Bankruptcy as a student

Deep

Hi everyone, I've basically got little choice but to go BR, I owe around £30,000 with little means to repay anytime soon, but I've a few concerns I'm hoping you can help me with.

I start University again (I'm a mature student) in a couple of weeks and my income will come from my student loan, bursary and maintainence grant. Looking ahead this will leave me a with disposable income of around £100 a month.
The question is will the Official Receiver class this as income and take some of this away - in which case I may just decline the student loan and try cope without, it seems silly taking it and then having some taken from me.

I also sold my car a few months ago and bought another on a credit card, at the time I had no idea I would end up declaring myself bankrupt. I spent some of the money on a new computer as I intended to start my own business (unfortunately this didn't work out as I hoped) I also deposited some in my bank account - will this be deemed as acceptable for accounting for the item sold? I'm really worried it will look bad but I honestly did it with the right intentions.

My only other concern is that I will get a quite a lump payment in the form of my student loan etc. soon and I'm wondering how I will withdraw it or keep it separate before I go BR as I will need the money to live on up until Xmas.

I'd really appreciate any help as I feel like I'm in a very awkward and somewhat desperate position.

IF

Hi Deep and Welcome to the BR board. When a bankrupt is in receipt of a student loan this is not income which can be claimed under an IPA/IPO

Since 1 September 2004 all outstanding student loans cannot be claimed in bankruptcy. They remain the responsibility of the (former) student to repay within the terms of the loan arrangement.

Regards to what your OR will think of you buying things with a credit card I don't really know tbh as we don't have all your details in front of us but the worst you can get is a BRU/BRO.

Bankruptcy Restriction Undertakings / Orders.

• Bankruptcy Restrictions Orders/Undertakings (IS)

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 others 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.

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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

Bankruptcy NDL Guide

Basic Bankruptcy Advice & Guide NED CAB

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

doseduk

Hey. I'm a 24 year old student who went bankrupt in March 2012, also over about £30,000. First things first, chances are if bankruptcy is an option, it necessarily must be your only option (a judge would recommend an IVA or other payment options if it appeared they were possible and more suited to you/your creditors). That in mind, I guess its more just gaining peace of mind and clarity on what to expect regarding your issues, as it would appear you probably are going to need to go bankrupt. For that reason, *DO* get some expert advice, if not from anywhere else, CAB (or perhaps your university has financial advisors, but CAB solicitors would be more used to it I would picture).

There is information on the BIS FAQ about student loans and IPA/IPOs (the methods by which excess income is taken). Although the above reply is correct that student loan cannot be taken in these agreements/orders.. they *ARE* classed as income for you to use. This means that it would be expected that you were able to use that part of your loan, and if you had a job at the same time, your earnings from that job could be treat as the '£100 extra income'.. I say this because I have a job as well, if you don't, then rightly, if your only income is from a student loan, they cannot take any of it. If you like I'll find the BIS (government department that deals with this) information regarding it.

As for the car issues... as you say, if you had no idea you would be going bankrupt, then that is reasonable, and it would come more down to how that behaviour looked if you were behind on payments etc and buying a computer, and whether it was realistic that you could pay off the car purchase on the credit card... I am looking at a BRU/BRO because I took out a lot of credit, very fast, and despite me being generally reckless and having alcohol/drug issues, that still counts as bad conduct.. you situation sounds more innocent but, even if it looked bad, I'd be surprised if you would be penalised much for it if at all.. as I say, my case was excessive, yours sounds like one case of generating some cash whilst still taking out credit, whilst probably already in a bit of trouble.. it doesn't sound like fraud to me, just bad judgement if anything but, I'm hardly one to talk!

If you went bankrupt, you would not be able to have a student account anymore - you would need to open a fresh basic account with barclays/co-op and forget about your old account, depending on what state it is in... then, update that info with student loans so the student loan goes into that (and your university, for bursaries etc)...

Your official receiver will appreciate that if these assets appear, maybe supported by your notification letters from SFE, they are instalments that comprise of your day to day living income as specified in your income/expenditure part of your statement of affairs.

The O.R. will be a just, decent person, in my experience, on the other end of a phone, that you can explain that to, and not just, an automated case of taking all your money off you. But again, the only accounts available to undischarged bankrupts are the barclays basic account and co-op cashminder, so chances are your current account will be frozen and not suitable for your funds. My experience though is of HAVING to abandon my old account as it was hugely overdrawn, so again, getting the proper professional advice may inform you that if you already have an account open, things might be different to if you are attempting to open a new account as an undischarged bankrupt.

But again, the BIS/Insolvency Service states clearly that Student Loan income, if it is your only income, will not be taken. The difference comes when like in my position, if you also have income from working, they are able to assume you can use your expenditure out of both, and if they figure you owe £50 a month or whatever, then as long as you earn at least £50 from your job, they can take that (without having effectively touched your student loan).

Anyway - I'm rubbish at explaining things, but I really can't stress how important it is that you get this sorted out - not only is it a huge relief to walk out of the court entirely relieved of your obligation to pay the debts that have been weighing heavily on your life (its often hard to realise how much they might have been bringing you down until that weight is lifted actually!) - it means that you can start the process of fixing things, living within your means, and that discharge date will come sooner, the sooner you get the bankruptcy in place.

It could be that an adviser/solicitor might find a better option for you, but your situation sounds similar to mine, and there was no question whatsoever as to my only option being bankruptcy.

The process is not aggressive, the Insolvency Service, in my experience, have been excellent, professional, very decent people that apply the same respect and level of service that you would expect from customer services departments... they take very seriously the issue of protecting you from harassment from creditors who don't take the hint straight away.

Anyway, I really hope you manage to get some advice - try to ring the CAB maybe straight away and get an appointment, take all your student loan letters and figure out (look around these forums for income expenditure calculators, make sure you include EVERYTHING you need to live on, especially taking into account student specific expenses for essential course equiptment, books, seminars or whatever else you might need)..

If you drive and *NEED* your car (as in, if you would not be able to manage to maintain your work/studies without it) your O.R. may well be willing to exempt it as an asset, meaning you could keep it, although this is only likely if its worth less than £1000 (I think thats the figure pretty much) ... if it is worth more, it might be more complicated, I'm not experienced but I'd heard of things like it being taken as an asset and the max value of £1000 being returned to purchase a car? I could be wrong there though..

Anyway, I hope that lots some help maybe?
Prioritise yourself and your ability to live. Its easy to get into the trap of going without money you do kind of need just to keep up payments, when I went to the CAB they were surprised that I'd been going on stupidly small amounts of expenditure just to meet minimum payments.

Anyway, do let us know how you get on! For all it scared the hell out of me and at times felt stressful or a bit out my depth with it all, it is, despite being dressed up quite intimidatingly, a positive step to take, and whatever happens I hope you're able to get advice and find that there is indeed a way out of the problems you've been having.

Good luck, and keep us posted
-adam

doseduk

PS:http://www.bis.gov.uk/insolvency/personal-insolvency/income-payments-orders-and-agreements#10 - BIS Official information regarding student loans in bankruptcy

"My only income is from my student loan. Does this mean I won’t have to pay into an IPA or IPO?
The official receiver will not ask for an IPA or IPO if your only source of income is from a student loan."

(An IPA/IPO - Income Payments Agreement/Order - Is the means by which your spare leftover income is taken in bankruptcy.. so when you ask about people taking parts of your income, an IPA/IPO is how it would happen, and if its just a student loan you get and no government benefits or employment income, this will not be happening.)

Still declare it though, as the statement of affairs is also used to work out if a bankruptcy is the right thing... I can't see how a £100 a month spare income could be that much use on your £30,000, but if it meant that could be split into a payment plan, they might recommend that.
Hence, expert, personal advice needed!