Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

Bcfc171081

Thank very helpful. One last question. My wife is currently not working however because she worked a bit while pregnant she is receiving maternity allowance until December. Apart from that all she gets is benefits. Would they take into account that will finish in December.

StepChange_Rachael

Hi

In bankruptcy, an Official Receiver (OR) may set a monthly payment arrangement, if the amount an individual has is more than £20 per month after household bills and general living expenditure has been set aside. If this is set, it can be set for up to three years maximum. If there are changes in the budget within this time then the budget can be altered and payment arrangement altered to match these changes. When applying for bankruptcy, the OR will check full financial details so should be aware that the income is maternity and therefore will obviously change after a period of months and this should be taken into account with the application.

Hope this helps,

Thanks
Rachael

Bcfc171081 wrote: »

Thank very helpful. One last question. My wife is currently not working however because she worked a bit while pregnant she is receiving maternity allowance until December. Apart from that all she gets is benefits. Would they take into account that will finish in December.

tatty1985

Hi

here is a quick copy of my expenses as they stand at the moment

I am in an IVA, I am trying to work out if both my partner and I go bankrupt what is the likely IPA payment going to be? Will it be the £245.00 that I pay the IVA now?

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 0 (don’t own a car but am insured and use the father in laws on weekends as I get shopping in for family members who are too old or ill )

Monthly Income Details
Monthly income after tax................ 1800
Partners monthly income after tax....... 1550
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3350

Monthly Expense Details
Mortgage................................ 600
(but in arrears and likely to be repossessed not sure if I will be able to rent
Secured/HP loan repayments.............. 0
Rent....................................
Management charge (leasehold property).. 0
Council tax............................. 120
Electricity............................. 100 (arrears 600)
Gas..................................... 50
Oil..................................... 0
Water rates............................. 50 arrears (200)
Telephone (land line)...................
Mobile phone............................ 50 (for both phones)
TV Licence.............................. 13
Satellite/Cable TV......................
Internet Services.......................
Groceries etc. ......................... 600
Clothing................................ 25
Petrol/diesel...........................80
Road tax................................
Car Insurance..........................20.83 (one off payment in May of £250)
Car maintenance (including MOT).........
Car parking............................. 0
Other travel............................ 250 (both us need to get the train most days)
Childcare/nursery.......................800
Other child related expenses............ 75
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 0
Buildings insurance..................... 50
Contents insurance...................... 50
Life assurance ......................... 50
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 30
Entertainment........................... 50
Holiday................................. 20
Emergency fund.......................... 10
Total monthly expenses.................. 3143.83




Assets
Cash.................................... 0
House value (Gross)..................... prob about 90k (120k mortgage so negative equity)
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts

Unsecured Debts
42k debt between the two of us


Monthly Budget Summary
Total monthly income.................... 3350
Expenses (including HP & secured debts). 3143.83
Available for debt repayments........... 206.17
Monthly UNsecured debt repayments....... 245
Amount short for making debt repayments. –38.83


Any advice appreciated

thanks

StepChange_Kirsty

Hello,

Thanks for your post.

It’s very difficult to predict how much an income payment arrangement (IPA) would be as this is always at the discretion of the Official Receiver (OR) managing your case. The amount you’re paying into the individual voluntary arrangement (IVA) is likely to be a useful as a guide, but the actually IPA could be different.

It looks like you’re struggling with your IVA payment with £206 available rather than the £245 agreed. I would recommend speaking to your insolvency practitioner to discuss your options. They will also be able to give you some advice as to whether terminating the IVA early in order to petition for bankruptcy would be the best solution for your individual situation. As you’re currently in a legally binding solution we wouldn’t be able to give you this advice.

All the best

Kirsty

tatty1985 wrote: »

Hi

here is a quick copy of my expenses as they stand at the moment

I am in an IVA, I am trying to work out if both my partner and I go bankrupt what is the likely IPA payment going to be? Will it be the £245.00 that I pay the IVA now?

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 0 (don’t own a car but am insured and use the father in laws on weekends as I get shopping in for family members who are too old or ill )

Monthly Income Details
Monthly income after tax................ 1800
Partners monthly income after tax....... 1550
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 3350

Monthly Expense Details
Mortgage................................ 600
(but in arrears and likely to be repossessed not sure if I will be able to rent
Secured/HP loan repayments.............. 0
Rent....................................
Management charge (leasehold property).. 0
Council tax............................. 120
Electricity............................. 100 (arrears 600)
Gas..................................... 50
Oil..................................... 0
Water rates............................. 50 arrears (200)
Telephone (land line)...................
Mobile phone............................ 50 (for both phones)
TV Licence.............................. 13
Satellite/Cable TV......................
Internet Services.......................
Groceries etc. ......................... 600
Clothing................................ 25
Petrol/diesel...........................80
Road tax................................
Car Insurance..........................20.83 (one off payment in May of £250)
Car maintenance (including MOT).........
Car parking............................. 0
Other travel............................ 250 (both us need to get the train most days)
Childcare/nursery.......................800
Other child related expenses............ 75
Medical (prescriptions, dentist etc).... 30
Pet insurance/vet bills................. 0
Buildings insurance..................... 50
Contents insurance...................... 50
Life assurance ......................... 50
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 30
Entertainment........................... 50
Holiday................................. 20
Emergency fund.......................... 10
Total monthly expenses.................. 3143.83




Assets
Cash.................................... 0
House value (Gross)..................... prob about 90k (120k mortgage so negative equity)
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts

Unsecured Debts
42k debt between the two of us


Monthly Budget Summary
Total monthly income.................... 3350
Expenses (including HP & secured debts). 3143.83
Available for debt repayments........... 206.17
Monthly UNsecured debt repayments....... 245
Amount short for making debt repayments. –38.83


Any advice appreciated

thanks

tatty1985

Hi

Thanks for your reply,

I am looking into the bankruptcy more as the house we have mortgaged is old and falling down practically and even once am debt free I doubt i will ever be in a position to ever do it up,

I fell if I get rid of the house and start over then it will take away a lot of stress etc.

I will speak to my IP though and see what they have to say

tgbnbgtg

I am currently in very early pregnancy and suffering with morning sickness which means I am practically bed bound and unable to keep my profitable business going strong. I am also concerned when the baby arrives I will not be able to earn money from my business, I am a sole trader.
I am not currently insolvent but very worried for the future now as if I cannot work I will become insolvent very quickly as I have a lot of personal debts - around 30000 and a 12000 income tax bill due end of Jan 2020. I have no assets so considering bankruptcy as an option but I have read alot about being penalised and have BRO/BRU enforcements on you for some of the spending if it is wreckless or gone to family and friends. I ask this because I have not put money away for the tax bill due as I usually make a lot of my tax money during the wedding season and over christmas - but being unable to work in full health at the moment and being pregnant I am worried I will be unable to pay it now. Will they see not putting sufficient money away every month cause for a BRO/BRU?
Also my partner earns as decent a salary as me, however I always put more money in our joint account for bills and he has recently had troubles with his DMP where he has had CCJ's threatened on him and I have put money in the joint account for him to pay those off as he works in finance and concerned of ramifications when he changes job role, we are also needing to move house in the next few months so would not pass referencing. Is money spent on Partners ok or seen as lending money? I also send more money to our joint account and he also pays his mum for a debt he has out of the joint, would this be against me? It is about £600 a month. Or if he then transfers the money I put in into his personal account to pay his mum, is this in effect seen as my debt? I have read money paid to loved ones can be requested back? I just need some help - I understand you may ask me to go to business debt help but I just need some rough advice at the moment! Thank you and so sorry if this doesn't make sense or is all over the place!

Cheery_Littlebottom

Hello all,
I went through a personal bankruptcy finalised many years ago (2001.) I had many debts, most of which were incurred by my ex-husband but were in my name owing to my own stupidity. I think they totalled slightly over 20,000 GBP and were with credit card companies and a building society. I did not default on a mortgage or suffer a repossession. I do not owe HM Gov any tax, nor am I currently liable for UK taxes as I am not considered resident.
I began working abroad in 2000 and am still doing very well as an expat. I am married to an american and have two kids. These days, I am fortunate in being very financially secure with a lot of money in investments, property in other countries and several pensions. I am a lot more savvy when it comes to money - I cringe when I think about how I was 20 years ago.
We are considering retiring to the UK in the medium future - a timescale of maybe 4-6 years. We have the means to meet the financial requirements for my husband to live in the UK. However, I need to find ways to build up my credit rating. We do not wish to buy a house at this moment but this would be the long term plan.
I have one bank account in my name in England that I generally have a few thousand quid in. I keep it in joint names with my mum so she can manage occasional transactions. I would like to move more money there and apply for a credit card (it's NatWest) to build up my credit rating.
Have you any advice for other ways in which I can slowly build up a decent credit rating, or at least begin to repair the damage?
Many thanks
Cheery L

StepChange_Rachael

Hi

Thanks for your post and welcome to the forum.

I’m sorry to hear you’re suffering so much with morning sickness and it’s impacting your business. I can understand that you’d want to consider all your options and know the detailed facts of any solutions before deciding on the best way forward. It’s difficult to give exact answers to your queries as ultimately how the bankruptcy would go ahead is dependant on how the OR (official receiver) views the facts.

The OR (Official Reciever) will investigate the full situation, they’ll want to see that the adults in the household are paying a fair payment towards living costs based on their income. It would be expected that you’re not paying over the odds for household bills in comparison to your partner. The OR might set an income payment arrangement/order (IPO/A), that is higher than you might feel is realistic with your current spending if they feel you could afford more towards the bankruptcy, if your partner was contributing more towards the house. An IPO/IPA is a monthly payment you might have to pay towards the bankruptcy for a maximum of three years.

Potentially the OR might take into consideration large payments paid to family/friends, usually this is if it’s a preferential payment paid towards a family/friend debt.

In regard to the tax bill, I would recommend speaking with the Business Debtline as this would fall under self-employed specialist advice that you’d need, I wouldn’t be able to answer that one for you, as I’m not sure how the OR views income tax.

Before making any big decisions, I’d recommend getting advice from the Business Debtline as they’ll be able to advise on any consequences for you and your business if you decide to take this route. They’ll also be able to let you know if there are any alternative options, they can help you consider.

Take care,
Rachael

tgbnbgtg wrote: »

I am currently in very early pregnancy and suffering with morning sickness which means I am practically bed bound and unable to keep my profitable business going strong. I am also concerned when the baby arrives I will not be able to earn money from my business, I am a sole trader.
I am not currently insolvent but very worried for the future now as if I cannot work I will become insolvent very quickly as I have a lot of personal debts - around 30000 and a 12000 income tax bill due end of Jan 2020. I have no assets so considering bankruptcy as an option but I have read alot about being penalised and have BRO/BRU enforcements on you for some of the spending if it is wreckless or gone to family and friends. I ask this because I have not put money away for the tax bill due as I usually make a lot of my tax money during the wedding season and over christmas - but being unable to work in full health at the moment and being pregnant I am worried I will be unable to pay it now. Will they see not putting sufficient money away every month cause for a BRO/BRU?
Also my partner earns as decent a salary as me, however I always put more money in our joint account for bills and he has recently had troubles with his DMP where he has had CCJ's threatened on him and I have put money in the joint account for him to pay those off as he works in finance and concerned of ramifications when he changes job role, we are also needing to move house in the next few months so would not pass referencing. Is money spent on Partners ok or seen as lending money? I also send more money to our joint account and he also pays his mum for a debt he has out of the joint, would this be against me? It is about £600 a month. Or if he then transfers the money I put in into his personal account to pay his mum, is this in effect seen as my debt? I have read money paid to loved ones can be requested back? I just need some help - I understand you may ask me to go to business debt help but I just need some rough advice at the moment! Thank you and so sorry if this doesn't make sense or is all over the place!

StepChange_Rachael

Hi

Thanks for your message.

I’m glad to hear that you managed to find a debt solution that worked for you and allowed you to break the debt cycle and that you’re now in a good financial position.

As a debt advisor, unfortunately, I can’t offer advice on credit files/ratings and ways to improve them or taking out credit. This isn’t within our remit, it might be worth contacting the credit reference agencies within the UK for advice. There are three, CreditKarma, Equifax and Experian. I’d recommend checking to make sure there aren't any fees for this information. You might also find information on ways to improve your credit file on another MSE forum section.

Thanks
Rachael

Cheery_Littlebottom wrote: »

Hello all,
I went through a personal bankruptcy finalised many years ago (2001.) I had many debts, most of which were incurred by my ex-husband but were in my name owing to my own stupidity. I think they totalled slightly over 20,000 GBP and were with credit card companies and a building society. I did not default on a mortgage or suffer a repossession. I do not owe HM Gov any tax, nor am I currently liable for UK taxes as I am not considered resident.
I began working abroad in 2000 and am still doing very well as an expat. I am married to an american and have two kids. These days, I am fortunate in being very financially secure with a lot of money in investments, property in other countries and several pensions. I am a lot more savvy when it comes to money - I cringe when I think about how I was 20 years ago.
We are considering retiring to the UK in the medium future - a timescale of maybe 4-6 years. We have the means to meet the financial requirements for my husband to live in the UK. However, I need to find ways to build up my credit rating. We do not wish to buy a house at this moment but this would be the long term plan.
I have one bank account in my name in England that I generally have a few thousand quid in. I keep it in joint names with my mum so she can manage occasional transactions. I would like to move more money there and apply for a credit card (it's NatWest) to build up my credit rating.
Have you any advice for other ways in which I can slowly build up a decent credit rating, or at least begin to repair the damage?
Many thanks
Cheery L

Nics39

Hi, I’m desperate for some help. I rang you guys earlier today but with two young children I couldn’t wait any longer as one child started to cry.

I lost my business last year, my (ex)business partner told me the business was struggling, when I was 6 months pregnant. We had a massive fall out as it turned out she had hidden a multitude of things from me. So we closed the business last August, when my second baby was just 7 weeks old. At the time I wasn’t in a place mentally to deal with it all, it made me so ill with the stress and dealing with a newborn and a toddler.
The issue I have is we are 50/50 personal guarantors on the lease. The landlord is now taking us to court for over £50k. I am not on our house mortgage and I don’t have any assets like a car etc. I can’t afford a solicitor to advise me so I am representing myself.
I’m a hairdresser and work sporadically when I can around my children and when my mum can help me, but that is sometimes only 2 days per week. While the business was operating I was only earning £200 per week, even when I worked full time. I have got myself into such a financial mess, I have used credit to afford my children’s birthdays and Christmas, to clothe us and generally live. I was managing this with a set income but now some weeks I’m only earning £150, my outgoings are far exceeding my income and I now have the added stress of the court case. I am also 14 weeks pregnant again meaning come January I won’t be able to work again for some months.

My husbands wages cover all the household bills and cars, insurance etc. I pay for food, petrol for the car I drive, nursery fees for my eldest, clothes, haircuts for myself, dentist bills, my phone, as well as my debts but I’m not covering a lot of this now, my mum has been buying me petrol, food, kids clothes and giving me money towards some of my bills when I’m short and my husband helps where he can but he has absolutely nothing surplus once all the household bills have come out. My mum can’t afford to keep this up, she has no pension and is due to retire in less than 10 years time. I don’t know how we are going to manage going forward and especially with the court case. I’ve been advised by several people to go bankrupt (citizens advice and a solicitor) and I’m open to this but I just don’t know how it’ll work, how fast does it all take place? Do I carry on trying to make payments to my debts in the meantime? I’ll have to borrow the fee money from my mum to even be able to go bankrupt in the first place. My outgoings amount to around £1170 each months and my earnings around £700.

Please help me 😔 I’m so overwhelmed by it all.