Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

hadenoughnow

Morning All

I am 3 years into a 6yr IVA. I have recently taken out £15k of loans to pay for private surgery, and some has also been spent on a gambling addiction brought about by my partner leaving. (I thought with her income we could have repaid the loans).


Now Im really struggling. I have £3000 of these loans set aside to repay the IVA should they accept it, after this I was thinking of the BR route to cater for the new loans. I am just wondering if this is the best way to go about it, and what the OR will say that I have taken out all this extra debt whilst in an IVA.

Im aware that im probably looking at BRU and that's fine, im just worrying that there is some kind of criminal accusation coming my way? Any well founded advice is really appreciated guys please.

Thanks in advance.

StepChange_Kirsty

Hello,

Thanks for your post.

It’s important for you to get in touch with your Insolvency Practitioner (IP) as soon as possible to explain what has happened. I appreciate it might feel daunting to speak to your IP as you’re not supposed to take out more than £500 credit without their permission when you’re in an individual voluntary arrangement (IVA) but honesty really is the best policy to get this situation resolved.


It’s very unlikely that your IP would allow you use the money from the loans in order to try to settle the IVA and they will ask where you got the money from. Again it’s important to be honest with them as otherwise it could cause you even more problems, especially if you’re looking to apply for Bankruptcy. Your IP will be best placed to advise whether or not the IVA can continue or if alternative advice is now appropriate.

If you decide to apply for Bankruptcy, as you’ve mentioned you may receive a Bankruptcy restriction undertaking or order (BRU/BRO) where the restrictions of Bankruptcy would last longer than the original 12 months. Under a BRU/BRO the restrictions could apply anywhere from two to fifteen years. Also if the Official Receiver (OR) views the new debts as fraudulent, whilst the creditors cannot chase you for the debt whilst you’re Bankrupt you may not be discharged from it so there’s a chance you would still need to pay it. Speaking to your IP will definitely give you a better understanding of what you need to do next.

You mentioned you’ve been gambling recently, if you haven’t already I would highly recommend seeking some support with this. Gamcare are a charity who can provide free and confidential advice on stopping gambling.

All the best.

Kirsty

hadenoughnow wrote: »

Morning All

I am 3 years into a 6yr IVA. I have recently taken out £15k of loans to pay for private surgery, and some has also been spent on a gambling addiction brought about by my partner leaving. (I thought with her income we could have repaid the loans).


Now Im really struggling. I have £3000 of these loans set aside to repay the IVA should they accept it, after this I was thinking of the BR route to cater for the new loans. I am just wondering if this is the best way to go about it, and what the OR will say that I have taken out all this extra debt whilst in an IVA.

Im aware that im probably looking at BRU and that's fine, im just worrying that there is some kind of criminal accusation coming my way? Any well founded advice is really appreciated guys please.

Thanks in advance.

hadenoughnow

Thanks Kirsty

I will ring them tomorrow, is there a Likleyhood of any criminal proceedings being brought about from this situation?

Former_StepChange_Joe

[FONT=&quot]

hadenoughnow wrote: »

Thanks Kirsty

[/FONT]

hadenoughnow wrote: »

[FONT=&quot]I will ring them tomorrow, is there a Likleyhood of any criminal proceedings being brought about from this situation?[/FONT]

[FONT=&quot]Hello[/FONT]

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

[FONT=&quot]You won’t be prosecuted for breaking the terms of your IVA, or for taking on debt you can’t afford to pay.
[/FONT]
[FONT=&quot]However, if you apply for bankruptcy, there’s a change you’ll receive a bankruptcy restriction order (BRO). As explained by my colleague, this will extend the restrictions put upon you by a bankruptcy for between 2 to 15 years beyond the date you’re discharged.
[/FONT]
[FONT=&quot]If you break one of these restrictions, then you could be prosecuted. [/FONT][FONT=&quot]The restrictions mean you must not:[/FONT]

• [FONT=&quot]act as a director of a company, or form, manage or promote a company, without permission from the court[/FONT]
• [FONT=&quot]carry on business under a different name without telling people you do business with the name (or trading style) in which you were made bankrupt[/FONT]
• [FONT=&quot]try to borrow more than £500 without saying you are subject to restrictions[/FONT]
• [FONT=&quot]be a trustee of a charity[/FONT]
• [FONT=&quot]work in various posts in education such as being a school governor[/FONT]

[FONT=&quot]This isn’t an exhaustive list: more detail can be found on the GOV.uk website here.[/FONT]

[FONT=&quot]I hope you’ve found this helpful.[/FONT]

[FONT=&quot]Joe[/FONT]

zed37

hi Stepchange advisors.

i am currently in year 5 of my IVA which was originally run by a company called Mitchell Farrer insolvency company it was then transferred to a company called Credit fix. last year my mortgage completed however i had an mortgage reserve account which had 33000 on it. my mortgage company offered me an extended mortgage and so my mortgage continues for a further 12 years.
Creditfix is now wanting to do an urgent review of my IVA however i have been receiving letters from the creditors saying that i am behind in payments and it doesnt look like things have been paid for over 2 to 3 months. I have had a change of income where my income has gone up by about times 2 and i had informed Creditfix of this however they never did a review or change in payments at that time. My question is how will this wage increase affect my existing IVA i have paid 150 every month regularly for the 5 years. Can i ask for a final figure or something to clear the IVA now or is it too late. Will my payments go up and how long will i have to stay in this IVA now.

hadenoughnow

StepChange_Joe wrote: »

[FONT=&quot][/FONT]

[FONT=&quot]Hello[/FONT]

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

[FONT=&quot]You won’t be prosecuted for breaking the terms of your IVA, or for taking on debt you can’t afford to pay.
[/FONT]
[FONT=&quot]However, if you apply for bankruptcy, there’s a change you’ll receive a bankruptcy restriction order (BRO). As explained by my colleague, this will extend the restrictions put upon you by a bankruptcy for between 2 to 15 years beyond the date you’re discharged.
[/FONT]
[FONT=&quot]If you break one of these restrictions, then you could be prosecuted. [/FONT][FONT=&quot]The restrictions mean you must not:[/FONT]

• [FONT=&quot]act as a director of a company, or form, manage or promote a company, without permission from the court[/FONT]
• [FONT=&quot]carry on business under a different name without telling people you do business with the name (or trading style) in which you were made bankrupt[/FONT]
• [FONT=&quot]try to borrow more than £500 without saying you are subject to restrictions[/FONT]
• [FONT=&quot]be a trustee of a charity[/FONT]
• [FONT=&quot]work in various posts in education such as being a school governor[/FONT]

[FONT=&quot]This isn’t an exhaustive list: more detail can be found on the GOV.uk website here.[/FONT]

[FONT=&quot]I hope you’ve found this helpful.[/FONT]

[FONT=&quot]Joe[/FONT]

Thanks Joe,

This is a relief. I do worry though about still being liable for these debts once discharged, can you give any advice on this or maybe how to play the OR interview to try and make sure this doesnt happen?

Cheers

Former_StepChange_Joe

zed37 wrote: »

hi Stepchange advisors.

i am currently in year 5 of my IVA which was originally run by a company called Mitchell Farrer insolvency company it was then transferred to a company called Credit fix. last year my mortgage completed however i had an mortgage reserve account which had 33000 on it. my mortgage company offered me an extended mortgage and so my mortgage continues for a further 12 years.
Creditfix is now wanting to do an urgent review of my IVA however i have been receiving letters from the creditors saying that i am behind in payments and it doesnt look like things have been paid for over 2 to 3 months. I have had a change of income where my income has gone up by about times 2 and i had informed Creditfix of this however they never did a review or change in payments at that time. My question is how will this wage increase affect my existing IVA i have paid 150 every month regularly for the 5 years. Can i ask for a final figure or something to clear the IVA now or is it too late. Will my payments go up and how long will i have to stay in this IVA now.

Hello

Thanks for posting.

Because an IVA is a legally binding arrangement, I'm limited in the advice I can give you. It’s important for you to get in touch with your Insolvency Practitioner (IP) as soon as possible to resolve this issues you’ve mentioned.

In the first instance, I’d definitely raise the missing payments with your IP, and if necessary you can follow their internal complaints procedure. If you’re unable to resolve this with your IP, or you’re not happy with how they’ve responded to your complaint, you can submit a complaint on the GOV.uk website.

Secondly, you should also get in touch with your IP to conduct a budget review. They will be the best placed to advise you whether or not the IVA can continue, if the term of the IVA needs to be extended, if the payments will stay the same or increase, or even if alternative advice is now appropriate.

I hope you’ve found this helpful. Take care.

Joe

splreece

morning all,

i hope you can advice whether im going down the right track

i split with my kids mum 3 years ago, just after I invested in a buy to let refurb property (all in my name) and i've been left with the bills and property half done and look after my kids half the week.

so over the last 3 years the credit card debt has got to astonomic levels yet all my bills are being paid up until 3 months ago when normal interest kicked in an no issuer would give me another low balance transfer rate.

debt on cc is around 30k.

property is bought for 40k and mortgage left =32k (no missed payments)

not sure on value as is still looking like its being renovated ...

i'm considering bankrupsy as my stress levels and worry have caused quite severe medical and work related issues so i want a fresh start.

However i now understand that any excess income you have once major bills are paid...are still going to be sent to creditors (similar to iva).

my 5 key questions i guess are ...
1) at what level are these repayments made? (for example i live off cheap food, drive a banger car, don't have holidays and dont drink/smoke or have relax time which has contributed to my health issues).

I would worry if i'm signing up to bankrupsy and still in the same position of stress and not eating properly or healthily, but now have bankrupsy on my record.

2) should i spend more now rather than make an effort to reduce like i have been.. making sure i am taken care of first?
This seems a very wrong thing to do but i don't budget so perhaps i should be putting money aside for a better car or high food budget that includes fresh food. i don't know?

3) if i chose bankrupsy it's likely i may loose the house (i havent missed payments yet), but is there a chance i wouldn't if i were to get a valuation as it is currently (unfinished).

4) should i stop paying all my credits cards (i read somewhere if i only pay 1 card then i am in the wrong)....? should i be spreading
the repayment between them all?

5) when putting the budget together, should i take into account interest changes/likely price rises. i.e. if council tax is 100 ppm now should i put 110 as its raising 5-10%each year from what i read in papers.


any help would be great.

Former_StepChange_Linsi

Good morning,

Thanks for your post.

I’m sorry to hear you’ve been struggling to make payments and the impact this has had on your health and work life. Your GP and organisations such as Mind can help you find ways to manage stress and your medical issues.

Getting advice before choosing a debt solution was the right decision as bankruptcy can put assets such as properties at risk.

I’ve provided some general information below to help answer your questions but because you have a buy to let property I’d recommend you speak to an organisation called Business Debtline to discuss your options.

They’re also a free advice charity but their advisors have specialist training and are in a better position to give you advice about potential impacts on your property. Their number is 0800 197 6026.

1. If you have disposable income it’s likely you’ll have to make a payment via an income payment arrangement or an income payment order usually for 3 years. There aren’t repayment levels as such but the official receiver (OR) will calculate your disposable income using their own budget guidelines. The maximum monthly guideline figures the OR uses are called the Household Expenditure Survey (HES), they can be viewed on the gov.uk website.

2. You should make sure you have enough money to cover your priority bills (such as a mortgage) and your essential living costs (such as food) before making payments to unsecured debts such as credit cards.

3. Any assets you have will be at risk in bankruptcy. Business Debtline will be able to give you more guidance about this when you call them.

4. When you’re in financial difficulty you’re not doing anything wrong by making affordable payments to your credit cards. For now the best advice would be to contact your credit card providers to let them know you’re struggling and ask them to give you breathing space whilst you’re getting debt advice.

5. When creating a budget you should list what you’re paying now for household bills. Budgets can then be reviewed as and when bills increase.

I hope this helps,

Linsi

splreece wrote: »

morning all,

i hope you can advice whether im going down the right track

i split with my kids mum 3 years ago, just after I invested in a buy to let refurb property (all in my name) and i've been left with the bills and property half done and look after my kids half the week.

so over the last 3 years the credit card debt has got to astonomic levels yet all my bills are being paid up until 3 months ago when normal interest kicked in an no issuer would give me another low balance transfer rate.

debt on cc is around 30k.

property is bought for 40k and mortgage left =32k (no missed payments)

not sure on value as is still looking like its being renovated ...

i'm considering bankrupsy as my stress levels and worry have caused quite severe medical and work related issues so i want a fresh start.

However i now understand that any excess income you have once major bills are paid...are still going to be sent to creditors (similar to iva).

my 5 key questions i guess are ...
1) at what level are these repayments made? (for example i live off cheap food, drive a banger car, don't have holidays and dont drink/smoke or have relax time which has contributed to my health issues).

I would worry if i'm signing up to bankrupsy and still in the same position of stress and not eating properly or healthily, but now have bankrupsy on my record.

2) should i spend more now rather than make an effort to reduce like i have been.. making sure i am taken care of first?
This seems a very wrong thing to do but i don't budget so perhaps i should be putting money aside for a better car or high food budget that includes fresh food. i don't know?

3) if i chose bankrupsy it's likely i may loose the house (i havent missed payments yet), but is there a chance i wouldn't if i were to get a valuation as it is currently (unfinished).

4) should i stop paying all my credits cards (i read somewhere if i only pay 1 card then i am in the wrong)....? should i be spreading
the repayment between them all?

5) when putting the budget together, should i take into account interest changes/likely price rises. i.e. if council tax is 100 ppm now should i put 110 as its raising 5-10%each year from what i read in papers.


any help would be great.

maxmycardagain

A DRO is only achievable via an agent like Stepchange?