please see my PM regarding info.

The £2750 would, I imagine, be eaten up with legal fees alone should the IP want your share of the equity. If your IP is approachable I would enquire as to the possibility of your equity being bought for say £500 - they can only say no and advise what they would take.

HTH

Ang
x

monkeyy

Merry Christmas all:beer: :beer: hope you all have a great time and for those of you in debt try and forget about it for a day or two.
Little update on my situation, have sent my soa off to the or and am awaiting a decision, egg and Halifax have stopped ringing me and acknowledge my BR by sending out letters. And the only ones being !!!!!!!s are mnba never mind I'm off for 2 weeks tomorrow so they can ring that phone to their fingers bleed for all I care.

merry xmas and a happy new year all and a big shout out to mikey st helens for this thread and helping me get my life back on track

Addicted2Chocolate

Sandra do you work for an Official Receiver and deal with IPA's? I do. The advice you are giving desmonds is incorrect.
All the facts about what is and is not 'assessable income' for IPA calculations is available on the insolvency service website. Under the freedom of information on act, technical manual chapter 31.7 here is the link:
http://www.insolvency.gov.uk/freedomofinformation/index.htm

But to correct you: 1) it is standard practice to include the whole households income and expenses when calculating an IPA ii) child benefit should NOT be included as assessable income iii) all tax credits ARE included as assessable income, techically they are NOT benefits at all, they are TAX CREDITS iv) if the bankrupt is unemployed and only income is from benefits no IPA is sought by the OR.

A question for you sandra? why should it be fair on the creditors and taxpapyers not to get some money back from an IPA? The money from a IPA first goes to paying the costs of admistering the bankruptcy, which are otherwise paid for by the taxpayer. It is not logical or fair to suggesting desmonds' wifes income should not be taken into account, but all household expenses should be paid by him, it gives the impression seems to me that is what you are implying? TAx credit are calculated on bais of household income, the same as IPA's.

Bankruptcy is not for people to keep all their income (which is an asset and bankrupty works by the bankrupt losing control of their assets) and other assets and get rid of their debts. Perhaps we are forgetting the IPA is for 3 years maximum, and without the option of bankruptcy debtors would be left paying debts for 100's of years, impossible before death!
If there is genuinely no surplus of income after reasonable expenses of course the OR should not seek an IPA. If the bankrupt does not consent to the IPA they can decline to sign the agreement, then the OR will consider aplying to the court, for the court to decide on a fair amount for the IPA.
Any questions about bankruptcy? personal message me. I only deal with debtors petitions. I am on maternity leave but up to date on policy and legislative changes, as I go into work and check emails. I may be delayed in replying to you, as I have a 4 month baby to look after.
HTH
A2C
QUOTE=sandralovescats]That is what I thought!

I would dispute the issue with the OR. If your wife's only income is working tax credit and child benefit, which are both State Benefits, then they ought to be deducted from any calculations. Alternatively, since it is YOUR bankruptcy, the OR should not be including HER income at all ! Since she technically has no income of her own, and it is your responsibility to pay for everything, the OR should have included all income but also allowed for ALL expenditure too.

If you have a problem with your particular OR you can contact the OR office for your area which can be found on the insolvency.org.uk website.

I will leave others to answer your questions on property since it is an area I know very little about.[/QUOTE]

sandralovescats

[QUOTE=
1) it is standard practice to include the whole households income and expenses when calculating an IPA ii) child benefit should NOT be included as assessable income iii) all tax credits ARE included as assessable income, techically they are NOT benefits at all, they are TAX CREDITS iv) if the bankrupt is unemployed and only income is from benefits no IPA is sought by the OR.

A question for you sandra? why should it be fair on the creditors and taxpapyers not to get some money back from an IPA? The money from a IPA first goes to paying the costs of admistering the bankruptcy, which are otherwise paid for by the taxpayer. It is not logical or fair to suggesting desmonds' wifes income should not be taken into account, but all household expenses should be paid by him, it gives the impression seems to me that is what you are implying? TAx credit are calculated on bais of household income, the same as IPA's.

[/QUOTE][/QUOTE]

You have misread Desmond's situation.

His OR is taking all the household income into account including child benefit which, as you said, should not be included. However, there are two adults and only one income, yet the OR is still only allowing 50% of Desmond's household expenditure in the assessment.

I do feel that if you want to help people facing bankruptcy that you should reply to questions within the public domain rather than by private message. This forum is to help people who are having problems and to face up to those problems and to deal with them, not to hide away in shame. It is not shameful for people to ask for help.

Addicted2Chocolate

I apologise sandra , if that is what the OR is doing it is wrong, i understand the OR should do the calculation on a household basis.
Many people on here appreciate personal messaging, it is just another way to ask for help and does not mean they are ashamed of their situation. It is just easier to communicate sometimes especially if you are busy and cant read 1000's of posts on the DFW board, but it is easy and quick to check messages.
Sorry again for the misunderstanding.

QUOTE=sandralovescats][/QUOTE]

You have misread Desmond's situation.

His OR is taking all the household income into account including child benefit which, as you said, should not be included. However, there are two adults and only one income, yet the OR is still only allowing 50% of Desmond's household expenditure in the assessment.

I do feel that if you want to help people facing bankruptcy that you should reply to questions within the public domain rather than by private message. This forum is to help people who are having problems and to face up to those problems and to deal with them, not to hide away in shame. It is not shameful for people to ask for help.[/QUOTE]

desmonds

I went BR in Sept owing approx £125K to about 13 credit cards. All the debt was in single name only,

I live with my wife who is a full time mother looking after our 3 year old boy.

My wife gets child tax credits and child benefit and no other income.

I go out to work to make ends meet and pay the bills.

We have a £357K outstanding joint mortgage and the value of the house at present is £365K so very little equity exist at the moment.

We are in a fixed rate deal with the mortgage company which expires April 2008 which has a redemption penalty of £12.5K.

My monthly nett income is £1500 per month and my wife gets about £500 in tax credits and child benefit based on my last years earnings.

The mortgage payment of £1500 almost swallows my income to begin with and then theres the council tax and utility payments and other household income.

You may say "how can they afford to pay more than what's coming in?"

Well, at the moment my wife has cashed in one of her own ISA policies and downgraded her car but we just manage through with the help of family.

My wife is looking to buy my beneficial interest in the home ASAP so that creditors can't come knocking in 2 years time when the house will be worth more.

So the plan is that my wife buys my interest in the home which 50% is roughly £2500 and then when the fixed rate deal ends we can downsize and benefit from whatever equity has grown in the property up untill then.

My examiner has worked out an IPA of £170 per month which I am disputing because she is taking into account my wife's child benefit and tax credits.

She is saying that we have a monthly income of £2000 and then she is deducting my share of the bills being 50%. So, the mortgage of £1500 she is taking my share as £750 and so on.

She is allowing something like £300 for food which I assume covers me my wife and son together.

Eventually she gets to a remaining figure of £170 left to form this IPA.

Strange how I never had enough disposable income for an IVA???

If there is £170 left over then surely an IVA could have been an option and I would not have had to choose Bankruptcy.

Well there's alway's a FTVA which would throw a spanner in the works.

But I may still be better off Bankrupt?

I don't want to cut my nose off to spite my face.

As A2C has stated that 3 year IPA is nothing to what would have taken a lifetime to repay.

I can't see how there's enough disposable income to pay into an IPA.

I'm sure that something like 90-95% of all BR cannot afford IPA's.

Before anyone say's why we don't sell the house and downsize and then we'd have more disposable income

Well, £12.5K redemption costs plus 1.25% estate agent fees and solicitors fees and then no one will give me a mortgage 'cos i'm an undischarged BR and apart from going into rented accomodation we would be in negative equity owing to the mortgage company.

Whilst there is hardly any equity in the property the only choice is to get the beneficial interest bought and sort out the IPA situation and when the fixed rate ends downsize and at least we'd have some money to at least start afresh.

I'm sure it's killing the examiner and OR and i'm sure they are clinging at straws because they have little to get there paws on.

They've tried taking my car worth less than £250 which I need for work so I am filling out a exemption form( B30.01 'Application for item to be considered as exemp)

They've mentioned nothing about the house hoping I expect to come after it in say 2-3 years time before the IPA ends.

The examiner seemed surprised when I asked about my wife, family of friends buying my beneficial interest in the home.

I've sent numerous email's to the OR office and not one has been replied to.

The examiner has phoned on a couple of occasions and when she last phoned gave me a run down of the IPA over the phone.

I sent an email asking that they send an explaination how they came to such a figure with a breakdown of income and expenditure.

They just seem to be dragging there heels as it is nearly 4 months since my bankruptcy order.

At this rate I will be discharged before they've sorted things out.

Any advice would be appreciated and thanks for reading and listening to my boring life.

Desmonds

smokey112

Hi Desmonds

Please keep your chin up - your life isn't boring and we are all here to help whether on the forum or by PM - whatever you feel comfortable with.

I would keep on your OR's case regarding the BI - that was my main issue as I knew that in 2 or 3 yrs time the OR could have realised any equity in my home.

I know that when we do our SOA for the OR at our 6 month review and at the start when we petitioned then our expenses where not put down as being equal although we both bring home approx the same. The mortgage is in my name only and is fully attributed to me but the secured loan is in both our names and is split 50-50. The car which we have on finance is fully attributed to OH . Electricity is on my expenditure as I am the home owner and council tax is split 50-50.

I don't know if it would help but could you post a copy of what you put in your BR application as your income/expenditure.

I would definately press the OR her results on this - I know when we had our interview with the OR then we review our submitted SOA and he revised this and knocked £25 each off our proposed IPA.

HTH

Ang
x

bizzylizzy

bizzylizzy wrote:

One thing did surprise me though - OR will take over our joint life insurance policy. There is no surrender value on it, only pays out on death. So if one of us dies OR will get the pay out! There are apparently 2 ways round this - we can let the policy lapse and then in 1 yr (after discharge) start another one (which leaves us with no cover for a year) or we can buy the policy back. That costs a years premiums. In our case £260!! We have 10 days to decide what we want to do.
As we had some problems opening this one (due to OHs health) some years ago and my health hasn't been too brilliant since, I think we need to keep the existing one. A new one would mean much higher premiums. Also we don't want to be without cover for 1 yr.
So we will have to BORROW money to buy it back!!! How crazy is that!! I swore never to borrow money again but I can't see any other choice,
What have other people done about this?

I have just spoken to OR again re life policy in the vain hope that he may have been wrong about the above. He said he does have an interest in it even though there is no surrender value in it. If one of us dies in the next 12 months then OR will get the money!!!! That is the interest he has. He is sending us the info on how to buy it back. I think we will have to do this as I can't leave us or our family unprotected. So that's us back in debt again! :mad: :mad:

Doushka

bizzylizzy wrote:

I have just spoken to OR again re life policy in the vain hope that he may have been wrong about the above. He said he does have an interest in it even though there is no surrender value in it. If one of us dies in the next 12 months then OR will get the money!!!! That is the interest he has. He is sending us the info on how to buy it back. I think we will have to do this as I can't leave us or our family unprotected. So that's us back in debt again! :mad: :mad:

Oh cripes, and there I was in the belief that mine was safe - being term assurance it has no surrender value. Hope my OR doesn't read this thread, she might decide she has to take that as well as my endowment policy which was my only likely means of more than state benefits come retirement age.

Hate to think what the increase premiums would be if i took out a new policy, mind you, arguably, with no debts and the house in OH name, him being the breadwinner too, there is nothing that would need paying off on event of my death, so perhaps I wouldn't need one. Still leaves the question of the critical illness cover aspect which I am adamant is a must these days

Hope you manage to sort something without too much expense bizzylizzy