Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

woggles97

Hi there,

I'm considering bankruptcy as the majority of my debts are in default, and I'll be a full-time student in a few months with no actual income to begin paying these back. 

I've read something super vague, but it worried me enough to ask the below. 

When you're discharged from bankruptcy, can a creditor still chase you if you move to a country where the bankruptcy may not be recognised, or does this only apply during the year you're bankrupt?

Thanks

StepChange_Allen

woggles97 said:

Hi there,

I'm considering bankruptcy as the majority of my debts are in default, and I'll be a full-time student in a few months with no actual income to begin paying these back. 

I've read something super vague, but it worried me enough to ask the below. 

When you're discharged from bankruptcy, can a creditor still chase you if you move to a country where the bankruptcy may not be recognised, or does this only apply during the year you're bankrupt?

Thanks

Hi Woggles

Thanks for posting.

As far as I'm aware, unless a/the debt was sold abroad before the bankruptcy, it can't be pursued abroad after the bankruptcy order is made, neither before or after being discharged.

I hope this is helpful.

Allen

fatbelly

woggles97 said:

Hi there,

I'm considering bankruptcy as the majority of my debts are in default, and I'll be a full-time student in a few months with no actual income to begin paying these back. 

I've read something super vague, but it worried me enough to ask the below. 

When you're discharged from bankruptcy, can a creditor still chase you if you move to a country where the bankruptcy may not be recognised, or does this only apply during the year you're bankrupt?

Thanks

Was the debt incurred in the UK?

woggles97

Thanks Allen.

fatbelly said:

woggles97 said:

Hi there,

I'm considering bankruptcy as the majority of my debts are in default, and I'll be a full-time student in a few months with no actual income to begin paying these back. 

I've read something super vague, but it worried me enough to ask the below. 

When you're discharged from bankruptcy, can a creditor still chase you if you move to a country where the bankruptcy may not be recognised, or does this only apply during the year you're bankrupt?

Thanks

Was the debt incurred in the UK?

The debt was gained only in the UK.

fatbelly

Woggles, it's going to be completely covered by the bankruptcy

patternsandshapes

It's been a few months now since my BR was accepted and officially started. Currently I am unemployed but not claiming any benefits as I am living with family (but very much DO. NOT. WANT. TO!) So I am wondering:

1. Does starting to claim Universal Credit or benefits affect my bankruptcy in any way during the 12 month period? I remember when researching BR and DRO's that a change in circumstances or income like this would void a DRO - is it the same for BR?
2. Similarly, can getting a job affect/void my BR?
3. Do I need to contact the OR once I start claiming UC to inform them of the change in circumstances, or will they know automatically? (Same for getting a job.)

I would really like to start to rebuild my life, but am fearful that a change in circumstances can void my BR and send me back to square one, or worse.

Thanks.

sourcrates

patternsandshapes said:

It's been a few months now since my BR was accepted and officially started. Currently I am unemployed but not claiming any benefits as I am living with family (but very much DO. NOT. WANT. TO!) So I am wondering:

1. Does starting to claim Universal Credit or benefits affect my bankruptcy in any way during the 12 month period? I remember when researching BR and DRO's that a change in circumstances or income like this would void a DRO - is it the same for BR?
2. Similarly, can getting a job affect/void my BR?
3. Do I need to contact the OR once I start claiming UC to inform them of the change in circumstances, or will they know automatically? (Same for getting a job.)

I would really like to start to rebuild my life, but am fearful that a change in circumstances can void my BR and send me back to square one, or worse.

Thanks.

You should claim benefits if you are entitled to them, but benefit income, contrary to popular belief, is quite low, and will have no effect at all on your bankruptcy, the only thing increased income could potentially change would be an IPA (income payment arrangement) but as your income would be solely benefit based, an IPA would not be sought under such circumstances.

You are allowed a budget to live on, which is quite generous, you must have gone through your budget with the OR originally ?

They won`t know anything you don`t tell them, they cannot read your mind after all, so any changes must be advised by you, the client.

Also its not automatically a given, that a change in circumstances voids a DRO, increased income usually means increased expenditure, everything is decided on a case by case basis, based on the individual circumstances.

But your bankruptcy will not be affected in any way by this.

patternsandshapes

sourcrates said:

You should claim benefits if you are entitled to them, but benefit income, contrary to popular belief, is quite low, and will have no effect at all on your bankruptcy, the only thing increased income could potentially change would be an IPA (income payment arrangement) but as your income would be solely benefit based, an IPA would not be sought under such circumstances.

You are allowed a budget to live on, which is quite generous, you must have gone through your budget with the OR originally ?

They won`t know anything you don`t tell them, they cannot read your mind after all, so any changes must be advised by you, the client.

Also its not automatically a given, that a change in circumstances voids a DRO, increased income usually means increased expenditure, everything is decided on a case by case basis, based on the individual circumstances.

But your bankruptcy will not be affected in any way by this.

Thank you, this is helpful. I had thought claiming benefits would be ok, but I couldn't find anything on the .gov website about starting to claim AFTER you've already started BR, which made me want to be extra sure first. I did go through my budget with the OR, so they were fully aware I was not claiming benefits when I applied for BR.

So once I start claiming I should inform the OR that I am doing so? And if I get a job within the 12 month period of BR, I should also inform them of that too - basically inform them of any change in circumstances, including change of address?

fatbelly

patternsandshapes said:

So once I start claiming I should inform the OR that I am doing so? And if I get a job within the 12 month period of BR, I should also inform them of that too - basically inform them of any change in circumstances, including change of address?

That is correct

StepChange_Aidan

patternsandshapes said:

It's been a few months now since my BR was accepted and officially started. Currently I am unemployed but not claiming any benefits as I am living with family (but very much DO. NOT. WANT. TO!) So I am wondering:

1. Does starting to claim Universal Credit or benefits affect my bankruptcy in any way during the 12 month period? I remember when researching BR and DRO's that a change in circumstances or income like this would void a DRO - is it the same for BR?
2. Similarly, can getting a job affect/void my BR?
3. Do I need to contact the OR once I start claiming UC to inform them of the change in circumstances, or will they know automatically? (Same for getting a job.)

I would really like to start to rebuild my life, but am fearful that a change in circumstances can void my BR and send me back to square one, or worse.

Thanks.

Hi,

I’d just like to reiterate the points made by Sourcrates and Fatbelly above.

I would recommend claiming any benefits if you’re entitled to receive them.

An increase in income could possibly cancel a DRO, as one of the qualifying criteria is that you must have less than £75 (previously £50) in surplus income per month after covering your household bills and living costs. However, this rule does not apply to bankruptcy.

If you start a new job while bankrupt and have more than £20 left over each month after covering your living costs, you can be ordered to make monthly payments in an Income Payment Agreement (IPA). If your income is from benefits only, you won’t get an IPA.

There’s some more information on IPAs here.

You’re required to inform the OR of any changes to your circumstances during the bankruptcy.

I hope this helps,

Aidan