Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Kirsty

Hi,

Thanks for your post.

I’m sorry to hear about you losing your job, I can appreciate how that can make things more difficult and I do hope you manage to find a new job soon.

Without seeing a full breakdown of your financial situation I wouldn’t be able to advise if bankruptcy would be a better alternative to your DAS/DPP during this more difficult time.

With regard to your car hire purchase, if you were to look at bankruptcy you would need to check your contract as there could be a clause which automatically terminates the agreement which would mean you would have to return the vehicle. Alternatively the trustee in bankruptcy could make you stop the payments and return the vehicle.

As you mentioned you won’t be able to make the repayments on your car, there is already a risk that the agreement could be terminated by the finance provider so it is important you seek full help and advice as soon as possible.

I would recommend contacting your DAS/ DPP provider directly for further advice. If your DAS/ DPP is with us, one of our certified money advisors specialising in Scottish debt advice will be able to look at your options in more detail and will be able to give you the best advice for your individual situation. You can find our contact details here.

All the best.

Kirsty

AdviceSought wrote: »

Hi

I could do with some initial advice...

The payment break on my DAS/DPP is coming to an end in a couple of weeks. I got this agreed due to losing my job and then ending up in a temporary role.

However, this role is coming to an end and it looks unlikely I will find alternative work in the near future either, so a spell of unemployment is likely.

I still have about 14 installments on this plan remaining, and an outstanding amount of around 9.5k.

At the same time, I still have just under 9k remaining on my car hire purchase. Obviously, unemployment will mean I can't resume repayments on my debt plan, and I would also be unable to make repayments towards my car.

I'd imagine this would mean I'm facing bankruptcy? The BIGGEST problem with that, would be losing my car. That would mean an already difficult situation in terms of trying to find work would be made even harder. So, losing my car is not really something I'd be able to cope with.

I'm hoping someone can advise on what options there are open to me in the event I'm unemployed for a while.

If it makes a difference, I'm in Scotland.

muppetscotland

Hi, My partner and I both owe HMRC just under £5k each in unpaid SA income tax. We are now on benefits and behind on the mortgage.

Is the £5k threshold for bankruptcy the same for HMRC as it is for other creditors or can they proceed with court order etc even if less than £5k?

With thanks

Former_StepChange_Linsi

Hi

Thanks for your message.

The threshold is the same and HMRC can’t petition for your bankruptcy if you owe less than £5000. If you have other debts and your total debt is more than £5000, HMRC and your other creditors could petition your bankruptcy together.

The £5000 level applies to bankruptcy in England and Wales. In Northern Ireland the level is £750 and £3000 is Scotland.

There are other actions HMRC can take if you have income tax arrears, even if you owe less than £5000. You can find more information about these actions on our website, here’s the link.

If you need help finding the best way to manage your debts and mortgage arrears then please get in touch and we’ll do everything we can to help. Our contact details are on our website.

All the best,

Linsi

muppetscotland wrote: »

Hi, My partner and I both owe HMRC just under £5k each in unpaid SA income tax. We are now on benefits and behind on the mortgage.

Is the £5k threshold for bankruptcy the same for HMRC as it is for other creditors or can they proceed with court order etc even if less than £5k?

With thanks

xcrystal2003x

Hello
I am hoping you can help.. due to numerous events beyond my control I am possibly looking at bankruptcy. My worry is this sold my car at market value(worth about 9k) to my mother just over 1 year ago, she paid me in instalments as she didn't have the full amount at once. I used the cash to live on while I was on maternity leave (being a single parent who receives no maintenance and considering the SMP isn't even enough to cover rent!!) I am really worried that if I declare the sale then they will try and take the car off my mum and sell it on again to pay my creditors. She's my mum therefore I did no receipts or anything like that but she paid for the car fair and square, sadly I cannot prove this!! Besides, I didn't exactly plan on going bankrupt so I genuinely didn't think there was a need for receipts and proof etc. Or even if the OR will ask for it? Thanks

StepChange_Allen

xcrystal2003x wrote: »

Hello
I am hoping you can help.. due to numerous events beyond my control I am possibly looking at bankruptcy. My worry is this sold my car at market value(worth about 9k) to my mother just over 1 year ago, she paid me in instalments as she didn't have the full amount at once. I used the cash to live on while I was on maternity leave (being a single parent who receives no maintenance and considering the SMP isn't even enough to cover rent!!) I am really worried that if I declare the sale then they will try and take the car off my mum and sell it on again to pay my creditors. She's my mum therefore I did no receipts or anything like that but she paid for the car fair and square, sadly I cannot prove this!! Besides, I didn't exactly plan on going bankrupt so I genuinely didn't think there was a need for receipts and proof etc. Or even if the OR will ask for it? Thanks

Hi there

Thanks for your post.

I can understand why you're worried about this, though from what you've said there it's unlikely there'd be an issue. It's only if you sold the vehicle for under it's true value where the official receiver (OR) may take action. They may look into the deal to make sure it was fair, but what they'd ask you to prove, if anything, I don't know.

If they felt that your mother had paid less than the true value, they can order her to pay the difference, especially if they feel it was done with the intention of hiding assets in bankruptcy (how they'd prove this is difficult to say).

But as I said at the start, it sounds like you've done nothing wrong at all. If you'd like some further reassurance I'd recommend contacting the Insolvency Service and run the scenario by them before declaring bankruptcy.

I hope this helps.

Allen

dmcw

I have been through a similar scenario where two years before bankruptcy I sold my car (below market value) to my parents as I needed the money for a bathroom as my ex husband left us with no facilities. The car belonged to them but they agreed that I could continue to use the vehicle as I needed transport for the children, until the time came that they were wanting to sell the vehicle and to realise what monies they could( like a log book loan) This was their way of helping me out with a terrible situation, although theyre not financially wealthy. They provided me with a receipt which was for a cash payment. I had mentioned this to my solicitor during divorce proceedings but he had no proof. The insolvency service wrote to my solicitor and he wrote back saying he was aware of the situation but had nothing on file. I dont know if this helps.

bbelt

Just entered into a debt payment plan under DAS in Scotland.

My vehicle is on PCP (not included on plan) and the PCP agreement ends next year. Will i just have to hand the vehicle back? or is there any chance I may be able to get a new vehicle and carry on with monthly payments?

Need a vehicle for work.

Former_StepChange_Linsi

[FONT=&quot]Hello

[/FONT][FONT=&quot]Thanks for your post.

[/FONT][FONT=&quot]Generally speaking there shouldn’t be any issues if your new PCP agreement has the same monthly payments or is cheaper.

[/FONT][FONT=&quot]I’d recommend getting in touch with your DPP provider who’ll be able to give you more guidance on this. If you’ve set up a DPP with us you can find our contact us details here.

[/FONT][FONT=&quot]I hope this helps,

[/FONT][FONT=&quot]Linsi[/FONT]

bbelt wrote: »

Just entered into a debt payment plan under DAS in Scotland.

My vehicle is on PCP (not included on plan) and the PCP agreement ends next year. Will i just have to hand the vehicle back? or is there any chance I may be able to get a new vehicle and carry on with monthly payments?

Need a vehicle for work.

coolcait

You'll probably have to get your money adviser to apply for a variation for you to get permission to take out a new PCP agreement. It's decribed as 'credit for an essential requirement' or something along those lines.

If you just go ahead and take out a new PCP agreement without getting permission, that could cause problems with the DAS.

threeofus

Although I now appreciate that I have to reluctantly sell my home, I wanted to check that if I negotiate my share of the equity I assume all the associated selling fees are deducted from my husbands, or rather the trustees, share not mine?

I also assume that as the equity doesn't cover his debts then he will have to continue paying the IPO until debt is cleared? It will take years and years to pay what he owes.

With this in mind I really do have to get the best deal for me and the children, and this means getting more than half the equity as he will be unable to pay any maintenance payments, also as I will have to accept benefits and housing benefit as my salary will not cover the rent even!! - I assume this is taken into account? Is this something that I can negotiate?

If I start divorce proceedings I assume that this will go in my favour and that he won't have a claim on my share?