Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

swimmingthroughfog

Hi,
Ive started a thread on the main bankruptcy board. If you could have a read I would be more than grateful.
Thankyou

Tallulah-32

Hi


Debt is my brothers.


The creditors solicitors have asked my brother to arrange to get an undertaking from his solicitors stating that when my brother's house is sold they will be paid back their debt (if debt not paid back before then). He has a bankruptcy petition hearing next week which my brother is trying to get a solution to.


He doesn't have a solicitor and I assume this will be more money (which could be used to pay the debt). Is there a template undertaking which you could point me in the direction of please?


Any help would be very much appreciated please.

Tallulah-32

Sorry it looks like I was initially given a bit of misleading advice.


My brother's house is up for sale but there is no offer yet. I've now been told that the undertaking the creditor's solicitor is looking for is unlikely to be given by any solicitor I instruct because there is no definite sale of the house.


I was then told to offer a charge over the property or to pay a lump sum and then secure the regular repayment (of £100 a month) by way of a charge over my house. I now understand that a charge over a property can only be obtained by the creditor by way of a county court judgement.

StepChange_Kirsty

Hi Tallulah,

Thanks for your posts.

I’ve also had a look at the thread you’ve started (Bankruptcy Petition – Making offer to creditor) to get a better idea of the circumstances surrounding the debt.

From what I can see your brother has personally guaranteed a debt which has a balance outstanding of £6,157 and the creditor has now issued a bankruptcy petition which your brother is trying to avoid. I can see you have also received a response from Laura at National Debtline who has given some very useful advice.

As Laura has stated, if the debt was above £5,000 at the date the Statutory Demand was issued but is reduced below £5,000 before the hearing, the court may dismiss the hearing. I must reiterate though that there are no guarantees and the Judge may take other factors into consideration.

It is possible to agree to a voluntary charge on your property however, creditors will not always agree to do this due to the expense involved. As a result it can be far easier for the creditor to go through the court process and obtain a Charging Order with permission of the court. My concern is that you would be offering a charge over your property rather than the charge being taken out over your brother’s property. I would highly recommend that you seek independent legal advice before you consider this route.

Your other thread also mentions that your brother has other debts. Your brother may benefit from seeking full debt advice about his situation. If he is struggling financially and would be considered insolvent then it may be in his best interests to allow the bankruptcy to go forward. This way the fees would be paid by the creditor rather than him needing to raise the fees himself.

He cannot be a director of a Limited Company in bankruptcy but if he is a sole trader, it is possible the Official Receiver would agree to him continuing to trade. This is at the Official Receiver’s discretion so again we cannot provide any guarantees. I would recommend your brother speaks to Business Debt Line who can provide free, impartial and confidential advice.

All the best

Kirsty

Tallulah-32 wrote: »

Hi


Debt is my brothers.


The creditors solicitors have asked my brother to arrange to get an undertaking from his solicitors stating that when my brother's house is sold they will be paid back their debt (if debt not paid back before then). He has a bankruptcy petition hearing next week which my brother is trying to get a solution to.


He doesn't have a solicitor and I assume this will be more money (which could be used to pay the debt). Is there a template undertaking which you could point me in the direction of please?


Any help would be very much appreciated please.

Tallulah-32 wrote: »

Sorry it looks like I was initially given a bit of misleading advice.


My brother's house is up for sale but there is no offer yet. I've now been told that the undertaking the creditor's solicitor is looking for is unlikely to be given by any solicitor I instruct because there is no definite sale of the house.


I was then told to offer a charge over the property or to pay a lump sum and then secure the regular repayment (of £100 a month) by way of a charge over my house. I now understand that a charge over a property can only be obtained by the creditor by way of a county court judgement.

StepChange_Rachael

Hi

Thanks for your post.

I’ve had a read through your post on the main thread, I can see it’d be a difficult and stressful time for you but you’re certainly doing the right thing by exploring all your options and seeking advice before making any decisions.

Firstly you’ve mentioned your partner spoke with us some years ago for advice. I would suggest your partner going through a budget review with us so we can go back through the advice. Even if Bankruptcy is going to be the best solution after your partner has had the advice at least he’ll be able to discuss the ins and outs based on his personal situation with an advisor and we’d be able to give you support with a chosen solution. You can find our contact detials here.

You’ve mentioned your partner has now missed 3 months of mortgage payments. It’s likely that the mortgage company if they haven’t already will start court proceedings. Mortgage companies normally will do this after 3 missed payments and no arrangement to repay the arrears.

Voluntary surrender of a property can be a good option for those looking to go Bankrupt as any shortfall after the mortgage company has sold the property would be included in the Bankruptcy and as you’ve mentioned the property is in negative equity.

If there was anything left after the sale of the property the Official Receiver (OR) would likely take this to form part of the Bankruptcy. As your partner has already missed three payments and as long as he’s not hiding anything from the OR then handing the keys over before or after the petition I don’t think would make a difference.

In regards to question A, to voluntary surrender the keys would need to be handed back to the mortgage company. If your partner decided to go down this route then he’d need to make arrangements with the mortgage company to do so.

In response to question B, He’d be liable for any bills while the property is still in your partner’s name. Once he’s contacted the utility companies and given them a leaving date they’ll forward the remaining payments on. This includes Council Tax. Once they know a leaving date they’ll calculate the council tax and if there are any arrears by the leaving date these will be owed. These will be included and written off in Bankruptcy if they are un-paid before the Bankruptcy.

The utility companies and council can chase for these payments through the court until the client is made Bankrupt at which point the creditors can no longer legally enforce the debt.

I know you’ve done everything to reduce the likelihood of your partners Bankruptcy effecting your personal and financial situation but it’s worth mentioning the OR is likely to want to look into this further. In particular they’ll consider whether your partner has an interest in your property. This isn’t something I’d be able to give a definite answer on but the OR will explore all possibilities to see if your partner has an interest in any other assets.

The OR may also make sure your partner is paying a fair payment towards the household bills when they move into your property. This is to make sure a Bankrupt isn’t purposely avoiding an income payment arrangement in the Bankruptcy. An OR may set a monthly payment into a Bankruptcy for up to 3 years if the Bankrupt has money left over usually over £20 after living costs have been paid.

It’s worth gathering information to show that your partner has had no financial interest in your assets. This can include letters, statements etc. to show your separate living and financial situation.

I hope this is helpful.

Take care
Rachael.

swimmingthroughfog wrote: »

Hi,
Ive started a thread on the main bankruptcy board. If you could have a read I would be more than grateful.
Thankyou

tracyj07

Hi there, I'm hoping someone can help me. we lived in Australia for 4 years and returned back to the uk to live. Leaving behind a $5000 Australian credit card debt. I have been sending £70 a month which only covers the interest and my bank charges £9.50 to send. I have rang the Australian bank to see if we could switch to a o% interest card but they said no as we live in the uk and the only way to get out of the debt is to pay it off. If we could do that I wouldn't be paying just the interset. I can't see any way out of this and it is a huge chunk out of my part time wage to pay.have thought of trying to get a loan. Help please.

Former_StepChange_Linsi

Hi Tracy

Thank you for your post.

Welcome to the forum. I hope you’ve been able to get settled back in the UK.

As a UK debt advice charity we can give advice about the collections process the credit card provider could follow in the UK, but we can’t give advice about the collections process in Australia. For this reason I’d recommend getting advice from an impartial organisation based in Australia.

If you have any other debts taken out in the UK we’ll be able provide free and impartial advice about the debt solutions available to you and incorporate the Australian debt into this advice. Here are our contact details.

We wouldn’t actively encourage someone to take out further credit to repay existing debt but this is something you could look into. You’d just need to make sure the monthly repayments are affordable and keep in mind that the interest may be higher, so you may end up paying more back in the long run.

I hope this helps.

Linsi

tracyj07 wrote: »

Hi there, I'm hoping someone can help me. we lived in Australia for 4 years and returned back to the uk to live. Leaving behind a $5000 Australian credit card debt. I have been sending £70 a month which only covers the interest and my bank charges £9.50 to send. I have rang the Australian bank to see if we could switch to a o% interest card but they said no as we live in the uk and the only way to get out of the debt is to pay it off. If we could do that I wouldn't be paying just the interset. I can't see any way out of this and it is a huge chunk out of my part time wage to pay.have thought of trying to get a loan. Help please.

DK71

I've got 45k debt following divorce and job changes. These are on credit cards and a loan. I think the best option is to go bankrupt but what IS written off? I heard credit cards aren't? Are court fees written off?

StepChange_Allen

DK71 wrote: »

I've got 45k debt following divorce and job changes. These are on credit cards and a loan. I think the best option is to go bankrupt but what IS written off? I heard credit cards aren't? Are court fees written off?

Hi Darren

Thanks for your post.

I replied to your very similar one on the other StepChange thread, but in terms of your extra question on this one, yes credit cards and personal loans do go into bankruptcy.

As mentioned on my other reply, the court/legal fees can depend on the exact circumstances so please get in touch via the link on the other page.

Allen

fridge1987

hi just after a but of advice.i am bankrupt due to gambling when i get really low due to a mental disorder.was put on nt code and took so long befor receiver sorted the payments .my mrs waled out with kids and i went that bad place and spent the nt tax money.im writing to confess my sins to OR .im pleadin as gesture to do all overtime i can so i pay more in tax and ipa over coming months ..just wondered what will happen.legal action? a huge smack on wrist or what.any advice appreciated