Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Aidan

sourcrates said:

Question to stepchange representitive from myself.

Re : individuals applying for a DRO (Debt releif order).

It appears just lately, DRO applicants who receive PIP, and who list PIP as income, but also a corresponding amount as "adult care costs" in their expences, are being refused DRO`s as they are failing to meet the £50 mimimum disposable income allowence.

Stepchange are telling them that they cannot list adult care costs against PIP, and are demanding to know what the money is spent on, which according to DRO guidence, is incorrect.

Can you provide any explanation or clarification on this at all, according to Debt Camel, an individual is entitled to list adult care costs against an income comprising of PIP,  it appears stepchange advisors disagree on this point, which quite concerns me.

One more recent issue that has been highlighted on these forums, DRO applicant who has use of a car, pays tax and insurance on it, is the registered keeper, but is not the owner.

Guidence says this is acceptable for DRO purposes as they do not own the car,  Debt camel concur, stepchange say its not acceptable, who is right ?

Your comments would be most welcomed.

Thanks.

Hi,

Thanks for your query.

The guidance to our advisors is to list all disability related expenses in the budget where possible, but if someone is unable or unwilling to itemise them, we can add ‘care costs’ as a separate item. 

If someone receiving PIP has been told by a StepChange advisor that they can’t go ahead with a DRO without specifying the care costs, this was incorrect. If you come across any examples of this, please encourage the client to come back to us to review the recommendations or make a complaint so we can investigate.

DLA and PIP are no longer counted as income when we’re working out if someone qualifies for a DRO (although we do need to include it on the budget to check eligibility for other debt solutions).

We would count a car as an asset if the client is the owner, but not if they’re the registered keeper.

I hope this helps.

Aidan

StepChange_Aidan

apz7 said:

Hi, I'm new to the forums but after reading a few similar situations I thought it'd be best to post my own and potentially receive some advice.

Story is as usual, business was going well however after a certain amount of time it went downhill. Loan payments became harder and harder and here we are today. So i'll layout the amount of secured loans against the house.

House worth - around 350k-450k (needs valued)
Mortgage - 160k
Loan 1 - 250k
Loan 2 - 70k

Total Secured (charges against house) = 480k
Lets say house worth is 400k, that would leave us in 80k negative equity.

(There are also unsecured loans and CC loans of high amounts too)

Now this is my parents house, and their business. We are suffering as a family and bankruptcy seems a viable option in our situation. We have went the route of an IVA however the payments of the secured loans haven't been kept up, which means we are getting letters, bailiffs etc. sent to the house with action to take it further.

My parents are currently worried and after doing some research I have found that if a house is in negative equity, the official receiver will wait 2 years and 3 months to assess the situation again. In this time you are free to stay in your home. My question is, when the official receiver comes back to review if the house is still in negative equity, will he prevent the house from being sold?
another question is, how would the negative equity turn into positive equity, if we can't keep up payments? (apart from the value of the house going up)

So in conclusion I suppose the question I am asking is are we able to keep the house if we go bankrupt? (mortgage payments are interest only and we will ALWAYS keep paying the mortgage ofcourse)

Just to add to the question, my father also has a property worth 100k which one of the loans have a charge on. Would this be taken away from the total equity in the house? For example
House worth : 400k
Property 1 worth : 100k  (total 500k)

Total Secured loans - 480k
Total equity left - 20k

- is this how it would work?
so in this instance the house would be sold since there is equity left?

Sorry if this comes out a bit unclear, im just looking for some guidance in this situation and there's too many questions to ask. Bankruptcy is a scary thing for my parents as the house is in risk.
I hope someone can help, time is getting tighter.

Thankyou. 

Hi,

Thanks for your post.

When a person’s share in the property is worth less than £1,000 (including cases of negative equity), the Official Reciever (OR) may decide to do nothing now and review the case after 2 years and 3 months. If there’s still no equity after this time you will usually be allowed to keep it.

However, if there’s more equity after 2 years and 3 months (for example, if the value of the property has increased), the OR could decide to sell the property or to apply a charging order for the value of interest in it at that point.  

I can see your other thread that the additional property is rented out. If it’s in your father’s name only, it would vest with the OR at the point he went bankrupt. If there’s equity in this property the OR would look to sell it, if not they would become the landlord and start collecting the rent from the tenants. 

This process can be complex and I would need more information about your situation before I could give any specific advice. It would be best to discuss things in full with a debt advisor before you make a decision about bankruptcy. As the second property is rented out commercially, I would recommend Business Debtline for specialist help.

Kind regards,

Aidan

StepChange_Aidan

Frank38 said:

Hello  I hope this is in the correct Forum, apologies if not.  I'm trying to discover what happened to Mortgage Trust because I've discovered that they put a note on our Experian Credit Score and it is still there.  We are discharged from the bankruptcy and the  bankruptcy period is ended.  We want the note removed because the money we owed them has now been sorted.  However it nowadays seems to be for Brokers Only.  I was wondering if you might know the present location or form of their original  Buy-to-Let Lending department ?  Thank you for your help, I'm sorry if this is the wrong Forum.  Thank you. Regards Frank Mann

Hi Frank,

Thanks for posting.

Mortgage Trust Ltd rebranded as Paragon in 2017. 

Their contact details can be found on their website.

Can I check what type of note has been left on your credit report? Most information would show on there for six years, even if the debt has since been cleared or written off in the bankruptcy.

Kind regards,

Aidan

Frank38

Thank you  Aidan and I must apologise for putting the wrong name.  It is in fact Mortgage Express. (  The bankruptcy has somewhat rattled my concentration, however my good wife has checked this reply for me !).

It says this:

MORTGAGE EXPRESS

£0

This accounts payment history has some payment issues that may affect your score.

Up to date

Opened:     09 May 2006    Settlement date: 16 Dec 2015   Last updated: 10 Jan 2016

Last year:  In good standing  £0  ( that would be 2019 )

The bankruptcy was from 27 May 2014 to 27 May 2015, the date 27 May 2015 is the Discharge date.

Thank you very much for your help.

Regards  Frank

joe1796

I need some advice or an expert opinion possible!

I applied to be bankrupt back in December 19 and was approved almost immediately. 

I was informed an IPA would need to be set up and that my OR would be in contact, he informed me he had some annual leave and would contact me upon his return. During this time lockdown occurred, I couldn’t get in touch with my OR and after 6 months raised a complaint direct to the insolvency service. I was informed from the service that my details had been lost due to an “admin error” and that they’d send me some new paper work to fill out my budget. I did this immediately and was informed I’d receive a letter in the post to set up IPA payments. I did not hear anything back for a further 3 months. I needed to contact the OR as my circumstances have changed, securing a new job and moving house. I escalated my complaint and received a response that for a second time my details had been lost and the correct procedure hadn’t been followed by the OR. They told me this wouldn’t happen again but this was the second time this has happened, I haven’t recieved communication unless I got in touch with the OR myself. 

I contact citizens advice and they advised me to escalate the complaint to the chief exec and ask for my IPA to be cancelled, I haven’t yet made a payment as I haven’t been sent instruction on how to do so. I’m nearly 12 months into my bankruptcy and have not yet had an IPA set up. There has been clear miscommunication from the OR and my mental health is completely screwed as I’m unsure where i stand financially. 

Do you feel I may get my IPA waived as a result of the insolvency services wrong doings and them losing my details? Ironically I had a call a few days ago from a completely different OR saying they need to set up an IPA and they were completely unaware of the fact that my details had been lost twice and I’ve been doing this for a year and chasing them up. I was informed by citizens advice that if an IPA isn’t sought in 12 months then one can’t be set up. I realised that if I hadn’t contacted the insolvency service then the likelihood of them getting in touch within the year was very slim, feel like I’ve shot myself in the foot but I wanted to be proactive. I’m awaiting a response to my complaint and have been told this could take 3 months, which would mean I’d be discharged by then. Potentially if they maintain the IPA I’ll be 4 years into the process.

Any help would be appreciated!

StepChange_Allen

Frank38 said:

Thank you  Aidan and I must apologise for putting the wrong name.  It is in fact Mortgage Express. (  The bankruptcy has somewhat rattled my concentration, however my good wife has checked this reply for me !).

It says this:

MORTGAGE EXPRESS

£0

This accounts payment history has some payment issues that may affect your score.

Up to date

Opened:     09 May 2006    Settlement date: 16 Dec 2015   Last updated: 10 Jan 2016

Last year:  In good standing  £0  ( that would be 2019 )

The bankruptcy was from 27 May 2014 to 27 May 2015, the date 27 May 2015 is the Discharge date.

Thank you very much for your help.

Regards  Frank

Hi Frank

Thanks for your reply.

My understanding is that this should drop off your credit file, like the bankruptcy, after 6 years. So given that you were discharged in May 2015, this would be May 2021. However, the 'settlement date' is down as December 2015  (I'm not sure why), so it may not drop off until December 2021.

Please note that bankruptcy can stay on there longer than 6 years if any restrictions were placed upon you when your bankruptcy was arranged.

All the best.

Allen

StepChange_Allen

joe1796 said:

I need some advice or an expert opinion possible!

I applied to be bankrupt back in December 19 and was approved almost immediately. 

I was informed an IPA would need to be set up and that my OR would be in contact, he informed me he had some annual leave and would contact me upon his return. During this time lockdown occurred, I couldn’t get in touch with my OR and after 6 months raised a complaint direct to the insolvency service. I was informed from the service that my details had been lost due to an “admin error” and that they’d send me some new paper work to fill out my budget. I did this immediately and was informed I’d receive a letter in the post to set up IPA payments. I did not hear anything back for a further 3 months. I needed to contact the OR as my circumstances have changed, securing a new job and moving house. I escalated my complaint and received a response that for a second time my details had been lost and the correct procedure hadn’t been followed by the OR. They told me this wouldn’t happen again but this was the second time this has happened, I haven’t recieved communication unless I got in touch with the OR myself. 

I contact citizens advice and they advised me to escalate the complaint to the chief exec and ask for my IPA to be cancelled, I haven’t yet made a payment as I haven’t been sent instruction on how to do so. I’m nearly 12 months into my bankruptcy and have not yet had an IPA set up. There has been clear miscommunication from the OR and my mental health is completely screwed as I’m unsure where i stand financially. 

Do you feel I may get my IPA waived as a result of the insolvency services wrong doings and them losing my details? Ironically I had a call a few days ago from a completely different OR saying they need to set up an IPA and they were completely unaware of the fact that my details had been lost twice and I’ve been doing this for a year and chasing them up. I was informed by citizens advice that if an IPA isn’t sought in 12 months then one can’t be set up. I realised that if I hadn’t contacted the insolvency service then the likelihood of them getting in touch within the year was very slim, feel like I’ve shot myself in the foot but I wanted to be proactive. I’m awaiting a response to my complaint and have been told this could take 3 months, which would mean I’d be discharged by then. Potentially if they maintain the IPA I’ll be 4 years into the process.

Any help would be appreciated!

Hi Joe

Welcome to the forum and thanks for posting.

My understanding is that an IPA needs to be set up before discharge, which itself is most commonly 12 months, though it can be longer. Whether the investigation of a complaint changes this, I'm not sure.

I can't comment as to whether an IPA would be waived due to your complaint, as I don't know if there's any precedent for that. However, you're absolutely entitled to ask them to make things right after their mistakes, and this would of course help you. All I can really do is wish you luck with that, and I hope it all gets sorted soon for you.

Best wishes

Allen

angetsh77

Hello...Im feeling so overwhelmed.  I was discharged of my debts 4th April 2019 and formally declared bankrupt.  Its taken me all this time to come to terms with it and I just don't know where to start.  I'm in Scotland and not sure how it differs from England.  I need to start getting my life back on track having been solely dependent on my husband the last year.  Where do I start with trying to open a bank account and building my credit rating up again?  Any help would be greatly appreciated

StepChange_Aidan

angetsh77 said:

Hello...Im feeling so overwhelmed.  I was discharged of my debts 4th April 2019 and formally declared bankrupt.  Its taken me all this time to come to terms with it and I just don't know where to start.  I'm in Scotland and not sure how it differs from England.  I need to start getting my life back on track having been solely dependent on my husband the last year.  Where do I start with trying to open a bank account and building my credit rating up again?  Any help would be greatly appreciated

Hi,

Thanks for posting and welcome to the forum.

Once you’ve been discharged from bankruptcy you should be able to open an account with any bank. However, it may be difficult to get one with an overdraft facility if you have a recent bankruptcy on your credit report.

The bankruptcy will show on the credit report for six years from the date it was awarded, but you should be able to gradually build up your credit score with sensible use of credit and by paying bills on time. There’s some more information about credit ratings here. 

I hope this helps.

Aidan

cbatflash

Hi,
Thanks for your time, if you can spare it to answer my question.
I'm in the process of trying to go Bankrupt, due to owing HMRC £150k+ - this debt was the result of the loan charge payment (tax avoidance) that has affected many contractors.
I'm fine not waiting for the results of the class action against HMRC and want to get this out of the way.

My question is, in the current Covid climate - what would the time difference be between paying the £680 and pushing the bankruptcy myself and waiting on HMRC to make me bankrupt? -  their last correspondence with me was sending me a (Statutory Demand - FEB 2020) saying they would make me bankrupt. I e-mailed them since asking why they are taking so long - Saying the below:
-----------------------------------------------------------------------------------------------------------------------------------------
Dear Mr ******

Thank you for your E mail, I have updated your record with the information provided. 

Due to the current COVID 19 situation, I would be unable to give you any dates as to when your case would be put through for Bankruptcy. 

Kind regards

Sent: 15 September 2020 13:40
To: Insolvency SD, DM (DM) <dm.insolvencysd@hmrc.gov.uk>

Subject: Bankruptcy - REF: 202071504 ONE

 

Good Afternoon,

 I hope you're well.

 I am e-mailing as advised to create a paper trail.

 Statutory Demand - REF: 202071504 ONE 

I am currently claiming Universal Credit, not working.

I have no Assets of worth.

I have no savings. 

I have no interest in waiting for the Loan case to resolve with the European Court of Justice. 

I would like my bankruptcy to be progressed as soon as possible, can you let me know how long this normally takes? 

Thanks for your time, stay safe. 

Kindest Regards 

*******

-----------------------------------------------------------------------------------------------------------------------------------------------

Any advice would be appreciated, or if you can forward this to someone else who may know...

Thanks again. 

Regards

Liam