Cashed endowment policy

Roebuck_2

Hello, I hope somebody may to able to advise me...:)

I am sadly in a business partnership that is really struggling. We have very little turnover (£2-300 per week) and total joint debts (Inc business rates, personal tax and VAT) of some £58k.

I have personally drawn less than £500 from our business account in wages since June this year.

My wife and I had an endowment policy that we cashed for £30k some months ago. After settling some personal debts, we are left with around £20k.

The cheque from the policy was made out to my wife and deposited into her current account. It is not a joint account and I have no access to it.

I am seriously considering personal bankruptcy as the business will never be able to pay its debts, but having looked at the forms 6.27 and 6.28, I see that I have to declare any cashed policies.

Will the OR be able to take remaining monies from my wife's account to be paid towards my debt?

Any advice will be very gratefully received. Thank you.

Mouse1812

Is your business partner your wife or someone else?

Of the £10,000 used settling some personal debts, how much of those were in your sole name?

Only half of the policy proceeds belong to you - so we need to examine where that £10,000 went first.

Roebuck_2

Thank you Mouse,

My business partner is somebody else, not my wife.

Got the figures wrong re. settlement of debts....actually spent £7k.

£4k was for a payment against my current outstanding personal tax bill (this was a few months ago when I had no idea that I may have to declare bankruptcy.) HMRC were calling me every day and I thought that by paying something, I could get them off my back.

The remaining £3k has been used to pay off a small loan and to meet our mortgage payments as I am not earning at the moment.

We continue to eat into this capital each month, as I used to contribute £750.00 per month to the mortgage/household bills, but having not been paid since June, we need to use this money to keep up with bills, etc..

Mouse1812

Thanks for clarifying wife not business partner.

As I said above, half of the policy proceeds belong to your wife in her own right. You used £4k of your half to settle a tax bill. Assuming the small loan was a joint loan then you should split the £3k used for this and your mortgage 50:50.

£15k - £4k - ½ of £3k = £9½k

The OR could therefore request that your wife hands over £9,500. They can not however claim all of it.

Of course you could use some of it for the BR fee and some more for normal living expenses between now and BR date (including your share of the mortgage).

ps to add - normal household provisions are exempt assets, no point going BR with empty cupboards

Roebuck_2

Thank you Mouse,

You have been very helpful, I appreciate it.

tigerfeet2006

Also have a chat with Business Debtline

http://www.bdl.org.uk/