Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Kirsty

Hi Pendramoon,

I can see you posted the message on our other thread on the Debt Free Wannabe forum. My colleague Allen has responded to that post, but I just thought I’d copy it to here in case you haven’t had chance to see it…

“Welcome to the forum and thanks for posting.

Before taking a step as big as bankruptcy, I'd highly recommend seeking debt advice from an organisation like ourselves. If you put a budget together with us, we can see whether bankruptcy is a good option for you. If it is, we can then discuss all the benefits, risks and consequences with you, as well the process to actually do it.

If you don't wish to register with us, we have a lot of information about bankruptcy on our website: www.stepchange.org/debt-info/personal-bankruptcy

I hope this is helpful.

Allen”

Many Thanks,

Kirsty

pendramoon wrote: »

Hi all

Thank you for taking the time to read my post. I am in 40k debt with two credit cards + a personal loan. I have been working over 50 - 70 hours a week to pay everyone out but in the end of the day I always have to use what I pay back on my credit cards. I getting very tired and emotionally drained out as this has been going on for 4-5 years now. I can feel that this put a huge risk on my health now.I can feel that I can't do too much over time now.


SO I came to the conclusion I have to file for bankruptcy. Just want to know what is the process, what step it will take place? I have to complete an online form. upon submitting the for I have to pay the fee or after, before? what happens next? would people come to my rented property to take away my stuff? Don't have too much stuff. Also my Grandmother is very old and recently become more sick. She still manages OK but I think very soon she would need even more help from me. She lives abroad and just worried that they would take my passport away from me, I wouldn't be able to see her. Also my wife has a nice car what is in her name but she worries that they might take it away from us. (all my debt is in my name and I don't even drive). Also my wife is sceptical about me applying for bankruptcy as she say it has hidden issues. can you explain to me the possible negative impact on me please?

Thank you for your answer

StepChange_Kirsty

Hi Freyaella,

Thanks for your post and welcome to the forum.

We can never guarantee if the Official Receiver (OR) will allow you to keep a car on finance. It depends on the type of finance you have as to how it would be dealt with, but the most common type of car finance tends to be Hire Purchase (HP) or Personal Contract Purchase (PCP) which are dealt with quite similarly. You mentioned you are in year one of a three-year option which sounds like it may be PCP.

First of all, you would need to check if the lender has a clause in the contract which allows them to end the agreement if you go bankrupt. Not all creditors will act on this clause so it would be worth checking with them before you go bankrupt otherwise, they may expect you to hand back the vehicle.

If the creditor allows you to retain the vehicle and it has equity in it then the OR may decide to pay off the remainder of the finance so they can sell it. This is usually only likely where a significant profit can be made to offset the loss to the other creditors.

It’s only when the creditor would not expect you to hand the car back and there is little or no equity in the vehicle that the OR could allow you to keep it if they deem it to be essential. However, if the OR doesn’t view this cost as an allowable expense and you have an income payment arrangement (IPA) set, you may not be able to afford to maintain the payments and have no choice but to hand the car back anyway. The only other option here would be if a third party agrees to take over the payments for you.

I hope this helps.

Kirsty

freyaella wrote: »

Hi,
I have had my IVA refused by one creditor. My debts are about £65,000.
I don't have any assests, but I do have a car on Finance which is is one year in to a 3 year option, I need the car to work and to take my daughter to school etc. If I go down the bankruptcy route, is it likely I can keep the car? I have never missed a payment on it because I need it.

Thank you

Em03750

I am hoping that someone may be able to help as I am considering bankruptcy.

My ex husband and I previously lived with our children in Dubai. Due to his hidden spending I discovered we were in a precarious position and borrowed myself to try to out the situation right. To cut a long story short we left Dubai (me 32 weeks pregnant) in 2015 and I finally decided to end our marriage last year when more secret borrowing was uncovered. In essence, I am now a single mum in council accommodation and it looks like the Dubai debts in my name are about to catch up with me. I have recieved a letter from a UK solicitor acting on behalf of the Dubai bank for one of the debts totalling approximately 15k (there is another looming in my name for approximately 35k which I suspect will catch up with me very soon). The fear and stress that this is creating is astronomical. I can't see any way that I am going to be able to clear this debt. I keep receiving conflicting advice regarding whether bankruptcy will cover these debts. Can anyone advise please?

StepChange_Kirsty

Hi Em,

Thanks for your post and welcome to the forum.

The bankruptcy rules in this situation depend on where in the UK you are based. If you’re based in England, Wales or Northern Ireland and you declare yourself bankrupt then the debts from Dubai would be provable in bankruptcy and no further action could be taken in the jurisdiction the order was made. You would also be protected from further action in any other UK jurisdiction, any other EU member state (apart from Denmark) and non-EU countries where a reciprocal arrangement has been made with the UK to provide mutual assistance when administering bankruptcies.

If you decided to return to Dubai, there is no guarantee that you would still be protected against these debts.

In Scotland the law is slightly different and there is no guarantee the debts would be written of under Scottish legislation. There would need to be a reciprocal arrangement between Scotland and Dubai. If there is a reciprocal arrangement, then the debt can be included in bankruptcy and written off as the bankruptcy would be recognised in both jurisdictions.

I hope this helps.

Kirsty

Em03750 wrote: »

I am hoping that someone may be able to help as I am considering bankruptcy.

My ex husband and I previously lived with our children in Dubai. Due to his hidden spending I discovered we were in a precarious position and borrowed myself to try to out the situation right. To cut a long story short we left Dubai (me 32 weeks pregnant) in 2015 and I finally decided to end our marriage last year when more secret borrowing was uncovered. In essence, I am now a single mum in council accommodation and it looks like the Dubai debts in my name are about to catch up with me. I have recieved a letter from a UK solicitor acting on behalf of the Dubai bank for one of the debts totalling approximately 15k (there is another looming in my name for approximately 35k which I suspect will catch up with me very soon). The fear and stress that this is creating is astronomical. I can't see any way that I am going to be able to clear this debt. I keep receiving conflicting advice regarding whether bankruptcy will cover these debts. Can anyone advise please?

Trebsie94

Hi,

I did an online calculation with StepChange themselves and it stated bankruptcy. I was going to do an IVA but I have a car on finance which is £264 per month, I need this car to get to and from work and take my children to school. They advised me it needs to be less than £250 but there is nothing I can do. My mum has said she will pay off my finance, buy the car in her name and the v5 go to her. I would then be a named driver on insurance but that’s it. But if I was to go bankrupt am I going to get into trouble for this? I am not transferring the car for money, and I would make sure I prove this. Plus I don’t even own the car now it’s a pcp agreement. Can someone help please?

StepChange_Kirsty

Hi there,

Thanks for your post and welcome to the forum.

If your Mum decides to pay off the car finance for the car to go in her name, this should not be a problem as she is essentially buying the car from the finance company and not from you. I would suggest speaking to the Insolvency Service helpline just to make sure this would not cause you any problems. You can find their contact details here.

You mentioned you wanted to do an individual voluntary arrangement (IVA) but have been advised the PCP would need to be less than £250. The fact that the finance is £264 per month is not an automatic bar to doing an IVA so there must have been another reason the IVA has not been recommended. If you’d like to discuss the IVA in more detail and why this has not been recommended, please give us a call. Our contact details are here.

I hope this helps.

Kirsty

Trebsie94 wrote: »

Hi,

I did an online calculation with StepChange themselves and it stated bankruptcy. I was going to do an IVA but I have a car on finance which is £264 per month, I need this car to get to and from work and take my children to school. They advised me it needs to be less than £250 but there is nothing I can do. My mum has said she will pay off my finance, buy the car in her name and the v5 go to her. I would then be a named driver on insurance but that’s it. But if I was to go bankrupt am I going to get into trouble for this? I am not transferring the car for money, and I would make sure I prove this. Plus I don’t even own the car now it’s a pcp agreement. Can someone help please?

Jamiebiglad

Good morning all, I’m new to this and wanted to ask a few questions regards Bankruptcy. What do I do? Is there any particular forums ?

Moneywhizz

I have a friend who was discharged from sequestration in Scotland over two years ago. She is now eligible to draw a pension lump sum and income but is worried that this will be taken by the Accountant in Bankruptcy. She did not pay any contributions during her sequestration because she was on benefits. She called the AIB to ask for advice and was told that they couldn't comment and that she was asking the wrong question? Not too sure what that meant but also cannot find anything on the AIB website to clarify whether she still has to report this new income to the AIB.

StepChange_Kirsty

Hi Jamie,

Thanks for your post and welcome to the forum.

Please feel free to ask your bankruptcy related questions here on this thread or you can call StepChange directly. Our contact details can be found here.

Many thanks,

Kirsty

Jamiebiglad wrote: »

Good morning all, I’m new to this and wanted to ask a few questions regards Bankruptcy. What do I do? Is there any particular forums ?

StepChange_Private_Messages

Hello,

Thanks for your post.

The AIB and the trustee in your friend’s bankruptcy would still be able access to the pension funds for four years from the date of the bankruptcy order. If your friend was only discharged two years ago then it’s likely the pension would be at risk if she chooses to draw down now.

Before drawing down on her pension I would recommend your friend seeks pensions advice. The Money and Pensions service may be able to point her in the direction of a qualified and independent pensions advisor.

I hope this answers your question.

Kirsty

Moneywhizz wrote: »

I have a friend who was discharged from sequestration in Scotland over two years ago. She is now eligible to draw a pension lump sum and income but is worried that this will be taken by the Accountant in Bankruptcy. She did not pay any contributions during her sequestration because she was on benefits. She called the AIB to ask for advice and was told that they couldn't comment and that she was asking the wrong question? Not too sure what that meant but also cannot find anything on the AIB website to clarify whether she still has to report this new income to the AIB.