Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Aidan

Chocgirl61 said:

Hello
I'm about to go bankrupt - I've used all this months salary (I only work 2 days a week & clear £720 pm) to pay the fees, I'm just waiting until Monday morning to press the button so I'm not stressed & anxious all over the weekend.
I'm a single parent, had a breakdown last summer so had to stop working full time which is when I started to fall behind with all the credit card payments. I've overcompensated my children for them not having another parent & it's got me into this fix...
Since the DWP in their wisdom assessed me as not being capable for extra work, this month to my huge surprise, I have been awarded an extra £336 pm in my UC.  Shame I wasn't getting this much before or I might not be in this predicament...
Anyway, along with UC paying all my rent I actually (now!) have £1000+ in benefits as well as my £720 salary pm.
My query is will the OR be likely to make me pay an IPA?
Finally, the part on the incoming & outgoing section of the form - I don't smoke, drink or have a car so obviously, those are not outgoings for me.  But why am I not able to add the first two anyway as expenditure?  Are people who don't smoke or drink at a disadvantage because they don't spend money on those things?
Thanks

Hi,

Thanks for your post.

We can’t predict whether there will be an IPA (Income Payment Agreement) as this is something that the OR (Official Receiver) decides on a case-by-case basis. However, it is more likely when you have over £20 left over each month after you’ve covered your essential living costs.

Including tobacco and alcohol costs in your application doesn’t necessary give you an advantage. These are areas of spending that the OR is unlikely to view as essential and could be ignored if they are calculating a monthly IPA payment. I would recommend trying to be as accurate as possible with your income and expenses figures.

Because your income has changed, is bankruptcy still the best option? It could be worth discussing your situation with a debt advisor to see if there are other solutions now available to you. If you’d like to contact StepChange our details can be found on our website.

I hope this helps.

Aidan

Chocgirl61

Many thanks for getting back to me. I had actually completely missed one important fact - my rent is paid straight out of my UC tomy landlord, I never receive that money but I had inadvertently added it tomy income!I couldn't work out quite why I appeared to be so well off when I can assure you, that is not the case!
I have since rectified the amounts and submitted my petition yesterday around 3pm - I have been declared bankrupt today, in less than 24 hours! Just waiting now for the next step...

Jemmaj86

Hi, I’ve been on the step change website and it’s been recommended I apply for bankruptcy based on my current circumstances. Can I ask will this affect my partner at all? Ie will his money be taken into account? We’re not married but we do live together in privately rented accommodation. 

Thanks

StepChange_Ciaran

Chocgirl61 said:

Many thanks for getting back to me. I had actually completely missed one important fact - my rent is paid straight out of my UC tomy landlord, I never receive that money but I had inadvertently added it tomy income!I couldn't work out quite why I appeared to be so well off when I can assure you, that is not the case!
I have since rectified the amounts and submitted my petition yesterday around 3pm - I have been declared bankrupt today, in less than 24 hours! Just waiting now for the next step...

Hi

Congratulations on taking that next step.  Please feel free to use the forum if you need further support.

Ciaran

StepChange_Ciaran

Jemmaj86 said:

Hi, I’ve been on the step change website and it’s been recommended I apply for bankruptcy based on my current circumstances. Can I ask will this affect my partner at all? Ie will his money be taken into account? We’re not married but we do live together in privately rented accommodation. 

Thanks

Hi Jemma

Welcome to the forum.

Before making any decisions on a Bankruptcy, I would suggest calling the Charity to discuss your options in more detail.

As part of your application the Official Receiver (OR) will review a joint budget to ensure that both parties are contributing a fair proportion towards the household expenditure.  This will be calculated using actual earnings figures.  They will want to see that both parties are paying their way. The expectation would be that if one of you earns more than the other, they should contribute more to the household.

You would be expected to disclose that you live with a partner.  Attempting to hide any income/payments could result in further restrictions being applied in the future.

The maximum term for any payments towards a Bankruptcy is 36 months. You may not have to contribute, the OR will make this decision.

I can confirm that at no point with your partner be expected to contribute towards your actual debts. There will also be no direct impact to him as a result of your bankruptcy

Thanks

Ciaran

SIM

I'm a bit concerned about the lack of contact I've had from the OR since I was made bankrupt in June 2019. I originally signed a council tax and NT code IPA, but this agreement was only until Jan 2020 which has now passed. My tax code from work has not changed to NT and I have had no contact instructing me to pay the council tax. I've had contact with the OR office around other things and have asked on more than one occasion about whether I should be doing anything. I will be coming up to discharge at the beginning of June but am worried that I'll get an IPA letter or bill for the council tax at the last minute. Any one have any advice or experienced similar?

ll1979

Hi there,
I was wondering if anyone could advise me of the process at the end of sequestration (Scotland).  I have almost completed 4 years in payment and was formally discharged after 1 year.  I recently took on some credit for disability equipment for my son and I have now realised that it is over the amount of credit you are allowed.  I am a wee bit panicked as I pay the disability equipment from my son's DLA money which is kept separate from my financial assessment and due to that, I have no problem paying the credit off because it is paid from his DLA but i was wondering if they will do a credit check at the end of the 4 year payment period or if I am just getting my knickers in a twist.  The trustee is extremely critical with anything I have asked previously so I dont want to contact them when I have less than a year before my term is up.  Thanks in advance.

Athelfled

My husband and I are divorcing, and he is going bankrupt.  The debts are in his name but we both own our family home.  Please advice what I need to do to protect myself?  Can I be forced to sell the house?

StepChange_Aidan

SIM said:

I'm a bit concerned about the lack of contact I've had from the OR since I was made bankrupt in June 2019. I originally signed a council tax and NT code IPA, but this agreement was only until Jan 2020 which has now passed. My tax code from work has not changed to NT and I have had no contact instructing me to pay the council tax. I've had contact with the OR office around other things and have asked on more than one occasion about whether I should be doing anything. I will be coming up to discharge at the beginning of June but am worried that I'll get an IPA letter or bill for the council tax at the last minute. Any one have any advice or experienced similar?

Hi,

Thanks for posting.

If the OR (Official Receiver) decides to set an IPA (Income Payment Agreement) it may not start straight away, but they have to set it up before you are discharged from bankruptcy.

If an IPA is set up, the OR will take what you would be paying in income tax and council tax into account when calculating how much you should pay in.

When the bankruptcy order was made you were no longer liable to pay council tax for the rest of the tax year. You will need to start paying council tax for 2020/2021 as normal from 1st April, even if you haven’t been discharged. 

The OR may have decided not to set up an IPA. It sounds as though you’re already on top of this by asking the office if you need to be doing anything, but if you haven’t had a clear answer, I’d recommend contacting them again to confirm.

I hope this helps.

Aidan

StepChange_Aidan

ll1979 said:

Hi there,
I was wondering if anyone could advise me of the process at the end of sequestration (Scotland).  I have almost completed 4 years in payment and was formally discharged after 1 year.  I recently took on some credit for disability equipment for my son and I have now realised that it is over the amount of credit you are allowed.  I am a wee bit panicked as I pay the disability equipment from my son's DLA money which is kept separate from my financial assessment and due to that, I have no problem paying the credit off because it is paid from his DLA but i was wondering if they will do a credit check at the end of the 4 year payment period or if I am just getting my knickers in a twist.  The trustee is extremely critical with anything I have asked previously so I dont want to contact them when I have less than a year before my term is up.  Thanks in advance.

Hi,

Thank you for your post.

One of the restrictions of sequestration is that you cannot take out credit of more than £2,000 without telling the creditor that you’re bankrupt. You can’t borrow any amount without telling the creditor you are bankrupt if you already have debts of £1,000 or more.

The restrictions will end at the point that you are discharged from bankruptcy (unless they have been extended by a Bankruptcy Restriction Order). They shouldn’t apply if you’ve already been formally discharged but are still paying a four-year Debtor Contribution Order.

Thanks

Aidan