A few questions about BR

Hughesy84

Can people tell me how it all works?

My dad and his wife have a property together, with a value of £130-140k

The outstanding mortgage is £131k and has a secured loan against the property for £11k also, so no equity. Its also an interest only repayment mortgage so its not going down!

27 months ago his wife left, leaving him to pay all the house bills, loan and also debts + live.

Now each month he only brings home £1300 – the mortgage and loan alone are £930 and he then has bills such as elec/ gas/ council tax/ tv licence etc + he is also with a debt management company which he pays £150 a month to cover agreed payments with credit cards etc…..he owes over £30k in card bills too. So clearly isn’t ever going to clear his debt or pay his mortgage off.

He also owes £12k to a family member and 4k to another.

Now he is thinking of going bankrupt as overtime has dried up, which he needs and he is struggling to just pay bills, never mind live.

· How does he go bankrupt and how will it affect him in the long run?
· Not too worried about it stopping him get credit, but what will happen if he stops paying everything and instead applies to go bankrupt?
· What will happen in terms of payments?
· Obviously he will become debt free, but will he have to pay anything to OR?
· And how long until he is ‘discharged’?

Would he be able to go bankrupt and what money will he be entitled to keep each month?

As ideally he wants to start paying his 1st family member off with £300 a month, and also will need a place to rent and pay for his living etc.

Thanks for any help & advice

mysterio_2

fair bit of reading here

https://forums.moneysavingexpert.com/discussion/1056083

IF

Hi Hughesy84, Please get your father contact one of the following debt charities. Please try these they don't charge and are impartial. They will go through all your father's options and if they suggest bankruptcy then come back to this board and we will help him all we can. Also if he's not ‘clicking’ with one of the Debt charities do try another. We advise you to try at least two for piece of mind.

Please ask him to read everything he can x

For ‘essential’ BR info this is Fermi’s sticky - Click here

Main recommended sources of help:

• National Debtline - Website: National Debtline Telephone: 0808 808 4000
• Citizens Advice Bureau - Website: Citizens Advice or visit your local CAB centre (find nearest)
• Consumer Credit Counselling Service - Website: CCCS Telephone: 0800 138 1111
  

Others:

• Business Debtline - Website: Business Debtline Telephone: 0800 197 6026
• Christians Against Poverty
• PayPlan
• TaxAid - Help with tax debts.

Best wishes
If...x

tigerfeet2006

Hi and Welcome, The first step make a list of all his creditors, debts and assets. Secondly and most important is contact one of the following debt charities. Please try these they don't charge and are impartial. They will go through all his options with you and if they suggest bankruptcy then come back to this board and we will help you all we can. Also if your not ‘clicking’ with one of the Debt charities do try another.

Please don’t do anything rash take your time and weigh up your options and read everything you can x

For ‘essential’ BR info this is Fermi’s sticky - Click here

Main recommended sources of help:

• National Debtline - Website: National Debtline Telephone: 0808 808 4000
• Citizens Advice Bureau - Website: Citizens Advice or visit your local CAB centre (find nearest)
• Consumer Credit Counselling Service - Website: CCCS Telephone: 0800 138 1111

Others:

• Business Debtline - Website: Business Debtline Telephone: 0800 197 6026
• Christians Against Poverty
• PayPlan
• TaxAid - Help with tax debts.

And do remember we’ve all been through this and anything you don’t understand don’t be afraid to ask.

Hughesy84 wrote: »

Can people tell me how it all works?

My dad and his wife have a property together, with a value of £130-140k

The outstanding mortgage is £131k and has a secured loan against the property for £11k also, so no equity. Its also an interest only repayment mortgage so its not going down!

27 months ago his wife left, leaving him to pay all the house bills, loan and also debts + live.

Now each month he only brings home £1300 – the mortgage and loan alone are £930 and he then has bills such as elec/ gas/ council tax/ tv licence etc + he is also with a debt management company which he pays £150 a month to cover agreed payments with credit cards etc…..he owes over £30k in card bills too. So clearly isn’t ever going to clear his debt or pay his mortgage off.

He also owes £12k to a family member and 4k to another.

Now he is thinking of going bankrupt as overtime has dried up, which he needs and he is struggling to just pay bills, never mind live.

· How does he go bankrupt and how will it affect him in the long run? First thing he needs to do is talk to a debt charity. If he goes BR he will find it difficult to get credit for at least 6 years after. Difficulty getting a mortgage.
· Not too worried about it stopping him get credit, but what will happen if he stops paying everything and instead applies to go bankrupt? He will get lots of calls and letters untill he has done the deed.
· What will happen in terms of payments? How do you mean?
· Obviously he will become debt free, but will he have to pay anything to OR? The OR will look at his essential monthly outgoings and if there is anything left after these have been agreed then the OR will take the surplus.
· And how long until he is ‘discharged’? Automatic discharge is 12 months, if he pays into an IPA then that lasts 36 months (AD still 12 months)

Would he be able to go bankrupt and what money will he be entitled to keep each month? Only what the OR agrees are his essential outgoings.

As ideally he wants to start paying his 1st family member off with £300 a month, and also will need a place to rent and pay for his living etc.

Thanks for any help & advice

He will not be able to repay the family member as this is favouring a creditor and he could end up with a BRO if found out. Now how he spends the money that the OR has agreed is essential to live is up to him.

If the debt charities agree that BR is an option then he should stop paying his mortgage, secured loans, CC and loan debts and start saving for rental deposit, rent, moving costs, BR fees and then find a rental property. Once he has moved he can then go BR.

All joint debts will become the responsibility of his ex-wife in full.

Hughesy84

tigerfeet2006 wrote: »

Hi and Welcome, The first step make a list of all his creditors, debts and assets. Secondly and most important is contact one of the following debt charities.

He will not be able to repay the family member as this is favouring a creditor and he could end up with a BRO if found out. Now how he spends the money that the OR has agreed is essential to live is up to him.

If the debt charities agree that BR is an option then he should stop paying his mortgage, secured loans, CC and loan debts and start saving for rental deposit, rent, moving costs, BR fees and then find a rental property. Once he has moved he can then go BR.

All joint debts will become the responsibility of his ex-wife in full.

Whats a BRO?

Ok so he has £1300 a month....what is the OR likely to take?

If he came to live with me, could I charge him say £500 a month rent?

Do they take into account living expenses such as travel to work, food etc? What other things?

Also how long does he pay 'surplus' to the OR?!

Hughesy84

tigerfeet2006 wrote: »

All joint debts will become the responsibility of his ex-wife in full.

After the way she racked up debts and left....I like the sound of that one :beer:

IF

Hughesy84 wrote: »

Whats a BRO?

Bankruptcy Restriction Undertakings / Orders.

• Bankruptcy Restrictions Orders/Undertakings (IS)

Hughesy84 wrote: »

Ok so he has £1300 a month....what is the OR likely to take?

If he came to live with me, could I charge him say £500 a month rent?

Do they take into account living expenses such as travel to work, food etc? What other things?

He can claim all those things, when he's spoken to one of the debt charities post all his expenses using the MSE Calculator:-

MSE SOA Calculator - Click here Select the MSE format at the end. Copy and paste onto your thread.

Hughesy84 wrote: »

Also how long does he pay 'surplus' to the OR?!

Please read below:-

Income Payment Agreements/Orders.

• Urgent news on IPA's - Changes for BRs after 01/12/2010
• IPO / IPA (Income Payment Orders and Income Payment Agreements) (IS)
• Nil tax (NT) coding/IPAs (MSE)
• Annex A – Assessment of real disposable income where the bankrupt's income is derived in part from state benefits
  Annex B - Guidance on the assessment of real disposable income where the official receiver seeks to claim a lump sum payment
• Income payment agreements (IPA)
  Spreadsheet showing average UK spending calculated from the Office of National Statistics publication ‘Family Expenditure Survey’
• IPA calculator Pre 01 December 2010
• IPA calculator Post 01 December 2010

If...x

Ineedaname

Hughesy84 wrote: »

If he came to live with me, could I charge him say £500 a month rent?

That depends on what a reasonable rent is for a lodger in your area. Where I live the average is about £380 pcm for room including bills.

Also you'll need to be aware that lodger rent over £354 pcm is taxable and to benefit from the tax free income you would need to sign up to the rent a room scheme.

wildheart83

Ineedaname wrote: »

That depends on what a reasonable rent is for a lodger in your area. Where I live the average is about £380 pcm for room including bills.

Also you'll need to be aware that lodger rent over £354 pcm is taxable and to benefit from the tax free income you would need to sign up to the rent a room scheme.

Does the tax implication still apply if the "lodger" is the OP's immediate family? I'm not saying you are wrong here, more a case of thinking out loud.
£500 might seem a lot but in reality, it's probably still a lot cheaper than paying full rent, council tax, bills etc. And also, we don't know where the OP lives, because where I live you don't get flatshare / houseshare - it's all 1 and 2 (or more) bedroom flats and houses.

debtinfo

It is more likely that if he came to live with you then the OR would simply apportion a percentage of the household bills against his income depending on the number of eligible paying adults in the household

sundays

Huge amount of questions and joint debts i dont think can be put in the bankruptcy pot unless both become bankrupt.,so the joint liability remans - however i may be wrong - clarification is appreciated from the site.

As others have said must seek advise on BR from either debt charity such as the CAB or CCCS please do not pay for the facility.

But in principal this is what ive found:

Any equity over 1k on the property the OR is intrested in.
Secured debts ie secure loan are not in BR pot if he remains and pays that loan, same as mortage, if he doesnt eventually the creditors will go for repossession.
In respect of his income he will have to demonstrate to the OR everything ie mortage, bills etc and the OR will determine if they are reasonable and allow what they accept as reasonable, any surplus income over 20 pound is taken by the OR, and that is called a IPA and if granted lasts for 3 years from the date of bankruptcy, some dont get one but circs can change then get one ie a pay increase, others get one and then can be suspended ie may get laid off.
Those on benefits are the lucky ones they dont have to pay anything back.

If he came to live with you and gave up the proerty with the costs the OR would determine what is reasonable , this way he end up prob paying far more back to the OR as a IPA then he currently pays at 150 pcm for his debt managament company.
Hence why advise is needed.

maybe stay put , becuause if he doesnt get a IpA in the undischarged period which is 12 until automatic discharge then one cant be imposed thereafter , what he does after that is up to him.

Example a lot of people go BR when they end up on benefits and engineer the BR to their advantage - maybe not right , but true. So if your father had 700 surplus the OR would be after a fair old chunk, the amount in the BR pot is not just his debts it increases massively due to OR fees and admin charges etc, which you will never be made aware of but basically you never really pay it off.

A BRO (bankruptcy restriction order ) is imposed when preferable payment has been made often to family and friends to avoid going into the BR pot, the restriction imposes further limitations up to 15 years from BR.
When BR you dont pay back any money to the creditors for unsecure debts that were accrued at the date of BR.

you can get some finance as a BR but pretty hard.
.
intrested to her on others opinons to mine and that is just what it is opinon, he needs advice asap.