Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

KPNuts

StepChange_Rachael wrote: »

Hi

Welcome to the forum and thanks for your post.

They'll initially ask for your partner’s household finances, you don’t have to give information of your financial situation. It’s not a legal requirement. However, the Official Receiver (OR) who’ll overlook the Bankruptcy may want to check that your partner is paying a fair contribution towards the household bills based on their income.

The reason the OR will do this is because it stops people declaring Bankruptcy and not having to pay anything into the Bankruptcy, because there is nothing left to set as an income payment arrangement (IPA).

An IPA can last up to 3 years and is normally set by the OR if there is money left over after household bills and general living costs are paid, which is over £20 per calendar month.

One thing to take into consideration is that the OR will look into your partner’s assets and beneficial interest. If your partner has high value assets or have paid towards a mortgaged property even if it’s not mortgaged in their name, it could be seen they have an interest in that property and the OR may look to release that equity.

You’ve not mentioned if the property is in your name as a rental property or a mortgaged property but it’d be worth seeking legal advice if the house is mortgaged and the Bankruptcy does go ahead.



Your partner could explore alternative solutions to the Bankruptcy going ahead. If your partner wanted to discuss suitable alternative solutions then they can contact us for a second opinion.

You partner can complete an online assessment of their financial situation using our anonymous debt tool.

Once Debt Remedy’s completed it’ll let your partner access a personalised action plan which details our advice and recommendations.

Thanks
Rachael

Thank you for this. The property is mortgaged in my name and all the associated costs to purchase it were paid for by me. My partner has only paid for food while we have lived at this address but at the previous address (mortgage in my name and owned by me before my partner moved in) she did contribute towards bills. Does this make it more or less likely that the OR will move to realise any equity in the mortgaged property?
Thanks again for your help and advice.

Former_StepChange_Linsi

Hi,

Thanks for your post and welcome to the forum.

I’ll try to answer your questions as best as I can but it may be better to call so that we can really tailor our advice to your individual situation.

With bankruptcy any assets you have including your house will be taken into account by the Official Receiver (OR). The OR has a total of three years to deal with the property from the date of the bankruptcy order. There’s no way to check if your home would be at risk before you apply and I really can’t say what the likelihood will be, as each case is different and ultimately it’s down to the OR.

The amount you’ll need to pay into your bankruptcy is also worked out by the OR, who use their own budget guidelines. They’ll take into account your individual circumstances, and if you have any unusually high expenses you’ll need to explain these. If there’s more than £20 left over each month after your essential living costs, you’ll usually be instructed to pay this into your bankruptcy.

If your circumstances change whilst you’re making these payment you’ll need to let the OR know and the payment amount will be revised.

The IVA payments are also based on your leftover available income and although these payments are usually fixed for the duration of the IVA there’s flexibility if your circumstances change.

Generally with an IVA you can earn up to 10% more than the monthly salary shown in your budget/proposal before you’ll need to make any additional payments into the IVA.

If you don’t feel you can afford to pay £1200 a month towards your debts or if you’d like more specific advice, I’d recommend getting back in touch so we can update your budget. Here are our contact details.

Thanks,

Linsi

Fiver007 wrote: »

Hello all, I'm new here after finally facing unto the mess me and my hubby are in..

Together we have around 68k unsecured debt which is a mixture of cc's and loans. We are currently deciding which is the best solution to our problem.. IVA or bankruptcy?

We have a mortgaged property that us worth 165k and the mortgage outstanding is 138k, however we purchased this house a new build in 2010 and the builders put in a 15% deposit which they want back in 2020, therefore most of the equity in the property has a charge on it and what belongs to us is very little (2k ish)

We are currently not in any arrears with any creditors including our mortgage provider but only because we have to use cc's to get through.

A couple of weeks ago I went through the budget calculator with Stepchange over the phone and they concluded that we have 1200 pounds a month available income after our outgoings (this calculator obviously doesn't include the repayments we currently have to creditors which is just short of 2k a month, hence we've racked the cc's up).

So basically my question is, how likely is it that we will be forced to find alternative accommodation is we apply for bankruptcy? Is there any way of finding out for definite before we commit to applying? How much are people normally expected to pay towards their bankruptcy for the 3 year period? is it all the available income I mentioned earlier (1200)?

IVA questions.. do they also base your repayments on the leftover available income? Is there any room for manouvre from time to time to accommodate for things like Christmas and holidays (I'm not talking Caribbean 5*). We have 2 young children and I feel at the minute that an IVA is a commitment to pretty rubbish quality of life for the next 5 years. Also, my job means that my monthly wage is variable depending on the shifts I've worked (days, nights and weekends all different rates) Do I need to pay more if I get a better wage because I've worked lots of nights for example?

Sorry for the million questions but I don't know where to start to be honest.

Many thanks in advance x

StepChange_Allen

KPNuts wrote: »

Thank you for this. The property is mortgaged in my name and all the associated costs to purchase it were paid for by me. My partner has only paid for food while we have lived at this address but at the previous address (mortgage in my name and owned by me before my partner moved in) she did contribute towards bills. Does this make it more or less likely that the OR will move to realise any equity in the mortgaged property?
Thanks again for your help and advice.

Hi there

Thanks for your reply.

It's difficult to be sure of this to be honest, because there are many factors that the OR will taken into account, details that I don't know at the moment. In a simplistic scenario where you paid the mortgage and your partner bought the shopping (and everything else was split say), they might argue that your partner is still contributing to the property. I don't think it's quite so simple as just whose account the mortgage payment comes out of.

In addition, as your partner was contributing to the previous property, they have had beneficial interest in that. If the sale of that property contributed to the purchased of this one, then your partner will probably have beneficial interest in this current one straight away.

All in all, from the information provided, I'd say there is a reasonable chance that the OR will feel your partner has beneficial interest in this property, and hence may try to realise it if they go bankrupt. However, I can't be certain so it's ultimately up to you and your partner.

As Rachael said, if your partner completes Debt Remedy on our website, advice will be provided at the end which will look at all available debt solutions.

I hope this is helpful.

Allen

rufusT

Hi
I'm new to this forum and just finding my way around.

There's a possibility that could go bankrupt.
My wife and I have savings which are in accounts that are in my name (although we do have a joint current account). The question is are all the savings in the savings accounts deemed as my savings or can my wife have her share as the debt was incurred by me?

StepChange_Kirsty

Hi,

Welcome to the forum and thank you for your post.

When you enter into Bankruptcy the Official Receiver will look into your circumstances. If there are any assets, it is likely they will appoint a Trustee in Bankruptcy whose powers are to investigate and realise any assets which could be used to pay into the bankruptcy. The Trustee in Bankruptcy is often the Official Receiver but alternatively they could employ a private Insolvency Practitioner.

It is very likely that the Trustee would take an interest in these shares and as a result can arrange for them to be sold and they would pay the proceeds into the bankruptcy.

If you’re not sure if this option is right for you, you can contact us and we can help you consider your options in more detail.

I hope this is helpful.

All the best.

Kirsty

nw1974 wrote: »

I've done a few debt calculators which come back telling me to declare myself bankrupt. i have employer shares in the company i work for, do i lose my shares or have to sell my shares if i go bankrupt? i owe 9000 my shares are worth around 3400.

StepChange_Kirsty

Hi Rufus,

Thanks for your post,

If you enter into Bankruptcy it is very likely you would lose your savings to the Bankruptcy. If part of your savings was paid in by your wife then in order for her to have her share, the Official Receiver would probably ask for proof that the money has come from her and not you. An example of proof could be a statement for the account showing that it has come from her income and not yours. Also they may want proof that this money was not gifted to you by your wife.

I would be very careful if you were planning to give your wife her share of the money before you entered into Bankruptcy. The Official Receiver could view this as the disposal of an asset and your wife could be expected to pay this back.

I would highly recommend you speak to the Insolvency Service directly as they will be able to provide you with further guidance before you take the next step.

You mentioned that Bankruptcy is only a possibility. If you haven’t already sought advice, we can provide you with impartial advice tailored to your individual circumstances to see if Bankruptcy is the best option for you. You can either contact us by phone or you could use our online Debt Remedy tool where you can enter your details and we will recommend a solution for you.

I hope this helps but please do not hesitate to contact us if you have any further questions.

All the best

Kirsty

rufusT wrote: »

Hi
I'm new to this forum and just finding my way around.

There's a possibility that could go bankrupt.
My wife and I have savings which are in accounts that are in my name (although we do have a joint current account). The question is are all the savings in the savings accounts deemed as my savings or can my wife have her share as the debt was incurred by me?

doorstep54

I wanted to ask. I have been bankrupt for over 3 months the question wanted to ask is I get Christmas bonus of £100 at Christmas do I have to tell the OR this? as I do need this money at Xmas as with presents and that as on low income and if I do have to tell them will they let me keep it ' it's from my work place as only thing I'm paying is my tax to them as have NT tax code

Former_StepChange_Linsi

Hi,

Thanks for your post.

You do need to let the OR know about your bonus.

As part of your duties you need to keep the OR informed about any changes in your circumstances during the bankruptcy and for the duration of an income payment arrangement (IPA) or order (IPO) if one is set up.

It’s likely the OR will expect you to pay your bonus into your bankruptcy. Whilst I can certainly appreciate why you’d like to keep your bonus, especially with Christmas around the corner if you don’t tell the OR, then further action could be taken against you. So in the long run it's best to keep the OR informed.

I hope this helps,

Linsi

doorstep54 wrote: »

I wanted to ask. I have been bankrupt for over 3 months the question wanted to ask is I get Christmas bonus of £100 at Christmas do I have to tell the OR this? as I do need this money at Xmas as with presents and that as on low income and if I do have to tell them will they let me keep it ' it's from my work place as only thing I'm paying is my tax to them as have NT tax code

doorstep54

Thank you for your reply' yes I will tell OR about bonus then wasn't sure if had to tell them, I only get £250 wages a week and don't pay tax as NT code so that money I have to pay them as don't earn enough to pay any more, just wounded as its only £100 bonus will they let me keep any of it or will they take it all:(

StepChange_Kirsty

Hi,

You’re definitely doing the right thing in telling the Official Receiver (OR) about the £100 bonus. As Linsi said, I can also appreciate why you would want to keep this especially as it's a low amount but it’s certainly not worth risking further action for.

If you have an Income Payment Arrangement (IPA) in place already then it is likely that the whole amount of the bonus will be taken. If you don’t have an existing IPA then the OR will need to calculate whether it is necessary for you to pay the bonus in and, if so, how much.

In the event you do get to keep all or some of the bonus, I imagine you’ll feel a great deal better knowing that you followed the rules and you won’t face any repercussions as a result.

I hope this helps.

Kirsty

doorstep54 wrote: »

Thank you for your reply' yes I will tell OR about bonus then wasn't sure if had to tell them, I only get £250 wages a week and don't pay tax as NT code so that money I have to pay them as don't earn enough to pay any more, just wounded as its only £100 bonus will they let me keep any of it or will they take it all:(