Deciding whether to go Bankrupt...

lisa.89

Hi there,

Myself and my husband are seriously considering the BR route. We have 2 properties (both negative equity), one is rented out (tenant hasn't paid rent for 2.5 months), 2nd property has secured loan against it.

We are in an IVA for unsecured debts and have been told that it is very unlikely that should we hand keys back to tenanted property (when tenant vacates) that this could be included in IVA (Shortfall will be around £50k). Therefore IVA would fail as shortfall would be an unsecured debt outside of IVA..

We both work but I am looking to do part time soon due to child care issues. Our mortgage on house we live in is quite high with secured loan so feel that the only solution is BR. So scared about it though..:eek:

There are so many questions.....

I know that if this is the plan, we should look to rent before filing for BR.

I was wondering if anyone who has recently been made BR could answer the following:

1. Would we be allowed to keep both our cars, which we use for getting to work (both worth around £1,000).
2. Can we keep our household goods - only decent thing we have that would be worth anything is a plasma tv.
3. Family member provides child care and we pay them - would this be acceptable as not through official child care provider? (IVA were fine with this).
4. I know we will have left over disposable income once bills are paid (if we rent), so know that we would have to pay this into BR for 3 years. Would we be allowed to keep any money for MOT's/ car service / intermet and clothes for us all etc.. do they set a particular budget for food etc..? Do you have to provide receipts and bank statements for 3 years
5. Are you allowed a bank accound with direct debit facilities & debit card??

We know it will be tough but feel that we are running out of options..

Would really really appreciate any advice.

Thanks

IF

Hi lisa.89 and Welcome to the Bankruptcy (BR) Board. First step is to make a list of all your 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 your 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. We advise you to try at least two for your own piece of mind. Your BR could be refused if you have not sought advice.

* Blue text on this forum usually signifies hyperlinks, click on the blue links below *

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.

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

We often ask you to post your SOA so we can see if you have included what you need to:-
MSE SOA Calculator - Click here Select the MSE format at the end. Copy and paste onto your thread.

For ‘essential’ BR info the ‘Look here first’ sticky by Fermi.

BR friendly home insurance thread.

BR Friendly bank accounts sticky.

BR Abbreviations

If you are new/old to this board and receive/see a comment that is not helpful or insensitive please don’t let it put you off posting, often these comments are made by people who don’t normally contribute to this board and don’t speak for us.

What to do if you get an insensitive or hurtful comment.


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


Best wishes
If...x

IF

Hope this helps.

1. Yes if needed for work and you can prove you can't get to work any cheaper and public transport it not available.

2. Yes, only assets worth (car, jewellery etc) £1,000 or more at auction need to be disclosed.

3. I not a 100% sure, but I know a previous poster was allowed to. (hopefully another poster can advise further on this).

4. You would fill out a SOA (statement of affairs, see links below) which include all you have mentioned. Receipts kept if they are above what the OR will allow, this will be discussed with the OR.

5. Click on link ---- > BR Friendly bank accounts sticky.

Income Payment Agreements/Orders.

• Income Payment Agreements & Orders
• Urgent news on IPA's - Changes for BRs after 01/12/2010
• Tech Man - 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 - Household spending
  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

lisa.89

Sorry, can I also ask. Would this be the best way to do things?
1. Reduce my hours at work (think that will be wise considering the stress ahead).
2. Hand keys back to 2nd property (tenant leaves end of month)
3. Stop paying mortgage for house / stop secured loan payment and stop paying IVA & save this money for BR fee and rent/deposit
4. Move out to rental - after 2 months or so of saving
5. File for BR - But will we have to wait for both properties to be sold to establish the shortfalls?

Just trying to get it straight in our heads.

Many thanks - again

IF

lisa.89 wrote: »

Sorry, can I also ask. Would this be the best way to do things?
1. Reduce my hours at work (think that will be wise considering the stress ahead).
2. Hand keys back to 2nd property (tenant leaves end of month)
3. Stop paying mortgage for house / stop secured loan payment and stop paying IVA & save this money for BR fee and rent/deposit
4. Move out to rental - after 2 months or so of saving
5. File for BR - But will we have to wait for both properties to be sold to establish the shortfalls?

Just trying to get it straight in our heads.

Many thanks - again

I'm am sorry Lisa, I'm not good with property advice :o

Hopefully another poster can advise tomorrow but the board is very quiet over Easter so bear with us.

Some more links to read too.
Bankruptcy NDL Guide - Click here

Bankruptcy guide CAB - Click here


If...x

lisa.89

Thanks again, would be good to have some guidance on this.
Sorry, few more questions.. keep thinking of more things to ask.

Myself and husband will be filing BR as debts are joint - do we do this seperatley all the way through?

We both have mobile phone contracts of £30 pm each with 2 years left on each, I cannot find anything to say if this is a reasonable amount to pay.

Do they have rental limits for a family of 3? I would look at properties at max of £695 pm


Thanks for links etc.. sent tonight, I have done a load of reading.
I know its silly but its the small things that are popping up in my mind at the moment (internet, mobile phones etc..)

Look forward to any replies - glad I found some helpful advice x

Maizy

Hi Lisa

Your situation is pretty similar to ours so I can offer you my own experience with this. Its difficult to answer questions accurately though as each OR makes decisions based on your personal circumstances and whilst one person may have been allowed certain expenses, seems some of them have had theirs challenged.

We were in a house that had fallen into negative equity and also had personal debts on a DMP. We were working opposite ends of the day with a house that needed work doing on it and despite trying so hard with the DMP and overtime, slowly but surely we came to the realisation that we were in a no win situation.

After seeking advice for a good while we made the decision last summer to go for it. We stopped paying the mortgage to save for moving fees and BR and luckily we were accepted for a nice house that we enjoy living in so much. We saved the fees for BR and went BR 2 months after moving house. At the same time I reduced my hours at work as we had so much going on and and we had already been through so much stress. I wasn't going to make any more wrong or unnecessary moves, we had made enough of those and it was time family life came first.

I'm lucky enough to be able to increase them in the future so I would never advocate risking jobs etc. We did not get an IPA and discharge cannot come soon enough. Things are very tight, I won't deny that but the stress has gone which is worth its weight in gold.

We didn't sign anything when house got handed back, we just let the repossession take its course, sent the key back when the house was empty but again didn't sign a thing.

We are in a much better place now and things are on the up as I'm there more to sort things out for the family without leaving notes and handing car keys over at the door with working hours. We were allowed to keep the car but others hit problems so its hard to say what will happen.

Good luck to you, seek advice first and foremost from one of the charities if you haven't already and post up an SOA.

it is all worth it once things start clicking into place.

lisa.89

Hi Maizy

Thank you for your advice. It is comforting to know that others have been through the same experience and that there is light at the end of the tunnel.

Its going to be hard to let go of the house but I think in the long run it will be better for us as a family. I have a toddler and we would love to have another child but in current financial situation that would never be possible. I am hoping work wil be fine about my hours, its quite a busy and full on job so can't imagine doing that FT and sorting all this out.

Can I ask, did your BR go through before the property was sold. I wasn't sure if it would have to wait until the shortfall was confirmed?

I am really hoping that we can rent ok as we have the IVA, may have to look in paper for provate landlords. Does the landlord get informed of BR as I have found conlicting advice on this...

My husbands fear is that we will have no money to live on and it will be hard to buy clothes for our son etc... don't want him to suffer, from what I have read though it seems that clothing is allowed and that they give you a realistic housekeeping budget..? and money for haircutting (nothing fancy) etc.. I know each OR assesses individually so its hard to say.Very sure they will make us pay into IPA as doing a rough calc on our outgoings, without mortgages etc, we would have disposable income left over.

Will me anbcd my husband have to go into the court room on our own as its seperate? I deal with all household finances so he is really nervous about this..

Thanks again for all the advice. x

NeverAgain_2

lisa.89 wrote: »

Sorry, can I also ask. Would this be the best way to do things?
1. Reduce my hours at work (think that will be wise considering the stress ahead).
2. Hand keys back to 2nd property (tenant leaves end of month)
3. Stop paying mortgage for house / stop secured loan payment and stop paying IVA & save this money for BR fee and rent/deposit
4. Move out to rental - after 2 months or so of saving
5. File for BR - But will we have to wait for both properties to be sold to establish the shortfalls?

Just trying to get it straight in our heads.

Many thanks - again

Lisa,

Your five point plan is a sensible approach.

You don't need to wait for shortfalls to be confirmed, that may take a year or more, depending on how quickly your lenders move to repossession and then sale.

Experience suggests official receivers take different approaches to landlords.

The OR will want to see a copy of your tenancy agreement to see how much you are paying in rent, but there's no reason for the OR to inform your landlord directly, and from what I can gather many don't bother.

From the court's point of view, you and your husband go bankrupt separately, so he will need to take part in the process.

Some courts don't even ask you to see a judge, the clerk takes your papers - and money - and comes back a short time later with the order signed by the judge.

Even if you do have to see a judge, it's not like the dock of the Old Bailey, it's a man in a suit sat behind a desk with you sat the other side.

People who have been through the process will tell you it's nothing to be fearful of, although everyone worries about it beforehand.

Maizy

Hi Lisa

First of all many of us here will relate to the emotional side of losing our family home, loss of pride and worry of finances, I almost made myself ill over it all and I consider myself an extremely strong person. In the cold light of day though I know I am not alone and now know many people who are in severe debt and not many steps away from what I have been through. Please do not feel alone or ashamed, I feel tons better now and never thought I would, even proud for sorting it out before the kids get to an age where they question things or have too much peer pressure.

We initially looked at BR then put it off for a year increasing working hours etc waiting for a miracle to happen so initially my mortgage fell behind and we had a suspend repo order in place December 2010. We then failed the mortgage last summer as stated and the house was repossessed a month or so after BR, still awaiting the sale so until it is sold Ive no idea what the shortfall will be but its at least 30k, once we went BR we heard nothing from any lender and its all in the hands of the OR. Of course on our forms we had personal debts which we went BR for and showed that our home was in negative equity based on quotes and sales in the area.

Neither of us went to see the judge, he was happy with our forms and we had a brew and got the forms stamped within the hour, a very laid back visit but we were well prepared so it helps.

As far as allowances go, Im hoping someone will post you a link for the SOA or look at the sticky threads you may find a link. You can fill it in and transfer it to the boards for advice but clothing, haircuts, groceries, petrol, bills, small holiday allowance and emergencies are usually allowed.

We eat well and all the bills get paid, its amazing how money can go around but it helps knowing we only have 8 months to go before discharge, we can just about manage to live like this until then. BR rules have changed over the past year or so and any surplus above £20 gets taken where as you used to be allowed to keep a surplus percentage. I wont pretend its easy but its tons better than how we were living and we much more appreciate a trip to the park with the dog/bikes and the odd day out these days. It makes you appreciate money more and you learn a heck of a lot too.

Its important to note that we struggle a lot because our expenses were so low and even had to leave some off such as contact lenses etc purely because when I reduced my hours, I was expecting a certain amount in tax credits and it didnt happen when they reviewed due to previous years overtime etc. We kind of sold ourselves short even but like I say we have no IPA and will be out of it by the end of the year so its a small price to pay for the lack of stress we have these days. I was not prepared to keep my hours full time when we struggle so much with child care and we really needed mum more at home for different reasons. No regrets. Most SOA's allowances seem to be higher than ours so you should live perfectly well even on an IPA for 36 months. You will get opinions on your SOA once you post it on here.

As far as the landlord knowing, I have no idea if our OR told them as I heard nothing and rent gets paid on time each month and I haven't heard a single story when a LL kicks someone out for this reason, its very common these days.

If BR is your only realistic option then I would suggest getting your things in order and preparing yourself to save like mad to reduce the stress. Once you go BR, the calls stop and you can start to move on with your life. Wishing you well any others questions please ask.

NeverAgain_2

SOA calculator here:

http://www.makesenseofcards.com/soacalc.html