Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

Extended_tether

Hi everyone.
Way over committed on Credit and starting to run out of manoeuvre room. Getting fearful for the future.
Looking at my options.
On Bankruptcy need some help and advice on the following.
Have two homes , both bought at the height of the 2007 property boom in NIreland when financials were handing out mortgages like sweeties.
One is the family home. Interest only mortgage . £178000 remaining. House value £145000, so negative equity.
Second home we bought from my wife’s family. Paid £130,000. Outstanding mortgage £83000. House value £145000.
Wife’s parents pay a rent if £300pm and still live in the house.
The idea was that the 2nd house would pay of the first etc . ����!♂️. I know . Terrible idea.
At the time wife’s family solicitor advised them to add a legal precondition that they would be entitled to the first £100k if the house was sold. I think it was to ensure we would not sell them out of the house.
Anyhow, it means that if we sell the house they are legally entitled to the first £100k of the profit.

My question being, that with bankruptcy and the two properties.
The first one, the family home is already in negative equity, and could be for some
time, and is unlikely to be sold off by the Bankruptcy office.

Any ideas on the second. It sold now, it does have some equity we would receive nothing as legally, my wife’s parents owe the first £100k profit.
What would the bankruptcy adjudication be over this property?
Any help or advice would be much appreciated

Lauren96

I am considering bankruptcy, I am a student who gets student loans firstly can I ask am I correct in assuming not all of my student finance will be calculated as earned income for income/expenses I am a single parent living with my parents I get maintenance loan and grants and also parent learners grants. My parents have asked me to move out and I am planning on when I receive my student loan instalment in mid Jan I will be looking at putting money for rent upfront which housing associations require 1 month in advance which can be anywhere from £340-410 money I cannot afford quite clearly if I am considering bankruptcy and also around £500 for furnishing in particular for white goods as I would need to start and furnish from scratch the only things we have are bedroom furniture. My question is if I put this money aside for moving out expenses would the OR take this money away as I know I wouldn’t be entitled to a budgeting advance from Universal Credit to help furnish my local council also doesn’t offer any support for free white goods it’s comes at a cost so I would essentially need that money to be able to move out as I have been asked to by my parents as we are overcrowded so I have no option to stay here and moving out is a must which I cannot do with this money being put aside

StepChange_Rachael

Hi

Thanks for your post, I’ve realised I’ve replied to your private message regarding your queries before seeing the forum post. Please see your inbox for correspondence regarding this message.

Thanks
Rachael

Extended_tether wrote: »

Hi everyone.
Way over committed on Credit and starting to run out of manoeuvre room. Getting fearful for the future.
Looking at my options.
On Bankruptcy need some help and advice on the following.
Have two homes , both bought at the height of the 2007 property boom in NIreland when financials were handing out mortgages like sweeties.
One is the family home. Interest only mortgage . £178000 remaining. House value £145000, so negative equity.
Second home we bought from my wife’s family. Paid £130,000. Outstanding mortgage £83000. House value £145000.
Wife’s parents pay a rent if £300pm and still live in the house.
The idea was that the 2nd house would pay of the first etc . ����!♂️. I know . Terrible idea.
At the time wife’s family solicitor advised them to add a legal precondition that they would be entitled to the first £100k if the house was sold. I think it was to ensure we would not sell them out of the house.
Anyhow, it means that if we sell the house they are legally entitled to the first £100k of the profit.

My question being, that with bankruptcy and the two properties.
The first one, the family home is already in negative equity, and could be for some
time, and is unlikely to be sold off by the Bankruptcy office.

Any ideas on the second. It sold now, it does have some equity we would receive nothing as legally, my wife’s parents owe the first £100k profit.
What would the bankruptcy adjudication be over this property?
Any help or advice would be much appreciated

StepChange_Rachael

Hi

Welcome to the forum and thanks for posting.

When it comes to bankruptcy, the Official Receiver (OR) will only set an income payment arrangement into the bankruptcy if you have money left over after you’ve paid your household bills and general living costs. All income will need to be listed and all expenditure to make sure any payment would be affordable. If you have costs related to your course, then these would be expected to be included in your expenditure costs.

I wouldn’t recommend rushing to apply for bankruptcy until your financial situation has settled down, this way you’ll have a better idea of what options are available to you and how they would work out. You can ask creditors to hold the accounts and give you some breathing space while your situation becomes stable.

If you haven’t already, then I would recommend speaking with a debt advisor before choosing a solution, even if they advise you of bankruptcy being a suitable solution, the Insolvency Service will require evidence that you’ve been advised this is suitable when submitting the application. If you’d like to do this through StepChange you can find our contact details here.

Thanks
Rachael

Lauren96 wrote: »

I am considering bankruptcy, I am a student who gets student loans firstly can I ask am I correct in assuming not all of my student finance will be calculated as earned income for income/expenses I am a single parent living with my parents I get maintenance loan and grants and also parent learners grants. My parents have asked me to move out and I am planning on when I receive my student loan instalment in mid Jan I will be looking at putting money for rent upfront which housing associations require 1 month in advance which can be anywhere from £340-410 money I cannot afford quite clearly if I am considering bankruptcy and also around £500 for furnishing in particular for white goods as I would need to start and furnish from scratch the only things we have are bedroom furniture. My question is if I put this money aside for moving out expenses would the OR take this money away as I know I wouldn’t be entitled to a budgeting advance from Universal Credit to help furnish my local council also doesn’t offer any support for free white goods it’s comes at a cost so I would essentially need that money to be able to move out as I have been asked to by my parents as we are overcrowded so I have no option to stay here and moving out is a must which I cannot do with this money being put aside

brownie17

Thank you for the previous answer

Would you be able to advise if Damages for Distress could be included in a bankruptcy order?

Thanks

StepChange_Rachael

Hi

Thanks for your post.

If the previous message was one we’d replied to you with, then I’m sorry I struggled to locate this. However, to answer your question, damages that are payable to anyone for personal injury wouldn’t be written off in a bankruptcy order, this is stated on the govenment website in the bankruptcy section. I’d assume this would also include damages for distress.

Thanks
Rachael

brownie17 wrote: »

Thank you for the previous answer

Would you be able to advise if Damages for Distress could be included in a bankruptcy order?

Thanks

Pianothing

Hi
I was granted a DRO in April 2018. The moratorium period ended in April 2019 and the slate was cleaned ... in theory .
Things have been ticking along really nicely and I've even got into a position where I have a little bit of savings.
I wanted to move to a new rented house. I found a house through an agent and was up front about the DRO. In view of my honesty, the landlord was happy to proceed with renting to me as long as my credit report supported the information I had provided.
I completed the online reference details and a couple of days later got a call from the agents saying my reference had been rejected by the landlord as I had not been honest and had a CCJ showing on my report. I explained that the CCJ was included in the DRO and ended up providing all kinds of evidence to show that I had not been dishonest and that the debt is cleared ... in theory.
Eventually the referencing people accepted my evidence and passed my references which the landlord in turn accepted. But they did say that this is an error on my credit file.
On my equifax report it states the word discharged under the CCJ entry but it still shows a balance of £2413 which was the original amount of the judgement. I had paid off some of it prior to the DRO leaving a balance under 2k.
My question is this, what should I be doing to ensure that this doesn't continue to be a problem? Can it be marked on my file that the CCJ was included in the DRO?
I'm keen to keep my finances in order so that when it drops off my credit file in a few years time, I can be seen in a positive light by creditors. But for the present I just want my file to show a true picture of my current financial situation. I don't owe any money on this CCJ.

Thank you

Holly_Jones4

Hi there

I am struggling to raise the BR fee and am considering using my credit card to pay it but am I right in thinking this would be considered fraud? I have a credit limit of 5K and have used 3K and this company would be obviously part of the BR application.

The only money I possess is 1280 in my current account and 1125 of that is my rent which is due next week. This amount won't cover both obviously plus I need to buy food, petrol etc. The other alternative would be that I use the credit card to get cash out to pay my rent and pay the BR fee with the rent money I have in my current account? Would that still be fraud? I obviously have to pay my rent, that is crucial.

I am so desperate to submit my application and the thought of paying monthly in small instalments fills me with dread because the debts will continue to mount up. I have nothing significant to sell either or anyone I could borrow from. I have looked into charities but it is a long process and often not available anyway.

I don't want to get into trouble and potentially my BR not being accepted or the credit card company suing me for using my card to pay either the fee or my rent knowing full well I couldn't pay it back.

If anyone could give me any advice that would be very helpful. I am keen to do this 'by the book' (as much as possible) and not get into any bother with the law!

Thanks in advance
Holly

kateyleah

Hi can anyone help advise?

My ex partner has applied for an IVA and has a creditors meeting on Wednesday. He has not paid me child maintenance for pretty much a year, apart from a few one off payments.

We do not have a formal arrangement in place with the Child Maintenance Service. I would like to enter into one as I am concerned that i've not been properly taken into account in his outgoings with the IVA, however, my ex partner is insistent I don't do a child maintenance arrangement, which I don't really understand as it will make little difference to him.

As I haven't been paid for months now, despite promises to the contrary I would like to make an arrangement with Child maintenance, however I don't want to risk my ex-partner's IVA being rejected by doing so. Can someone tell me if this is likely to happen?

Thanks

Kate

StepChange_Allen

Pianothing wrote: »

Hi
I was granted a DRO in April 2018. The moratorium period ended in April 2019 and the slate was cleaned ... in theory .
Things have been ticking along really nicely and I've even got into a position where I have a little bit of savings.
I wanted to move to a new rented house. I found a house through an agent and was up front about the DRO. In view of my honesty, the landlord was happy to proceed with renting to me as long as my credit report supported the information I had provided.
I completed the online reference details and a couple of days later got a call from the agents saying my reference had been rejected by the landlord as I had not been honest and had a CCJ showing on my report. I explained that the CCJ was included in the DRO and ended up providing all kinds of evidence to show that I had not been dishonest and that the debt is cleared ... in theory.
Eventually the referencing people accepted my evidence and passed my references which the landlord in turn accepted. But they did say that this is an error on my credit file.
On my equifax report it states the word discharged under the CCJ entry but it still shows a balance of £2413 which was the original amount of the judgement. I had paid off some of it prior to the DRO leaving a balance under 2k.
My question is this, what should I be doing to ensure that this doesn't continue to be a problem? Can it be marked on my file that the CCJ was included in the DRO?
I'm keen to keep my finances in order so that when it drops off my credit file in a few years time, I can be seen in a positive light by creditors. But for the present I just want my file to show a true picture of my current financial situation. I don't owe any money on this CCJ.

Thank you

Hi Pianothing

Thanks for posting.

I'm not an expert on all the terminology on a credit file, but discharged suggests perhaps it's showing your liability for the debt has gone? You could contact the credit reference agency to check the exact meaning of this on there.

The CCJ will show on there until 6 years after it was obtained, and then drop off. but should still show as not outstanding. The DRO will also show on your credit file for 6 years, even though it's finished once the moratorium is over.

I hope this proves helpful.

Allen