Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Allen

Noo_noo74 wrote: »

Hi
I had a horrible man from the council phone me today stating that I owe 8k in overpayments of housing benefit! I don't! I tried to explain this on the phone to him and he became threatening and aggressive and said he will rush this through the high court and I would not be able to attend and also because I have had bailiffs 4 times he will use this against me and will come in and take my stuff and I have to also pay this years ct upfront! If I declare br will they go away as I don't have 8k nor owe it! I'm beside myself with worry

Hi there

Welcome to the forum and thanks for posting.

There are a number of different issues that you raise here and I think it's important that you seek some advice on all of this. I'd recommend registering with us free of charge and speaking to a debt advisor so that we can try and get to the bottom of what's happened here.

I'll briefly mention the key issues for you on here though. Firstly, it needs to be established and agreed whether the money is owed or not. They should be able to explain why you owe the money and when from, and if you don't agree with that, hopefully you can prove otherwise.

If you do owe some or all of the money, then we can discuss what they can and can't do in regards to collections methods. I'm not aware that local authorities normally escalate debts through the High Court, and certainly any bailiffs that may be instructed to collect benefit overpayments cannot force entry to your property unless they've been in before and made a controlled goods agreement.

There's a lot of advice about bailiffs on our website that could be worth reading: www.stepchange.org/debt-info/bailiffs/dealing-with-bailiffs

I'm not certain on this but I don't see why having this alleged debt would mean that you lose your opportunity to pay your council tax monthly, though councils do have the right to ask for it in full. However, if you feel such a decision, if it happens, has been made out of being deliberately difficult with you, you could make a complaint.

Finally, in regards to bankruptcy, yes it would include this debt if it exists, but if you don't owe the money really, then I wouldn't recommend making a decision on a debt solution based on it. We can look over your full situation and discuss all of this in more detail if you register with us. Details of how to do this can be found here: www.stepchange.org/Contactus

I hope this is helpful.

Allen

StepChange_Allen

Painterly wrote: »

I am retired with no aditional income. My interst only mortgage has come to an end and even though I have asked the lenders to extend the mortgage until the house prices improve they have refused and given me a month to find an alternative. I am thinking of just going for a voluntary reposession and then going bankrupt so that I am not pursued for a shortfall which I would not be able to pay anyway because I only have my basic pension to live on. I am not worried about this affecting my credit rating because I do not intend to borrow money . Please can I get some advice on the best way to move forward on this as really I dont care about the place any more I just want to avoid being harrassed for money. I have always paid the mortgage on time but cant see the point if they just intend to through me out anyway.

Hi Painterly

Thanks for posting.

This sounds like a very difficult situation and it could be hard to stay in the property from what you've said. One of the conditions of an interest only mortgage is usually that you have a repayment vehicle in place to clear the mortgage once the term ends.

If there's negative equity in the property and no repayment vehicle, it's tricky to see a way out of this other than allowing repossession and moving elsewhere. You could ask for time to try and sell the property on the open market; this may raise a better price than via repossession and so any shortfall would be less. Having said that, if you were to go bankrupt, the size of shortfall wouldn't matter.

I'd recommend contacting Shelter to get some advice on re-housing if it seems that you will leave your current place: www.shelter.org.uk/

You could register with us so that we can get a full picture of your finances and see whether bankruptcy is the best option for you or not. You can find how to get in touch with us here: www.stepchange.org/Contactus

I hope this is helpful.

Allen

victoriafv

I am hoping you might be able to give a little guidance.

I've had an IVA since January 2017. As I'm disabled and living on benefits, my monthly payments were never very high, and yet it was still a struggle. The one saving grace was that my insolvency practitioner agreed that as my Personal Independence Payments are to assist with my disability needs, that amount should be offset and not taken into account as part on my income.

Sadly, my financial circumstances have changed and after submitting my last financial review, my practitioner contacted me to say that my IVA was now unaffordable. Due to my health declining, my financial situation will not improve for many years, and may worsen. They've put a hold on my payments (thankfully) until I can get some impartial advice on where to go next, and it does seem that bankruptcy is my only option. I have a number of concerns regarding this, which is where your input could be helpful:

1) I do not have the money to pay the bankruptcy fee and the only way to raise the money would be to keep my IVA on hold until the money I save on that can cover my fees. Would my practitioner even consider this, given that I'd be telling them that my IVA will fail and asking them to basically look the other way until I can file for bankruptcy? Citizens Advice mention that if your IVA was agreed after January 2016, you can get up to a 9-month break. As I've never missed a payment up until now, do you think I'd stand a chance of getting the full 9 months?

2) I also know that once you file for bankruptcy and it is approved by the adjudicator, the official receiver can still insist you make payments to your creditors if they think you can afford it. Though my IVA is now unaffordable, due in part to my PIP benefits not being taken into account, I worry that an official receiver will not see the situation in such a generous light and I'll end up no better off, or possibly even worse off. If that happened, could I still pull out at that point or would I be stuck in my bankruptcy?

3) If my accounts are frozen, how will I be able to receive my benefits?

Hopefully I've given enough information, and I appreciate any advice you can give.

StepChange_Rachael

Hi

Thanks for getting in contact. As an IVA is legally binding I wouldn’t be able advise on what you should do, but I can give general advice that might answer some questions and help you decide on what’s best for you. If you’d like to discuss the IVA in detail you can call the Insolvency Service to discuss further.

Firstly, if your IVA is now unaffordable and your situation isn’t going to significantly improve then it sounds like there isn’t much option than to look at an alternative solution. Your household bills and general living costs are always going to be the most important.

I’d suggest contacting your Insolvency Practitioner , they’ll be able to discuss the options of breaks but I think you’d need to weigh up whether the IVA would affordable again in the near future, if not then is it going to be feasible to try and maintain payments?

If the IVA does fail or you cancel it then you’d be eligible for further debt advice from an advisor to consider your alternative options, I know it’s difficult as you’d prefer this advice before failing the IVA.

For someone going bankrupt that can’t afford the fee, there are trust funds they might be eligible to apply to. Details can be found here through Turn2us.

If this isn’t an option then there is also the option to save for the fee, advice regarding what to do with the creditors in the meantime would be provided by the debt advisor.

The Official Receiver (OR) will work out what a person may have to pay towards their bankruptcy but it would be based on their income and expenditure. If what is left is over £20 a month then they may set an income payment arrangement, but this is unlikely to be more than is affordable. Once you’d applied for bankruptcy you can’t cancel the process. They would still take into account care costs and benefit received for this in your expenditure budget.

An account in bankruptcy is generally only frozen for two days then re-opened. It would need to be a basic account that allows undischarged bankrupts and one that the bankrupt doesn’t have any debt with.

I hope this is of help. If you decided to come out of the IVA and would like impartial debt advice you can always contact us at StepChange.

Thanks
Rachael

victoriafv wrote: »

I am hoping you might be able to give a little guidance.

I've had an IVA since January 2017. As I'm disabled and living on benefits, my monthly payments were never very high, and yet it was still a struggle. The one saving grace was that my insolvency practitioner agreed that as my Personal Independence Payments are to assist with my disability needs, that amount should be offset and not taken into account as part on my income.

Sadly, my financial circumstances have changed and after submitting my last financial review, my practitioner contacted me to say that my IVA was now unaffordable. Due to my health declining, my financial situation will not improve for many years, and may worsen. They've put a hold on my payments (thankfully) until I can get some impartial advice on where to go next, and it does seem that bankruptcy is my only option. I have a number of concerns regarding this, which is where your input could be helpful:

1) I do not have the money to pay the bankruptcy fee and the only way to raise the money would be to keep my IVA on hold until the money I save on that can cover my fees. Would my practitioner even consider this, given that I'd be telling them that my IVA will fail and asking them to basically look the other way until I can file for bankruptcy? Citizens Advice mention that if your IVA was agreed after January 2016, you can get up to a 9-month break. As I've never missed a payment up until now, do you think I'd stand a chance of getting the full 9 months?

2) I also know that once you file for bankruptcy and it is approved by the adjudicator, the official receiver can still insist you make payments to your creditors if they think you can afford it. Though my IVA is now unaffordable, due in part to my PIP benefits not being taken into account, I worry that an official receiver will not see the situation in such a generous light and I'll end up no better off, or possibly even worse off. If that happened, could I still pull out at that point or would I be stuck in my bankruptcy?

3) If my accounts are frozen, how will I be able to receive my benefits?

Hopefully I've given enough information, and I appreciate any advice you can give.

System

hi bit of advice on bankcruptsy please
we will be having a huge change in circumstances shortly nnnnnn
we have roughly 45kish in debt.
we have a morgage with 138k outstanding balance nnn house probs worth around 150kish but i have just signed a 5year fixed deal just recently
would bankcrupysy be a good route or iva
as a dnt want to lose the house
thank u

Former_StepChange_Linsi

[FONT=&quot]Hi[/FONT]

[FONT=&quot][FONT=&quot]Thanks for posting.[/FONT]
[FONT=&quot]
[/FONT][/FONT][FONT=&quot]Your home is likely to be at risk in bankruptcy so this may not be the right solution for you. [/FONT][FONT=&quot]With an IVA you’ll likely be asked to try and remortgage near the end of the IVA term but this won’t mean losing your home.
[/FONT]
[FONT=&quot]We can’t say which solution is right for you without knowing more about your situation. I’d recommend using our Debt Remedy tool to create a budget and get further advice online.
[/FONT]
[FONT=&quot]Once you’ve filled in the details of your income, living costs and debts you’ll be able to download a personal action plan. This contains everything you need to know about the solutions available to you and the next steps to take.
[/FONT]
[FONT=&quot]I hope this helps,[/FONT]
[FONT=&quot]
[/FONT][FONT=&quot]Linsi[/FONT]
[FONT=&quot]
[/FONT]

mufc2k19 wrote: »

hi bit of advice on bankcruptsy please
we will be having a huge change in circumstances shortly nnnnnn
we have roughly 45kish in debt.
we have a morgage with 138k outstanding balance nnn house probs worth around 150kish but i have just signed a 5year fixed deal just recently
would bankcrupysy be a good route or iva
as a dnt want to lose the house
thank u

System

thank for reply linzi
if iva is more than likely a more btr option what is the likelyhood it being accepted by creditors 45kish debt and i havr done thr budget plan on your site and have 270 space end of month for iva
also alot of my debt is very recent but i have a massive change in circumstances
i have never missed a payment on any of my debts but i simply not going to be able to afford moving forward.
im open to bankcrupcy but cnt risk my home

StepChange_Private_Messages

[FONT=&quot]Hello[/FONT]

[FONT=&quot]Thanks for coming back to us.[/FONT]

[FONT=&quot]It's hard to say what the likelihood will be as each IVA is looked at on an individual basis. As you've started using our Debt Remedy tool I'd recommend you contact us over the phone or by chat rather than using this forum. This way we'll be able to see the information you've provided to help answer your queries.[/FONT]
[FONT=&quot]
[/FONT][FONT=&quot]You can find our direct number and chat facility by logging back into Debt Remedy using this link and clicking the ‘need help?’ button at the bottom of the page.[/FONT]
[FONT=&quot]
[/FONT][FONT=&quot]The office is closing now for the weekend but you can call us or start a chat on Monday, we’ll be open 8am to 8pm.
[/FONT]
[FONT=&quot]All the best,[/FONT]

[FONT=&quot]Linsi [/FONT]

mufc2k19 wrote: »

thank for reply linzi
if iva is more than likely a more btr option what is the likelyhood it being accepted by creditors 45kish debt and i havr done thr budget plan on your site and have 270 space end of month for iva
also alot of my debt is very recent but i have a massive change in circumstances
i have never missed a payment on any of my debts but i simply not going to be able to afford moving forward.
im open to bankcrupcy but cnt risk my home

STW1966

Hi

I am hoping that someone will be able to help.

My partner is self-employed and I found out last summer that he hadn’t been paying his tax bill for the last five years. He had received a letter stating that he needed to attend the Bankruptcy court as he owed £24k. Despite telling me that he was dealing with this, he eventually was made bankrupt at the end of August 2018. I have since found out that he owes £10k on his credit card and has a loan approx. £8k. Initially, he would not speak to the OR, but after pleading with him, he eventually spoke to him in November. He agreed to transfer to a local Business debt agency, but so far, I am only aware that he has met with this company once since November. Unfortunately he will not discuss this with me telling me that this is none of my business but I’m worried as he still appears to be burying his head in the sand and still ignoring this – he has changed his address to his mums, so I no longer see any post.

We have a joint mortgage of £30k with a house value of £180k+ and joint earning of £3K (my partner 2K and me 1k). We also have two children, one is due to take is GCSE’s this May. At present, his account have been closed, so all the d/d’s etc. are paid by me. As I understand with the bankruptcy process, he will need to enter an IPA as we have surplus cash, but again have no idea what this repayment figure will be.
I have no clue what is happening and as the debt is not mine, no-one will talk to me.

My questions are

If he continues to do nothing, what will happen? Who’s responsible to chase this - the OR or the Business debt Agency?
Will they force a sale of the house? If so, what timescales are there? I am concerned that this may affect my sons GCSE results, so am hoping that nothing happens at the moment.
Prior to the Bankruptcy, I had also saved money to go on holiday this year. The savings are in my name, will we still be able to go abroad?

Thanks

StepChange_Kirsty

Hello,

Thanks for your post. I appreciate what a difficult time this must be for you as the partner of someone who has been made bankrupt. I will do my best to answer each of your questions in turn.

It sounds as though the Business Debt Agency may be acting as the Trustee in your partner’s bankruptcy. It is very important that your partner cooperates with both the Official Receiver (OR) and the Business Debt Agency by providing any information they may ask for and by paying any income payment arrangement (IPA) which is set. We cannot say if or how much any IPA would be. Usually the restrictions of bankruptcy are set for 12 months from the date of the bankruptcy order, however, if your partner does not co-operate the restrictions could be extended up to 15 years under a Bankruptcy Restriction Order.

The OR/ trustee in bankruptcy must decide what they want to do with the property within three years from the date of the bankruptcy order. It’s likely they will approach you first to see if it’s possible for you to buy out your partner’s share of the property or to see if you want to try to sell the property on the open market. Your partner’s share of the equity would then need to be paid to the trustee.

Should a decision be made to apply for possession and sale of the property then for one year from the date of the bankruptcy order either a non-bankrupt spouse/ civil partner would have a right of occupation or a bankrupt would have the right of occupation where it is also the home of a person under the age of 18. After one year it is assumed that the interests of the bankrupt’s creditors would outweigh all other considerations unless there are exceptional circumstances.

With regards to the savings, if it can be shown that those savings have been made by you from your income then you’ll be able to keep this. However if your partner has also contributed to this savings pot you may be asked to release his share in order it can be paid in to the bankruptcy to offset the loss to his creditors.

I hope this helps to clears things up for you. You can also contact the Insolvency Service directly with any questions on 0300 678 0015. They’re available Monday to Friday 9am to 5pm.

Kirsty

STW1966 wrote: »

Hi

I am hoping that someone will be able to help.

My partner is self-employed and I found out last summer that he hadn’t been paying his tax bill for the last five years. He had received a letter stating that he needed to attend the Bankruptcy court as he owed £24k. Despite telling me that he was dealing with this, he eventually was made bankrupt at the end of August 2018. I have since found out that he owes £10k on his credit card and has a loan approx. £8k. Initially, he would not speak to the OR, but after pleading with him, he eventually spoke to him in November. He agreed to transfer to a local Business debt agency, but so far, I am only aware that he has met with this company once since November. Unfortunately he will not discuss this with me telling me that this is none of my business but I’m worried as he still appears to be burying his head in the sand and still ignoring this – he has changed his address to his mums, so I no longer see any post.

We have a joint mortgage of £30k with a house value of £180k+ and joint earning of £3K (my partner 2K and me 1k). We also have two children, one is due to take is GCSE’s this May. At present, his account have been closed, so all the d/d’s etc. are paid by me. As I understand with the bankruptcy process, he will need to enter an IPA as we have surplus cash, but again have no idea what this repayment figure will be.
I have no clue what is happening and as the debt is not mine, no-one will talk to me.

My questions are

If he continues to do nothing, what will happen? Who’s responsible to chase this - the OR or the Business debt Agency?
Will they force a sale of the house? If so, what timescales are there? I am concerned that this may affect my sons GCSE results, so am hoping that nothing happens at the moment.
Prior to the Bankruptcy, I had also saved money to go on holiday this year. The savings are in my name, will we still be able to go abroad?

Thanks