Postgraduate Bankruptcy

noisyowls

Hi everyone,

I am 23, totally without assets or savings, and owe 10,000 to the Co-op and 5000 to RBS. The former was a career development loan and the latter a graduate loan, both are unsecured. Both were taken out in order to do a postgraduate degree. I wanted the qualification because I have always wanted to be an academic and despite achieving top marks throughout my undergraduate, I wasn't offered any kind of help or funding (but the corruption of academia is a story for another day).

I also suffer from a severe mental illness, and as a result of it worsening over the last year I've had to delay my completion of my postgrad by several months. The university have been great about it. My first repayments on my loans will be due from November. I am extremely unlikely to be in any kind of employment by then, as my health has been getting worse and worse and the effects of the medication are nearly as debilitating as the illness itself. I do not receive DLA. I have applied before and been turned down, but probably should apply again as I'm now much worse than I was then.

Long story short, I don't know where the repayments are going to come from any time soon. Someone with a reasonable amount of financial savvy has advised me that bankruptcy is perhaps an option, since I own nothing and have very little to lose.

I've been researching it, and the main thing I am concerned about is the possibility of an IPA. Not that I particularly have any disposable income (or even adequate income). I am scraping by on very little with help from family and some money I've made through some fairly degrading, but legal, activities. I don't see this as helpful to my mental health or future prospects.

Is the OR likely to see this work as something I should keep doing in order to fund an IPA, or will they accept my desire to stop once I'm less desperate for money? And in what way is the IPA managed-- does the OR have access to absolutely every bank transaction during BR and for the next few years? So if I had an allowance for a TV licence, say, and didn't actually need one (I don't have a tv), would that allowance be taken away from me or still included? And if I did get a bit better and tried to begin saving towards further education during the three-year IPA period, would those monies be seized by the OR?

These are all speculative queries, as I still have several months to decide what to do. Thanks to anyone who can offer guidance.

Gray-Fox

I did pretty much the same thing as you noisyowls (took out a PTC/CDL). My BR is nothing to do with credit card profligacy or anything like that.

noisyowls wrote: »

Hi everyone,

(but the corruption of academia is a story for another day).

Ha! I know exactly what you mean.

financial savvy has advised me that bankruptcy is perhaps an option, since I own nothing and have very little to lose.

This is true, unless you foresee your circumstances changing within the year of BR (i.e. you get a job which pays a lot).

I've been researching it, and the main thing I am concerned about is the possibility of an IPA. Not that I particularly have any disposable income (or even adequate income). I am scraping by on very little with help from family and some money I've made through some fairly degrading, but legal, activities. I don't see this as helpful to my mental health or future prospects.

Same thing I was/still am worried about. All I can say is, go to http://www.makesenseofcards.com/soacalc.html and enter your financial details as they are now, and people on here will be able to assess your SOA to see if it meets your "reasonable domestic needs" or whether there are things that the OR simply won't allow. If your surplus per month is more than £20, then the OR will probably ask you to sign an IPA.

Of course, you don't HAVE to sign it (hence its name: income payment agreement). If this happens, the OR will send the case to be looked at by a judge, to see if they agree that you should pay or not. If they think you should, this will become an IPO (order) and you'll have to pay ALL OF YOUR SURPLUS for three years from that point. This obviously negates the incentive (in some cases) to seek better or more well paid employment.

Is the OR likely to see this work as something I should keep doing in order to fund an IPA, or will they accept my desire to stop once I'm less desperate for money?

If you're going to quit work, I'd do it a short while pre-BR. Although if you post your statement of affairs (SOA) up here, then we can see whether you even have enough surplus to be eligible for an IPA. The OR would be less than impressed if you quit your job (w/o good reason) then went BR.

And in what way is the IPA managed-- does the OR have access to absolutely every bank transaction during BR and for the next few years?

The people put in charge of collecting the payments are called Moonbeever. I believe they are solicitors or something. Once you sign the IPA, it's like a contract that ties you in. Thus, you've implicitly agreed to trn over your payslips and be subject to any checks etc.

So if I had an allowance for a TV licence, say, and didn't actually need one (I don't have a tv), would that allowance be taken away from me or still included?

If you have a laptop or the ability to watch live TV on ANY electronic you have (including a mobile phone) you need a TV licence. So chances are you need one anyway.

And if I did get a bit better and tried to begin saving towards further education during the three-year IPA period, would those monies be seized by the OR?

Explicitly saving money is very very unlikely to be allowed by the OR, unless it's towards something like bond money to move into another rented place (for example). However, I guess some people save some of the money they allocated for stuff like groceries/holidays etc (but it won't be a lot of money by any stretch of the imagination).

A debt management plan (DMP) is always an option for you, as is simply writing to your creditors yourself and offering to pay them small payments. The good thing about this is that you're not legally obliged to divulge your income, so technically you could say you earned whatever you want. As long as they get something, they'll likely be happy. This is what I did, after I went into a DMP (I pulled out of the DMP due to unemployment, then I had the interest frozen on my PTC and other debt, which made this approach much more viable.) I'd be wary of doing that if you can't get the interest frozen.

noisyowls

Thanks for the great response, Gray-fox.

I should clarify that I don't have 'a job', it's rather that I've been earning small amounts of money through sheer desperation by contributing material to adult websites. I don't know what the courts would make of that or whether they would think I should keep that up. I'm unlikely to acquire anything except a part-time job in the next year: I'm going to be on the same highly sedating medication for at least 6 months, probably longer.

And I have confirmed with the TV license people that I don't need one. I don't watch any live tv over my laptop, and its the receiving rather than the potential to receive.

I don't know if there's much point in me doing the SOA at the moment, I am just about to move city and cease being a full-time student. So I have no idea what my income/outgoings will be in two weeks' time. If I petition for bankruptcy it will be in December or January, so I have time to work things out and make preparations.

I am just a bit worried about the IPA, because the nature of my illness has something meant a loss of control regarding money, and it there's no buffer I might leave myself penniless after a bad episode. How would the courts or the OR regard that? I'm hoping this won't happen, obviously, but it is a possibility.

davidgmmafan

"If you have a laptop or the ability to watch live TV on ANY electronic you have (including a mobile phone) you need a TV licence. So chances are you need one anyway."

Not true. You are only breaking the law if you was tv as live. Iplayer and similar doesn't count. However most people would put it down as a basic domestic need.

Hope you get something sorted out, sadly I believe this type of bankruptcy is going to become more not less common.

Ineedaname

It sounds like you need to focus on stabilising your illness for now as that will reduce the likelihood of uncontrolled spending in the future. I've been there and worked through it so I know what you're going through and it isn't easy to over ride those 'demands' the illness places upon you, but it can be done.

If you are reliant upon benefits for income then an IPA will not apply. If you are on a low income and have less than £20 pcm surplus then you still won't have to pay anything. The allowances are actually quite generous for BR so please, focus on your health and try not to worry about the what if's until you are ready to go BR.

Regarding DLA - you should be entitled to it. I can well recommend investing £20 to sign up to Benefits & Work to use their guides. Even if you only get Low Rate Care as a result then you'll get your subs money back in one week! When I was where you are now healthwise, I got low mobility and middle care with no medical, just by using those guides - that's around £250 pcm.

Gray-Fox

davidgmmafan wrote: »

"If you have a laptop or the ability to watch live TV on ANY electronic you have (including a mobile phone) you need a TV licence. So chances are you need one anyway."

Not true. You are only breaking the law if you was tv as live. Iplayer and similar doesn't count. However most people would put it down as a basic domestic need.

Hope you get something sorted out, sadly I believe this type of bankruptcy is going to become more not less common.

I said "live". I've emboldened it this time.

davidgmmafan

Apologies I missed that. At least noone else will now

noisyowls

Just wanted to bump this, as things aren't totally clear to me yet. Also, is there any difference between my petitioning bankruptcy versus being bankrupted by the banks? And are there any steps I can take in the next month or two as I prepare for it?