pre-BR advice

moneynightmares

Hi everyone,

My husband and I are considering bankruptcy. Our history is using credit to live, and bad advise previously to consolidate with a secured loan, hence the real prospect of negative equity on a house which requires considerable improvements/maintenance. Also still have substantial unsecured credit. We are considering stopping paying the mortgage and let them repossess. Started a DMP in Feb, but struggling to cope.

My queries/worries are as follows:

1. Our only asset is our car. What would happen if we sold it now to pay of a debt to a family member?

2. An IPO/IPA USUALLY lasts for 3 years. What are the circumstances which would result in it being extended beyond this?

Hope you can help

immoral_angeluk

moneynightmares wrote: »

1. Our only asset is our car. What would happen if we sold it now to pay of a debt to a family member?

2. An IPO/IPA USUALLY lasts for 3 years. What are the circumstances which would result in it being extended beyond this?

Hope you can help

1. It would be a preference to a creditor as you are currently insolvent and aware of it. As the money owed to family would also be a bankruptcy debt. The OR has the power to reverse the transaction, and you could end up with a Bankruptcy restrictions order or criminal sanctions if the OR felt you were doing it purposefully to deprive yourself of an asset which would otherwise go into the bankruptcy. If you sold it at less than market value it would also be a transaction at undervalue with the same implications as above.

2. I have never known an IPA go on longer than 3 years, but someone else may be able to clarify this.

Ineedaname

Hi, have you taken advice yet from one of the free debt advice charities? That's a prerequisite for going BR as if you see the Judge on the day you will be asked about what advice you have taken to confirm you are aware of the implications of going BR.

philnicandamy

You are indeed correct IA

IPA/IPO will run 36mnths...no more no less(unless circs change during)

moneynightmares

immoral_angeluk wrote: »

1. It would be a preference to a creditor as you are currently insolvent and aware of it. As the money owed to family would also be a bankruptcy debt. The OR has the power to reverse the transaction, and you could end up with a Bankruptcy restrictions order or criminal sanctions if the OR felt you were doing it purposefully to deprive yourself of an asset which would otherwise go into the bankruptcy. If you sold it at less than market value it would also be a transaction at undervalue with the same implications as above.

2. I have never known an IPA go on longer than 3 years, but someone else may be able to clarify this.

thanks for the advice Angel. I did wonder if that would be the case.

fermi

immoral_angeluk wrote: »

2. I have never known an IPA go on longer than 3 years, but someone else may be able to clarify this.

The 3 years as a legal maximum is specifically set in the Insolvency Act.

An agreement that says it runs for longer than that would not be legal.

It has happened that people may take a payments break from an IPA for a few months, on the condition that the missed payments are tagged on to the end. That isn't an extension of the IPA though. It is just catching up with payments from the 3 years period that were voluntarily deferred.

immoral_angeluk

fermi wrote: »

The 3 years as a legal maximum is specifically set in the Insolvency Act.

An agreement that says it runs for longer than that would not be legal.

It has happened that people may take a payments break from an IPA for a few months, on the condition that the missed payments are tagged on to the end. That isn't an extension of the IPA though. It is just catching up with payments from the 3 years period that were voluntarily deferred.

Fab, thanks for that ferm