Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_James

The_mangler wrote: »

Hi,
Im currently on a DMP with StepChange and my husband has just been accepted for a DRO. This puts my debts at around £17k with payments of £34 going out to my creditors monthly. I was advised bankruptcy was my best option, would the OR take that £34 as payments towards creditors or have I got the wrong end of the stick? (Has been known to happen )
Thanks

Hello,

You've not got the wrong end of the stick. If you've go bankrupt and the OR (Official Receiver) think you've got surplus income then they can ask you to pay this to them through sometimes called an Income Payment Arrangement (IPA).

They'll then deduct their fees and pass the remaining money on to your creditors.

The OR would plan a new income and expenditure budget with you, so it's not certain to be the same amount as your DMP with StepChange and if your expenditure was slightly higher then it may mean there isn't enough money spare to justify setting up a IPA.

Kind regards

James

The_mangler

Thanks for that answer - would it matter that our only income is from benefits (husband is disabled and I am his carer)?

stig109

Hi, hope you can help.

I am a discharged bankrupt (Jan 2009) and am self employed. I have been very careful over since then not to get financially linked to my wife, apart from life insurance & Child Tax Credits, we have separate bank accounts and the Mortgage and house is in her name only. She has a good credit history and I don't want to compromise that.

However we want to change me from sole trader to partnership, there won't be a business bank account, so no link there, we will basically just split profits at end of year. It's a very simple business, no assets as such, no stock, just income minus expenditure.

Will this cause us to be financially linked? I don't want to cause problems when she changes Mortgage lenders, which is due soon as she does this every two years.

As I said, we wont have a bank account together or in the business name, so no link there, it's just as far as Inland Revenue is concerned.

StepChange_James

The_mangler wrote: »

Thanks for that answer - would it matter that our only income is from benefits (husband is disabled and I am his carer)?

Yes - you'd be very unlikely to be put on an Income Payment Arrangement if your income is just benefits. Here's a bit from the technical manual:

An IPA should not be sought where the bankrupt’s only source of income is state benefit payments.

You can read the full section on IPAs here: http://www.insolvencydirect.bis.gov.uk/freedomofinformation/technical/casehelpmanual/I/IPA%20(ISCIS).htm

Kind regards

James

StepChange_James

stig109 wrote: »

Hi, hope you can help.

I am a discharged bankrupt (Jan 2009) and am self employed. I have been very careful over since then not to get financially linked to my wife, apart from life insurance & Child Tax Credits, we have separate bank accounts and the Mortgage and house is in her name only. She has a good credit history and I don't want to compromise that.

However we want to change me from sole trader to partnership, there won't be a business bank account, so no link there, we will basically just split profits at end of year. It's a very simple business, no assets as such, no stock, just income minus expenditure.

Will this cause us to be financially linked? I don't want to cause problems when she changes Mortgage lenders, which is due soon as she does this every two years.

As I said, we wont have a bank account together or in the business name, so no link there, it's just as far as Inland Revenue is concerned.

Hello,

I can't see why there would be anything on your credit report about business partners. Your credit history should only look at people you've got joint financial products with.

There's a bit more about this on the Experian website here: http://www.experian.co.uk/consumer/faq/AR3.html. There's no mention of business partners, so there's no reason it should be reported on there.

Kind regards

James

unsettled

StepChange_James wrote: »

Hello,

The full cost of the fees to go bankrupt is currently £700, so it's very difficult for many people to get that sort of money together.

Presuming your smaller debts are the standard type of credit debts and they've not obtained any CCJs then there is a 6 year limitation period. This means they can't enforce the debt through the courts if you've not made payments or acknowledged the debt in writing in the last 6 years.

For mortgage shortfalls following repossession the timescale is 12 years.

So it's probably going to be a while before these debts aren't enforceable. If it's not likely that you'll be able to raise the money for the bankruptcy fee then it might be worth seeing if you can get any help with it. This thread has links to the main places that can offer funding:

Kind regards

James

Thank you very much. I'm in the position that I make too much to receive any help from the charities and don't make enough to be able to spare that much beyond my living costs. I sold everything of any value ages ago to pay off everything I could and I haven't had a holiday in 6 years.

I wish I could get out of it but that's the way it goes I guess. Thank you again for taking the time to explain the situation to me.

stig109

StepChange_James wrote: »

Hello,

I can't see why there would be anything on your credit report about business partners. Your credit history should only look at people you've got joint financial products with.

Kind regards

James

Many thanks for that, I was looking at going down the Limited Company route, with me as director and my wife as majority shareholder, but a partnership would be a lot less hassle!

mostlyarb

I am a bit confused by section 3 of form 6-28.
Do I list all my business assets here ? It says in the guidance notes that the OR will let you keep the items, but surely these are the things that need to be sold to pay towards the debt. Am I listing items I need to keep or items that I expect to be sold(or both).Am I supposed to list my business tools / machines / van in a different section. The more I read the advice the more unsure I become !
I was self employed sole trader, the business has closed down and I am now unemployed.

System

mostlyarb wrote: »

I am a bit confused by section 3 of form 6-28.
Do I list all my business assets here ? It says in the guidance notes that the OR will let you keep the items, but surely these are the things that need to be sold to pay towards the debt. Am I listing items I need to keep or items that I expect to be sold(or both).Am I supposed to list my business tools / machines / van in a different section. The more I read the advice the more unsure I become !
I was self employed sole trader, the business has closed down and I am now unemployed.

Hi and welcome to the forum.:)

It sounds like you would benefit from some free and impartial advice.

You need to list all of the business tools, and machinery etc. in section 3 – both the ones you may want to keep and ones that need to be sold.

You can list what you need for a new job (personal tools of trade) in the tools of trade section. Machines and van (if you don’t intend to keep them) would just go under the relevant sections on section 3.

I’d recommend that you give us a call, we have a dedicated bankruptcy team and it’s best to take advice before petitioning (the judge may ask about who advised you).
I hope this helps.

Kind regards,

Mat

XYZ1000

Hi I don't quite know what to do and wondered if you can help please. I currently am on a debt management plan. i am due for a update yearly look at my out goings ect. It's just I in the middle of looking for a job.i have one part time one.usually my plan is based on full time hours. Should I still do the update ?