Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Allen

Limalex said:

Hello there,
I am writing you regarding my Dad's case.
I recently find out that he has about 5 different accounts in debt some of them already passed to debt collectors. He basically hiding the letters and do not wish to deal with them. Since he is furloughed and been told when furlough ends he will be dismissed I believe he developed a slight mental illness, or depression. He is 65 very unlikely has another job before retirement due to some other health issues. So the bankruptcy option is on the table.

My question is If we arrange an LPA. Can I deal with the creditors on his behalf? Or even can I deal with the bankruptcy process on his behalf?

Hi there

Thanks for posting.

I'm sorry to hear that your Dad is suffering from health issues. If you manage to arrange an LPA, then any debt advice charities/agencies like ourselves would be able to speak with you, yes. I'd recommend seeking some free debt advice before going ahead with bankruptcy or any other debt solution. 

If ultimately, it's going to be a bankruptcy application, this is all done online now, so there's nothing stopping you helping your Dad through the process.

If you'd like some help from us, please visit www.stepchange.org for details of how to get started.

Best wishes

Allen

Limalex

StepChange_Allen said:

Limalex said:

Hello there,
I am writing you regarding my Dad's case.
I recently find out that he has about 5 different accounts in debt some of them already passed to debt collectors. He basically hiding the letters and do not wish to deal with them. Since he is furloughed and been told when furlough ends he will be dismissed I believe he developed a slight mental illness, or depression. He is 65 very unlikely has another job before retirement due to some other health issues. So the bankruptcy option is on the table.

My question is If we arrange an LPA. Can I deal with the creditors on his behalf? Or even can I deal with the bankruptcy process on his behalf?

Hi there

Thanks for posting.

I'm sorry to hear that your Dad is suffering from health issues. If you manage to arrange an LPA, then any debt advice charities/agencies like ourselves would be able to speak with you, yes. I'd recommend seeking some free debt advice before going ahead with bankruptcy or any other debt solution. 

If ultimately, it's going to be a bankruptcy application, this is all done online now, so there's nothing stopping you helping your Dad through the process.

If you'd like some help from us, please visit www.stepchange.org for details of how to get started.

Best wishes

Allen

Thank you Allen I really appreciate your answer.

I already took advantage if your online service and the only possible solution was bankruptcy unfortunately. No I have to put LPA in motion.

Thank you very much 

patternsandshapes

Hi, hope someone can offer some advice, I feel a bit stuck as to what to do right now.

I was looking into getting a DRO for the £13,000 credit card debt I have, currently unemployed. Last year I was talking to Nationdebtline about this and everything seemed go except I needed a bank account unconnected to any of my debts, which I have since got, the only thing now NDL are not accepting new DRO applications at the moment (I assume due to high volume from the corrent Covid situation, which is understandable.) So I contacted Payplan and had a helpful chat with a representative today that basically ended any chance I have of getting a DRO.

Payplan refused to go any further with a possible DRO application without me being on Universal Credit - which I'm afraid to apply for simply because a DRO takes 12 months and you are not allowed to change your circumstances during that time period otherwise it nulifies the DRO. But claiming UC changes my circumstances and what I can pay to my creditors, and if whilst claiming UC I am forced to take a job, obviously that is also my circumstances changing - So I felt completely bamboozled by a Catch 22 situation: Payplan won't help without be being on benefits, but getting benefits changes my income, as does being forced in to a job whilst claiming UC.

At this point I felt like my only solution is bankruptcy, which is even more terrifying than a DRO. I'm unsure what to do. I think I can probably scrape together the £680 needed for bankruptcy from family, but is that really my only solution?

StepChange_Allen

patternsandshapes said:

Hi, hope someone can offer some advice, I feel a bit stuck as to what to do right now.

I was looking into getting a DRO for the £13,000 credit card debt I have, currently unemployed. Last year I was talking to Nationdebtline about this and everything seemed go except I needed a bank account unconnected to any of my debts, which I have since got, the only thing now NDL are not accepting new DRO applications at the moment (I assume due to high volume from the corrent Covid situation, which is understandable.) So I contacted Payplan and had a helpful chat with a representative today that basically ended any chance I have of getting a DRO.

Payplan refused to go any further with a possible DRO application without me being on Universal Credit - which I'm afraid to apply for simply because a DRO takes 12 months and you are not allowed to change your circumstances during that time period otherwise it nulifies the DRO. But claiming UC changes my circumstances and what I can pay to my creditors, and if whilst claiming UC I am forced to take a job, obviously that is also my circumstances changing - So I felt completely bamboozled by a Catch 22 situation: Payplan won't help without be being on benefits, but getting benefits changes my income, as does being forced in to a job whilst claiming UC.

At this point I felt like my only solution is bankruptcy, which is even more terrifying than a DRO. I'm unsure what to do. I think I can probably scrape together the £680 needed for bankruptcy from family, but is that really my only solution?

Hi there

Thanks for posting.

I can appreciate that it's worrying when you have outstanding debts and no current plan in place to sort them out. I can understand the predicament that you're describing, however without seeing your budget and speaking with you, I can't be certain about some aspects of the advice given.

However, if you're eligible to claim benefits now, and are choosing not to, it's possible that the DRO could be declined on that basis. I imagine that's why payplan advised you this. It'd be best to claim what you're entitled to first, and then see what your best options are, whether that's a DRO or not. You're right that even if a DRO is available after you've claimed UC, if you are job seeking then there is a risk of the DRO being revoked (cancelled) if getting work significantly improves your finances. That would depend how much better off you were after losing your benefits.

If you'd like to, you can give us a call and register with us free of charge, and we can give you some fresh advice. Please visit www.stepchange.org to get started. As I say, without knowing your full situation, I can't currently advise on which solution(s) may be best for you moving forward.

Best wishes
Allen

patternsandshapes

StepChange_Allen said:

Hi there
Thanks for posting.
I can appreciate that it's worrying when you have outstanding debts and no current plan in place to sort them out. I can understand the predicament that you're describing, however without seeing your budget and speaking with you, I can't be certain about some aspects of the advice given.
However, if you're eligible to claim benefits now, and are choosing not to, it's possible that the DRO could be declined on that basis. I imagine that's why payplan advised you this. It'd be best to claim what you're entitled to first, and then see what your best options are, whether that's a DRO or not. You're right that even if a DRO is available after you've claimed UC, if you are job seeking then there is a risk of the DRO being revoked (cancelled) if getting work significantly improves your finances. That would depend how much better off you were after losing your benefits.
If you'd like to, you can give us a call and register with us free of charge, and we can give you some fresh advice. Please visit www.stepchange.org to get started. As I say, without knowing your full situation, I can't currently advise on which solution(s) may be best for you moving forward.
Best wishes
Allen

Thanks for your reply Allen.

I think what confused me was the paradox of claiming UC - which as I understand replaces Job Seekers Allowance, which a condition of claiming that was that one would be forced to take any job they see fit to offer you, whether you found it suitable or not, otherwise the benefits would be stopped.

So either I'll be forced to take a job I may or may not want or if I refuse the job then UC would be stopped - either way that results in my circumstances changing - either from wages or benefits being stopped - and thus this effects my DRO application either way. It seems like a Catch 22, a pitfall designed to automatically revoke the DRO within the 12 month period whatever happens.

At least at the moment I know my circumstances will remain the same within the 12 month period. The only way I see the DRO application being successful if I claim UC is if by pure chance they were not to offer me a single job within the the 12 month period, which seems highly unlikely.

Bankruptcy sounds embarassing and degrading, but at least there's no Catch 22 and DRO is essential bankruptcy by another name? So a bankruptcy application would be accepted as long as I could pay the fee, but a DRO application is destined to fail by design?

StepChange_Aidan

patternsandshapes said:

StepChange_Allen said:

Hi there
Thanks for posting.
I can appreciate that it's worrying when you have outstanding debts and no current plan in place to sort them out. I can understand the predicament that you're describing, however without seeing your budget and speaking with you, I can't be certain about some aspects of the advice given.
However, if you're eligible to claim benefits now, and are choosing not to, it's possible that the DRO could be declined on that basis. I imagine that's why payplan advised you this. It'd be best to claim what you're entitled to first, and then see what your best options are, whether that's a DRO or not. You're right that even if a DRO is available after you've claimed UC, if you are job seeking then there is a risk of the DRO being revoked (cancelled) if getting work significantly improves your finances. That would depend how much better off you were after losing your benefits.
If you'd like to, you can give us a call and register with us free of charge, and we can give you some fresh advice. Please visit www.stepchange.org to get started. As I say, without knowing your full situation, I can't currently advise on which solution(s) may be best for you moving forward.
Best wishes
Allen

Thanks for your reply Allen.

I think what confused me was the paradox of claiming UC - which as I understand replaces Job Seekers Allowance, which a condition of claiming that was that one would be forced to take any job they see fit to offer you, whether you found it suitable or not, otherwise the benefits would be stopped.

So either I'll be forced to take a job I may or may not want or if I refuse the job then UC would be stopped - either way that results in my circumstances changing - either from wages or benefits being stopped - and thus this effects my DRO application either way. It seems like a Catch 22, a pitfall designed to automatically revoke the DRO within the 12 month period whatever happens.

At least at the moment I know my circumstances will remain the same within the 12 month period. The only way I see the DRO application being successful if I claim UC is if by pure chance they were not to offer me a single job within the the 12 month period, which seems highly unlikely.

Bankruptcy sounds embarassing and degrading, but at least there's no Catch 22 and DRO is essential bankruptcy by another name? So a bankruptcy application would be accepted as long as I could pay the fee, but a DRO application is destined to fail by design?

Hi,

A DRO is sometimes referred to as a ‘mini-bankruptcy’ -  It’s another form of insolvency designed for people with a relatively low level of debt and a small amount of available income. 

I wouldn’t say that a DRO is destined to fail, in fact it’s fairly rare for an application to be rejected. However, if an applicant is entitled to receive benefits but is not claiming, the Insolvency Service may decide to investigate further and this could affect their decision.

There is also a risk that the DRO could be cancelled by the Official Receiver if during the 12 months, you have an increase in income which means that there is more than £50 per month left over after covering your priority bills and living costs.

It’s very unlikely that a bankruptcy application would be rejected, but I can’t really say whether or not this would be a better debt solution without knowing more about your financial situation. If you’d like debt advice from StepChange you can use our online tool or give us a call to speak with an advisor.

As Allen has said in his post, it would be better to make sure that you’re claiming all the income you’re entitled to, then review which option is best for you in the long run. You may still be able to go ahead with a DRO application, or there could be other debt solutions suited to your situation.

I hope this helps.

Aidan

Indiana76

My husband was discharged from bankruptcy in June 2020.  No one has collected the tax money we have set aside. We contacted the company that was supposed to be collecting it and with covid it was all done by emails and replies were slow and we got nowhere with them, this company are no longer doing the collecting and a new company have taken over , we have contacted the  new company and they have no record of my husband, we went back to the old company and they no longer hold any records. 
Where do we go from here?   Do we contact the OR?  Or are we just a bit lucky and get to keep the money? 

StepChange_Aidan

Indiana76 said:

My husband was discharged from bankruptcy in June 2020.  No one has collected the tax money we have set aside. We contacted the company that was supposed to be collecting it and with covid it was all done by emails and replies were slow and we got nowhere with them, this company are no longer doing the collecting and a new company have taken over , we have contacted the  new company and they have no record of my husband, we went back to the old company and they no longer hold any records. 
Where do we go from here?   Do we contact the OR?  Or are we just a bit lucky and get to keep the money? 

Hi,

If your husband’s tax from PAYE income was stopped when he went bankrupt, he’d normally be required to pay the difference to the OR (or a third party acting on their behalf) via an Income Payment Arrangement/Order.

As your husband is now discharged from bankruptcy, hopefully you’ll be allowed to keep the money. However, I would recommend keeping it to one side for now and contact his OR directly to confirm what they want to do.

I hope this helps.

Aidan

Indiana76

Thank you for your reply, we are waiting for a call back from the OR. 

Indiana76

Just to update, we had a call from the OR and they have invoiced us directly for the money which we have now paid.