Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

vivaespana

Hello, just looking for a bit of advice.
My husband left in May 2014 and a short time later he entered a management buyout of the company where he worked. We divorced in 2015 and our finances etc were agreed via a Consent Order (after much negotiation!). I have no direct contact with my ex-husband and I found out that he remarried last year. I have also now discovered that his company went bust early last year.
I received a few letters at my address (which was the marital home but which I bought from him) looking for him and I forwarded them to him - hence why he had to finally tell me what was going on.
Turns out there is a lot of debt as both he and his business partner (who have now fallen out) both had to personally guarantee loans that they needed for machines and equipment. He seems to be going down the IVA route, although I don't know where he has got his advice from or if this is the best option for him. I don't know his full circs but I know he had a car on PCP and I am thinking that where he lives will still be in his new wife's name as she had lived there for many years with her family and ex-husband. In effect, I don't think he has any/many assets. As the one that was good with the finances, I have made sure I have no financial ties with him. That said, we do still jointly own a house in Spain that we were going to retire to. However, it is rented out long term to friends - and for various reasons, I get the income from it.
My ex now states he needs to sell the Spanish house so that he can use the cash to make a lump sum offer to the IVA people and then hopefully have the rest of the debt written off.
I am not agreeing to this as I have given the "tenants" a further three year contract (they have been in since 2010).
After asking if I/my family could buy his share (which I cannot afford) he is still adamant that he wants to sell. Long and short is he is now saying that if he cannot pay his IVA (which he says he can't because they want £1500 per month) his creditors will make him bankrupt and he fears he will go to prison because he has not told them about the Spanish house (unlikely I know). He is then saying that WE will be forced to sell the Spanish house to pay for his debt.
I am not overly worried, but I am trying to get my head around how this affects me and the property in Spain. It does seem a tad unfair that his new wife will not be affected yet I might be - even though the debts were accrued after we separated and he was with her.
I have done some research but it isn't clear. I understand the Official Receiver could well claim his half - but have you any idea how likely that is? Is it something they often pursue? Would they then try to force the sale to get access to the cash? I am guessing that his share would be worth around £69,000 BEFORE any taxes were deducted. I have rung a few of the usual helplines (debt advisory, CAB etc) but cannot get a definitive answer other than that is classed as his asset.
Can you offer anything?
Thank you .:)

StepChange_Rachael

Hi

Thanks for messaging.

As you’ll be aware at this point, the creditors are only entitled to what your partner can afford after his household bills and general living costs have been taken into account. If this is only £1 then this is all he can offer, they are unlikely to be able to get anymore even if they went down the county court process, which is relatively unlikely if he’s providing evidence of his financial situation.

However, this doesn’t clear the debt and for some people the debt hanging over them can cause emotional distress and can be harmful to their mental health. In this case I would suggest your partner look at their alternative options, having the debt written off through an insolvency process like bankruptcy might be the best way forward for your partner to finally resolve the debt situation.

There are different types of insolvency so I’d recommend your partner speak with a third party, free debt advice service like ourselves as StepChange.

You can find our contact details here.

Thanks
Rachael

Pinky85 wrote: »

Hi, my OH left his now ex wife in 2017, they had a joint IVA with payplan, when they split we let them know and they turned the IVA into two so they were paying one each. The debt is £36,000.
For a while whilst he was working he was paying the £200 a month towards it that they had worked out he payed based on his income. But he then suffered a mental breakdown and eventually his other health conditions he suffers from got worse and he had to leave his job.
We are both now on a joint ESA claim and on £143.90 a week. Naturally he couldn’t afford the monthly payments and they were very kind and put the account on hold for a while biy eventually it failed.
I spoke to National debt line and they advised that we wrote letters to all of his creditors explaining his situation (at the time he was homeless) and asked if they would be willing to write off his debt as a gesture of good will. 1 company did do that, a few of the companies didn’t reply and still haven’t. But two other companies (Cabot financial and Link financial) have said it isn’t in there policy to do that. We have been on constant contact with these two companies and they have been good , putting his accounts on hold and just asking us to update them every so often.
As far as I am aware the ex wife still has her IVA, whether she pays it or not I don’t know as she is isn’t very good with money either.
Both the companies we are in touch with have said they will accept token payments of £1 a month been as he’s on such a low income. They’ve also asked for medical information so they can assess the situation. We have sent various boys and pieces, aswell as the expenditure forms they keep sending etc.

What I want to ask is- because of his situation (we now live in a council flat and both on benefits) should he declare himself bankrupt? I’ve asked this question before to various debt agencies and they have all said there is no point as he has nothing to give, and his priority debts and day to day living expenses are more important.

There are 8 creditors in total. 1 wrote the debt off, 3 are in contact with us and the other 4 didn’t contact us back and haven’t in the last 3 years.

Regards
Pinky 85

StepChange_Rachael

Hi

Thanks for your post and welcome to the forum.

I can understand your frustration, it can be difficult to get information from creditors, especially as your working for your dad as his power of attorney, however, the creditor would need to have evidence of the original debt to be able to chase for it. As power of attorney you have a right to that information. If you asked for the information and the creditor doesn't provide it then you can escalate this further, ultimately to a Financial Ombudsman service.

The fact that the debt is likely, from what you’ve said, to be at least 19 years old means it’s possible the debt is Statute Barred. Most debts, such as credit cards, personal loans, etc can become Statute Barred if after, five years in Scotland and six in the rest of the UK, there has been no court action, no acknowledgement from the debtor (your dad) to the creditor or payment made towards the debt.

In Scotland this debt would be extinguished, meaning the creditors can’t do anything to collect for it. Not all types of debt will be Statute Barred after five years. If you follow this link you’ll find more information about Statute Barred debt. If you feel the debt is Statute Barred you’ll also find a template letter and information to contact the creditor.

I hope this helps but if you’d like to discuss the debt further or for some reason the debt is enforceable then you can contact us directly at StepChange to discuss this further and for support.

Hope this helps,

Thanks
Rachael

Linda212 wrote: »

Hi there,


I am looking for some advice. I am currently my dad's Power of Attorney and over the past 3 months or so he has received debt letters from a company called Robinson Way. They are claiming he owes around £4000 but in their letters, they are not confirming with him what the debt is actually for.
My dad has had no credit arrangements since his separation in 2000 - 19 years ago. As far as I'm aware, he has no CCJ's outstanding.
Is someone able to let me know if this debt is enforceable in Scotland?
He is almost at retirement age and does not have the funds to repay this as he had to take early retirement due to ill health.


Any help is appreciated.


Thanks

StepChange_Rachael

Hi

Thanks for your forum post.

I’m sorry to hear you’re in a difficult position, I can understand you’d want to find the best way forward based on your change in circumstances. Because you rent out the properties and make an income from them, technically this would class you as self-employed, also because you’re now living abroad it makes things a little more complex.

I’d recommend getting some specialised advice and I think the Business Debtline would be the best place to start. They offer advice and recommendations on debt solutions such as bankruptcy and they’ll be able to tailor the advice to your situation.

Debt advice can differ when you have a form of self-employment and owning and renting out properties would come under this umbrella. You don’t need specific business debts for their support and help and if you do decide to go forward with an insolvency solution, they’ll be able to give you the correct information so you can make an informed decision.


Take care,
Rachael

angie85 wrote: »

Hello,

I moved overseas with my husband and our young children a few months ago. He secured a job following being made redundant in the UK. Our family home is solely is his name and is being rented out. The rental income doesn't cover the mortgage at present but we cover this deficit as part of our monthly outgoings. We have no joint accounts and no credit cards, I have one small personal loan in my name which again we cover each month.

I have three properties, two in my sole name and one I co-own with an ex partner.

Property One - Owned with ex partner under an interest only mortgage. Currently in negative equity but the rental income covers the mortgage.

Property Two - Owned by me under a capital payment right to let mortgage. The rental income almost covers the mortgage payments each month and no equity.

Property Three (The Problem) - Owned by me under a capital repayment mortgage. The property has been vacant for some time as my lender would not grant a right to let mortgage. It has been on the market for three years but has not sold despite reducing the price many times.

We have been using all our savings to pay the mortgage on Property Three in the hope it would sell. As a result we have no savings left and can no longer afford the Mortgage payment. Even if our lender were to grant a right to let, we would never recover on a monthly basis the mortgage amount.

If i move back to the UK and work full time this would barely cover nursery costs and food, let alone enough to pay the large mortgage.

I am running out of options and hope. Bankruptcy seems so extreme but I can't see any way out of this mess.

I'd be so grateful for any advice.

TIA

StepChange_Rachael

Hi

Thanks for explaining your situation.

It's a more complex situation and when it comes to insolvency the ultimate decisions on assets would come down to the Official Receiver in bankruptcy and the Insolvency Practitioner in an IVA. Certainly the property being jointly owned would mean that your ex-partner does have a beneficial interest as they part own the property.

In bankruptcy if an asset has over £1000 worth of equity then they are likely to try and release it, if this isn’t through a third party buying the equity then it could mean forcing sale of the property. They could only take your ex-partners share of the property not yours, but I know that’s not a great comfort.


As you mentioned the house is in Spain there may be other implications which I wouldn’t be aware of and you might need to seek legal advice in Spain for this. However, a good starting point would be to speak with the Insolvency Service directly. They are likely to be able to give you the most accurate advice regarding what might happen with the asset.

If the IVA company isn’t aware of the asset this is likely to impact the IVA as the creditors may not have agreed to the IVA when there was an asset with high equity as they may not class your ex-partner as insolvent, although i can’t see that this would result in imprisonment. It’s very rare someone could go to prison for debt and this is usually for non-payment of magistrates fines, complete refusal to pay council tax etc.

Best of luck with the property.

Thanks
Rachael

vivaespana wrote: »

Hello, just looking for a bit of advice.
My husband left in May 2014 and a short time later he entered a management buyout of the company where he worked. We divorced in 2015 and our finances etc were agreed via a Consent Order (after much negotiation!). I have no direct contact with my ex-husband and I found out that he remarried last year. I have also now discovered that his company went bust early last year.
I received a few letters at my address (which was the marital home but which I bought from him) looking for him and I forwarded them to him - hence why he had to finally tell me what was going on.
Turns out there is a lot of debt as both he and his business partner (who have now fallen out) both had to personally guarantee loans that they needed for machines and equipment. He seems to be going down the IVA route, although I don't know where he has got his advice from or if this is the best option for him. I don't know his full circs but I know he had a car on PCP and I am thinking that where he lives will still be in his new wife's name as she had lived there for many years with her family and ex-husband. In effect, I don't think he has any/many assets. As the one that was good with the finances, I have made sure I have no financial ties with him. That said, we do still jointly own a house in Spain that we were going to retire to. However, it is rented out long term to friends - and for various reasons, I get the income from it.
My ex now states he needs to sell the Spanish house so that he can use the cash to make a lump sum offer to the IVA people and then hopefully have the rest of the debt written off.
I am not agreeing to this as I have given the "tenants" a further three year contract (they have been in since 2010).
After asking if I/my family could buy his share (which I cannot afford) he is still adamant that he wants to sell. Long and short is he is now saying that if he cannot pay his IVA (which he says he can't because they want £1500 per month) his creditors will make him bankrupt and he fears he will go to prison because he has not told them about the Spanish house (unlikely I know). He is then saying that WE will be forced to sell the Spanish house to pay for his debt.
I am not overly worried, but I am trying to get my head around how this affects me and the property in Spain. It does seem a tad unfair that his new wife will not be affected yet I might be - even though the debts were accrued after we separated and he was with her.
I have done some research but it isn't clear. I understand the Official Receiver could well claim his half - but have you any idea how likely that is? Is it something they often pursue? Would they then try to force the sale to get access to the cash? I am guessing that his share would be worth around £69,000 BEFORE any taxes were deducted. I have rung a few of the usual helplines (debt advisory, CAB etc) but cannot get a definitive answer other than that is classed as his asset.
Can you offer anything?
Thank you .:)

J2db1977

I’m going to have to go bankrupt in the next few months and need some advice.

I’m struggling to get the money together for the fees £680 is a lot of money. I’ve recently just got a new phone on contract and was thinking I could sell the phone to raise the money for the bankruptcy.

But I’m concerned that might not be allowed or potentially classed as fraud?

What will happen to the mobile phone contract as well if I went bankrupt? Do I need to default on the contact so it goes to a debt collector?

I’m on benefits and am long term sick, I don’t drive and don’t really have assets of such. Maybe a debt relief order is better?

Leerhendy1

Hi,
I am looking for some advice please as I am about to submit my bankruptcy application and just want some final clarity/reassurance before i do.

Background to my situation is that due to excessive gambling which was compounded by poor mental health, I now have unsecured debts via credit cards and loans totalling £40,000. I have spoken to National Debt Helpline who whilst their support has been excellent, pushed me towards an IVA. Having read numerous forums and advice pages, as I have no assets and live in rented accommodation, I believe bankruptcy would be the best option for me. I understand that I will most likely get a BRU which is warranted but wanted to see if anyone could advise on the likely amount of an IPA. (IVA payment was going to be £205pm for 5 potentially 6 years)

Adults x 2
Children x 1 full time, x 1 3 nights per week, baby expected July this year.

Income:
Me:£1973pm
Partner: £925pm (£725 after own debts)
Partner maintenance: £371
Partner child benefit: £89
Total income: £3358
Total expenditure before partners debts: £3043.5

Expense Total Me Partner
rent 625 400 225
Home insurance 4 4 0
TV License 13 0 13
Council Tax 120 60 60
Gas 73 40 33
Elec 72 40 32
Water 44 20 24
Life Insurance 5 0 5
Scrips 9 9 0
Dentist 20 20 0
Groceries 480 250 230
Toileteries 60 30 30
Meals at work 60 30 30
Car Insurance 53 17 36
Breakdown cover 8 8 0
Car Tax 37 21 17
MOT & Servicing 60 30 30
Fuel 375 250 125
Child maintenance 230 230 0
Nappies & baby 55 40 15
Uniforms 20 10 10
School meals 15 15 0
school clubs & trips 20 10 10
School bus 15 15 0
Pocket money 20 10 10
Clothing 90 45 45
Hairdressing 60 25 35
Sky TV/Phone/Broadband 46 30 16
Mobile phone 61 31 30
Dry cleaning 20 20 0
Hobbies and leisure 90 60 30 (GP recommended fitness re mental health)
Newspapers 15 10 5
Gifts 25 15 10
Daughter full time student support with living costs 30 30 0
Emergencies 35 20 15
Holidays 60 40 20
Window cleaner 10 10 0
Tobacco 0 0 0
Pets 0 0 0
Tunnel toll/parking 8.5 8.5
Total Bills 3043.5 1903.5 1141


So my questions are:

1)When calculating the household income, my partner has her own debts so can this figure be deducted from the total she contributes towards the household income?
2)Looking at my SAO, do the figures seem reasonable? There are 2 adults and 1 child living in the house full time and my son lives with us 3 nights per week and we are expecting a baby in July this year so our income will decrease and expenditure increase. We also need to purchase baby products in advance ie cot, clothing, steriliser etc.
3)Based on our incomes, I earn 57% of the household income. As such, would an IPA payment be based on 57% of the total household surplus with the remaining 43% going to my partner.
4)If I receive a pay rise, would the IPA increase as per point 3, also taking into account any increase in expenditure?

Many thanks for your advice in advance, Lee

StepChange_Kirsty

Hello,

Thanks for your post.

Whether or not you can sell your phone whilst you’re still in contract depends on the terms and conditions of your mobile phone provider. Some will have clauses in the contract to say that you cannot sell the handset within a certain length of time, if you’re found to have done so they can block the phone. Others give separate contracts for the handset and the data so until the handset is paid in full it is not yours to sell.

If this is a brand new phone and contract the provider may see you selling the phone as fraud if any of the information provided to them when you obtained the contract was deliberately incorrect. We cannot recommend selling the phone in order to raise fees for Bankruptcy.

It would be the decision of the Official Receiver if the contract can be included in the Bankruptcy. It would usually need to have been disconnected before it can be included in most debt solutions.

We can certainly have a look to see if a debt relief order (DRO) would be more appropriate for your circumstances. We’d need to understand your full financial situation before we can advise you on this. I’d recommend giving us a call on 0800 138 111 in order to speak to one of our Debt Advisors. Please have details of your income, expenditure and debts to hand when you call.

I hope this helps.

Kirsty

J2db1977 wrote: »

I’m going to have to go bankrupt in the next few months and need some advice.

I’m struggling to get the money together for the fees £680 is a lot of money. I’ve recently just got a new phone on contract and was thinking I could sell the phone to raise the money for the bankruptcy.

But I’m concerned that might not be allowed or potentially classed as fraud?

What will happen to the mobile phone contract as well if I went bankrupt? Do I need to default on the contact so it goes to a debt collector?

I’m on benefits and am long term sick, I don’t drive and don’t really have assets of such. Maybe a debt relief order is better?

DuggieD

My IVA completion certificate is dated 29/11/2017 & I would now like to sell my house to downsize. In light of the Green v Wright case can my Iva provider claim any equity I may have if I sell my property?

StepChange_Allen

Leerhendy1 wrote: »

Hi,
I am looking for some advice please as I am about to submit my bankruptcy application and just want some final clarity/reassurance before i do.

Background to my situation is that due to excessive gambling which was compounded by poor mental health, I now have unsecured debts via credit cards and loans totalling £40,000. I have spoken to National Debt Helpline who whilst their support has been excellent, pushed me towards an IVA. Having read numerous forums and advice pages, as I have no assets and live in rented accommodation, I believe bankruptcy would be the best option for me. I understand that I will most likely get a BRU which is warranted but wanted to see if anyone could advise on the likely amount of an IPA. (IVA payment was going to be £205pm for 5 potentially 6 years)

Adults x 2
Children x 1 full time, x 1 3 nights per week, baby expected July this year.

Income:
Me:£1973pm
Partner: £925pm (£725 after own debts)
Partner maintenance: £371
Partner child benefit: £89
Total income: £3358
Total expenditure before partners debts: £3043.5

Expense Total Me Partner
rent 625 400 225
Home insurance 4 4 0
TV License 13 0 13
Council Tax 120 60 60
Gas 73 40 33
Elec 72 40 32
Water 44 20 24
Life Insurance 5 0 5
Scrips 9 9 0
Dentist 20 20 0
Groceries 480 250 230
Toileteries 60 30 30
Meals at work 60 30 30
Car Insurance 53 17 36
Breakdown cover 8 8 0
Car Tax 37 21 17
MOT & Servicing 60 30 30
Fuel 375 250 125
Child maintenance 230 230 0
Nappies & baby 55 40 15
Uniforms 20 10 10
School meals 15 15 0
school clubs & trips 20 10 10
School bus 15 15 0
Pocket money 20 10 10
Clothing 90 45 45
Hairdressing 60 25 35
Sky TV/Phone/Broadband 46 30 16
Mobile phone 61 31 30
Dry cleaning 20 20 0
Hobbies and leisure 90 60 30 (GP recommended fitness re mental health)
Newspapers 15 10 5
Gifts 25 15 10
Daughter full time student support with living costs 30 30 0
Emergencies 35 20 15
Holidays 60 40 20
Window cleaner 10 10 0
Tobacco 0 0 0
Pets 0 0 0
Tunnel toll/parking 8.5 8.5
Total Bills 3043.5 1903.5 1141


So my questions are:

1)When calculating the household income, my partner has her own debts so can this figure be deducted from the total she contributes towards the household income?
2)Looking at my SAO, do the figures seem reasonable? There are 2 adults and 1 child living in the house full time and my son lives with us 3 nights per week and we are expecting a baby in July this year so our income will decrease and expenditure increase. We also need to purchase baby products in advance ie cot, clothing, steriliser etc.
3)Based on our incomes, I earn 57% of the household income. As such, would an IPA payment be based on 57% of the total household surplus with the remaining 43% going to my partner.
4)If I receive a pay rise, would the IPA increase as per point 3, also taking into account any increase in expenditure?

Many thanks for your advice in advance, Lee

Hi Lee

Welcome to the forum and thanks for posting.

I appreciate you breaking down your budget as you have, but I'd never feel comfortable in estimating an IPA amount even after going through a full budget with a client myself. There are certain expenses which are never allowable in an IPA, but others depend on the discretion of the OR and your circumstances.

My understanding is that any changes in circumstances of note should be declared to the OR, so whether this is higher expenses due to having a baby, or a change up or down in income, they'd be taken into account and affect the IPA.

I believe that if you have 57% of the household income, then you'd be expected to be covering 57% of the household bills and allowable living expenses. The remaining amount would then be set as the IPA.

I hope this has been of some help, but it may be worth speaking to the Insolvency Service Enquiry line on 0300 678 0015 for more information.

Allen