Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Kirsty

Hi,

Thanks for your response.

I’m afraid we could not say for certain if damages for distress would be included in Bankruptcy or not as it’s quite an uncommon situation.

I can see from other posts you’ve put on the forum that you’ll be speaking to an Insolvency Practitioner tomorrow so they should be able to provide you more guidance on this. Alternatively you can call the Insolvency Service helpline on 0300 678 0015. They’re available Monday to Friday 9am to 5pm.

I’m sorry we’ve not been able to help you further with this question.

Kirsty

realgonekid wrote: »

Thank you for the previous answer

Would you be able to advise if Damages for Distress could be included in a bankruptcy order?

Thanks

motinter

I've reached a point where stepchangr have suggested bankruptcy is the best solution for me right now.

I've filled out the application and I'mjust trying to get the fee together. Obviously still apprehensive about the whole thing, but I just want to write this chapter of my life off and get moving forward using what I've learned.

My question is regarding change in circumstances. My income is variable. What happens if:

- my income improves and leaves me excess consistently.

- I have one month where my income leaves me a little extra, but then I have a bad month income wise?

Former_StepChange_Joe

motinter wrote: »

I've reached a point where stepchangr have suggested bankruptcy is the best solution for me right now.

I've filled out the application and I'mjust trying to get the fee together. Obviously still apprehensive about the whole thing, but I just want to write this chapter of my life off and get moving forward using what I've learned.

My question is regarding change in circumstances. My income is variable. What happens if:

- my income improves and leaves me excess consistently.

- I have one month where my income leaves me a little extra, but then I have a bad month income wise?

Hello

Thanks for posting and welcome to the forum.

When you go bankrupt, the Official Receiver (OR) may set an income payment arrangement (IPA). These payments are used to cover the OR’s costs and to make pro-rata payments to your provable debts.

The OR calculates how much the IPA should be based on the information you provide about your income, and your budget. They also use their own budget guidelines to decide how high to set the IPA.

An IPA lasts for 36 months (sometimes less, but it’s unusual). In 2016, around 1 in 6 of all bankruptcies had an IPA set.

You must get in touch with the OR immediately if your income or circumstances change so they can revise your IPA. For example, if your income increases due to overtime or bonuses, get in touch with the OR: the extra money will be taken as an additionally to the set IPA. If your income is lower one month, get in touch with the OR as soon as possible so the payment can be revised.

In terms of the fee, this can be paid in instalments, although the application can’t be submitted until the fee has been paid in full. You might be eligible for help with the fee, and you can check your eligibility for a grant on the Turn2Us website.

Bankruptcy is very rarely the only solution that we recommend, so if you’re unsure and want to review other options, I suggest getting back in touch with us for further advice.

I hope you’ve found this helpful.



Joe

motinter

Thanks for the reply.

So, what happens if I have, say £50 disposable income for one month due to increased income and then nothing the next 2 or 3 months. So my average income/expenditure is actually in a deficit over a longer duration?

Former_StepChange_Patience

Hi there

Thanks for getting back in touch.

If your income fluctuates, the Official Receiver (OR) may look to take an average of this.

This could potentially help them work out if you have a 'surplus' (an amount left over) and whether it's suitable to put an income payment arrangement or order (IPA/IPO) in place.

If you have any further questions or need any further support with your application, the Insolvency Service will happily help. You can find further information about them here: https://www.gov.uk/the-insolvency-service

I hope this helps.

Patience

motinter wrote: »

Thanks for the reply.

So, what happens if I have, say £50 disposable income for one month due to increased income and then nothing the next 2 or 3 months. So my average income/expenditure is actually in a deficit over a longer duration?

vixg66

Hi. I am addressing my £20k debt and on taking advice think that bankruptcy will be the best solution for me as I don't own a home or car. I do think that I will be required to pay money to my creditors for 3 years having gone through my income and outgoings.

I have 3 queries - I have managed to cut smoking down from 20 per day to 15 per day and aiming for 10 per day in the next few months. I do have a MH condition including anxiety which will worsen due to bankruptcy I think, so I don't feel able to stop smoking yet. Is 10 cigs per day acceptable to the OR in terms of budget? it's would be around 140 quid per month.

I'm also vegan and the milk, cheese & protein substitutes I use are more expensive. I use 3 cartons of oat and coconut milk a week which is about 24 quid a month. It took me a while to find the brand I like that doesn't curdle in tea or coffee and also tastes good and I know it may sound like a first world problem, but the thought of having to find cheaper alternatives is stressing me out a bit - more than not having money for holidays or meals out, etc. Are you allowed a bit more money for alternative diets? I'm vegan partly due to changing my diet to avoid being prescribed statins and it seems to have worked.

Which brings me to gym membership at 28 quid a month. The gym is best for me as it means I go to classes at times that fit around my working hours. It helps with my MH disability too, as well as physical health. I'm happy to stop seeing a personal trainer but am really anxious that the cost of gym membership won't be allowed in my budget. I am not someone who is motivated enough to go out jogging or do a workout dvd at home (I do walk though) so if I don't do classes or go to the gym I probably would do very little exercise at all.

I also added up the cost for my cat who is getting on and has a special diet for urinary problems. His food, litter, insurance, vet excess fees (£100), booster injection, flea & worming and taxi to vets every 3 months for treatment would be around 57.5 quid a month. I don't even know what I'd do if he needed 100's pounds worth of treatment during bankruptcy (another anxiety trigger for me) as I have to pay his treatments and then claim back on insurance. Would nearly 60 quid pm for 1 cat be over the trigger figure?

I know it's my fault that I'm facing these questions and worries now. Any advice would be much appreciated.

thanks

StepChange_Allen

vixg66 wrote: »

Hi. I am addressing my £20k debt and on taking advice think that bankruptcy will be the best solution for me as I don't own a home or car. I do think that I will be required to pay money to my creditors for 3 years having gone through my income and outgoings.

I have 3 queries - I have managed to cut smoking down from 20 per day to 15 per day and aiming for 10 per day in the next few months. I do have a MH condition including anxiety which will worsen due to bankruptcy I think, so I don't feel able to stop smoking yet. Is 10 cigs per day acceptable to the OR in terms of budget? it's would be around 140 quid per month.

I'm also vegan and the milk, cheese & protein substitutes I use are more expensive. I use 3 cartons of oat and coconut milk a week which is about 24 quid a month. It took me a while to find the brand I like that doesn't curdle in tea or coffee and also tastes good and I know it may sound like a first world problem, but the thought of having to find cheaper alternatives is stressing me out a bit - more than not having money for holidays or meals out, etc. Are you allowed a bit more money for alternative diets? I'm vegan partly due to changing my diet to avoid being prescribed statins and it seems to have worked.

Which brings me to gym membership at 28 quid a month. The gym is best for me as it means I go to classes at times that fit around my working hours. It helps with my MH disability too, as well as physical health. I'm happy to stop seeing a personal trainer but am really anxious that the cost of gym membership won't be allowed in my budget. I am not someone who is motivated enough to go out jogging or do a workout dvd at home (I do walk though) so if I don't do classes or go to the gym I probably would do very little exercise at all.

I also added up the cost for my cat who is getting on and has a special diet for urinary problems. His food, litter, insurance, vet excess fees (£100), booster injection, flea & worming and taxi to vets every 3 months for treatment would be around 57.5 quid a month. I don't even know what I'd do if he needed 100's pounds worth of treatment during bankruptcy (another anxiety trigger for me) as I have to pay his treatments and then claim back on insurance. Would nearly 60 quid pm for 1 cat be over the trigger figure?

I know it's my fault that I'm facing these questions and worries now. Any advice would be much appreciated.

thanks

Hi there

Thanks for posting.

May I ask who has given you advice on going bankrupt? I ask because if it's someone that is qualified to give you that advice, then these kind of questions they should be able to cover with you too. If you register with us for example, we'd look at your overall budget and advise of any possible issues on your budget.

If you do go bankrupt, then some of these areas may be an issue; tobacco isn't an allowable expense, but whether you could argue that it helps with your condition, I'm not entirely sure. It may be a similar conversation with regards to the gym membership as generally it's not an allowable expense in bankruptcy.

The OR is likely to assess all of your expenses as a whole and will decide on areas like shopping and pets by looking at the bigger picture, but it's certainly possible that they may ask you to cut some of the expenses.

I'd recommend either speaking further with the person that's recommended bankruptcy to you, if they're qualified to give debt advice, or you're welcome to contact us; details can be found on our website: www.stepchange.org/Contactus

I hope this helps a bit.

Allen

caravanlife

Hi
My husband was made bankrupt over a HMRC debt recently.

Our home & mortgage is in my name only. Its worth c£165k & has about £85k with of equity in it. Weve been together the whole time I've owned the house (only got married recently) & have had joint finances for most of that.

How likely is it that the OR will try to prove my husband has a beneficial interest & take that from me?
Also is there any guidance on how the OR works out what your monthly expenditure should be?

Thanks

freddieodom

Thanks for all contributors for sharing such a nice information here

Former_StepChange_Joe

caravanlife wrote: »

Hi
My husband was made bankrupt over a HMRC debt recently.

Our home & mortgage is in my name only. Its worth c£165k & has about £85k with of equity in it. Weve been together the whole time I've owned the house (only got married recently) & have had joint finances for most of that.

How likely is it that the OR will try to prove my husband has a beneficial interest & take that from me?
Also is there any guidance on how the OR works out what your monthly expenditure should be?

Thanks

Hello, thanks for your post and welcome to the forum.

First of all, beneficial interest can be quite complex, as it involves property, matrimonial and trust law, and most of this falls outside the scope of debt advice that StepChange advisors can give. I’d recommend also getting in touch with the Insolvency Service to discuss this further. You can visit their website here and reach them on 0300 678 0015 Monday to Friday 9am – 5pm.

Even though the mortgage is solely in your name, your partner could still have beneficial interest in the property, because you’ve lived together had joint finances for most of your relationship. However, deciding what amounts to contributions may be complicated, and if one party involved doesn’t agree, it will require a court decision and will usually be dealt with by an insolvency practitioner acting as trustee. If a trustee pursued your partner’s beneficial interest in the property, the burden of proof lies with them: it’s down to the trustee to prove your partner has an interest in your property, not for your partner or you to prove he doesn’t.

Even then, your partner’s beneficial interest is only likely to be pursued if it’s more than £10,000, but smaller amounts could still be at risk. The trustee could try to negotiate a payment from you rather than making you sell the property.

In response to your second question, the Official Receiver (OR) uses their own set of guidelines when looking at living costs, as well taking the bankrupt’s individual circumstances into account. This is based on the Office of National Statistics (ONS) data on average household expenditure. Expenses are divided into four categories:

• Essential expenses based on the amount the client actually pays
• Essential expenses based on the OR’s maximum guidelines using ONS statistics
• Costs which may be allowed if they are necessary. There are restrictions in the Insolvency Service Technical Manual on the circumstances in which these costs are permitted and how much will be allowed. Evidence may be required for some of these
• Costs which aren’t allowable, e.g. tobacco, children's pocket money.

The maximum monthly guideline figures the OR uses are called the Household Expenditure Survey (HES) and are based on ONS figures, which you can view on the gov.uk website. However, it’s important to remember that they are guidelines only and the OR may decide that acceptable expenditure is higher or lower than this depending on the client’s circumstances. The Insolvency Service has told us that where clients use the exact figures in these guidelines, they’ll examine the client’s spending in closer detail because they assume the figures have been manipulated.

I hope you’ve found this helpful.


Joe