Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

Timsomerset

Hi, I am self employed and have been struggling to get enough work.

This month I was unable to make the payment on my Lloyds Mastercard and now the bank have phoned me to say that they have frozen the card and my current account which is also with them and is the account I run the business through.

An ongoing problem I have with them is since I moved, they will not recognize my address and will not issue new cards. Either debit or credit. But they do seem to recognise the address for pursuing me for money. Prior to freezing the current a/c they have taken it up to its maximum overdraft limit and offset this against the credit card. They tell me that the fees on the credit card are still £290.00 over the cards limit and that both accounts are now frozen, until the credit card is bought back inside its credit limit and that the overdraft is reduced on the current account.

They have been kept aware of my financial problems and situation and they know that I cannot afford this.

I have been a self employed gardener and last years income was poor due to the weather problems, but survived as supplemented by a loan that Lloyds offered me. This year it has not picked up as I had hoped it would.

I was already considering ceasing trading and with this now happening, I have no way of paying the money they are asking for.

I think my only option is to go bankrupt or something. I don't have any assets to sell, as most of these have been sold already to try and keep going. I am at my wits end and feel I am in a no win situation.

Before you ask, we do not have any children at home.

Lloyds did once threaten to make me bankrupt, when I decided that was a good idea and said yep go ahead, they backed right down. A problem I have is I don't think I can afford the payment needed to go bankrupt.

StepChange_James

Timsomerset wrote: »

Hi, I am self employed and have been struggling to get enough work.

This month I was unable to make the payment on my Lloyds Mastercard and now the bank have phoned me to say that they have frozen the card and my current account which is also with them and is the account I run the business through.

An ongoing problem I have with them is since I moved, they will not recognize my address and will not issue new cards. Either debit or credit. But they do seem to recognise the address for pursuing me for money. Prior to freezing the current a/c they have taken it up to its maximum overdraft limit and offset this against the credit card. They tell me that the fees on the credit card are still £290.00 over the cards limit and that both accounts are now frozen, until the credit card is bought back inside its credit limit and that the overdraft is reduced on the current account.

They have been kept aware of my financial problems and situation and they know that I cannot afford this.

I have been a self employed gardener and last years income was poor due to the weather problems, but survived as supplemented by a loan that Lloyds offered me. This year it has not picked up as I had hoped it would.

I was already considering ceasing trading and with this now happening, I have no way of paying the money they are asking for.

I think my only option is to go bankrupt or something. I don't have any assets to sell, as most of these have been sold already to try and keep going. I am at my wits end and feel I am in a no win situation.

Before you ask, we do not have any children at home.

Lloyds did once threaten to make me bankrupt, when I decided that was a good idea and said yep go ahead, they backed right down. A problem I have is I don't think I can afford the payment needed to go bankrupt.

Hello,

Thanks for getting in touch. It sounds like a tough time at the moment.

It's generally fairly rare for a bank to pay the fees to make someone bankrupt. Most of the time they'll struggle to get back the money they pay on fees, never mind recover the debt, via bankruptcy.

I'd recommend getting in touch with us for some advice. Here's the contact details: http://www.stepchange.org/Contactus.aspx. We've got advisors trained to help the self-employed plan business budgets, personal budgets and then give advice about how best to move forward.

If bankruptcy is the best solution we can then support you through the process. I can see your point about the expense of the fees, the total cost is £700 which is hard for people to afford when they're already struggling.

I'd suggest getting some advice before deciding on bankruptcy though. Changing to a new bank account elsewhere could be enough to deal with the short term issues with Lloyds and then there could be alternative options for the longer term.

Whatever the solution for your situation, we'll do our best to help you through.

Kind regards

James

mountme

Hi
Was just wondering about the situation we're in here at the moment. If I end up going bankrupt, how would it affect the car we have?
The situation is this : everything is in my name, all credit, overdrafts, debt, everything! with nothing in my wife's name so I assume I can declare bankruptcy (if it comes to that) without it affecting my wife's account and possessions etc?
She was given some cash by her grandma who is on the way out and was enough for her to buy a (very) 2nd hand car. It was HER money but paid in cash and at the moment it's MY name on the V5 cert that will be coming to us as I'm the registered keeper as will drive it more than she will. The V5C does state in massive letters that it's not proof of ownership.
But if I go under and any of my, rather sparse, things try to be used to cover creditors, how can I prove that the car is owned by her even though I'm down as registered keeper? Not insured this yet due to this, on insurance details it can state who is reg keeper and who is the actual owner. If it says that she owns it in the details, as is correct, would the car be safe as it's not owned by me?
George

(and yes i know there's prob a much simpler way of putting that but I'm tired and stressed and the dog knocked over my only glass of cider!)

StepChange_Private_Messages

mountme wrote: »

Hi
Was just wondering about the situation we're in here at the moment. If I end up going bankrupt, how would it affect the car we have?
The situation is this : everything is in my name, all credit, overdrafts, debt, everything! with nothing in my wife's name so I assume I can declare bankruptcy (if it comes to that) without it affecting my wife's account and possessions etc?
She was given some cash by her grandma who is on the way out and was enough for her to buy a (very) 2nd hand car. It was HER money but paid in cash and at the moment it's MY name on the V5 cert that will be coming to us as I'm the registered keeper as will drive it more than she will. The V5C does state in massive letters that it's not proof of ownership.
But if I go under and any of my, rather sparse, things try to be used to cover creditors, how can I prove that the car is owned by her even though I'm down as registered keeper? Not insured this yet due to this, on insurance details it can state who is reg keeper and who is the actual owner. If it says that she owns it in the details, as is correct, would the car be safe as it's not owned by me?
George

(and yes i know there's prob a much simpler way of putting that but I'm tired and stressed and the dog knocked over my only glass of cider!)

Hi George,

You mentioned the car is second hand – if it is valued below £1,000 then it is not a considered in your bankruptcy. So the first thing is to check that.

The best thing to do is to have the documentation that the car was paid for with your partner’s money – do you have a bank statement that the money was in her account before paying for the car? Ultimately it is about showing the Official Receiver that you are being honest and open about the car. It is at their discretion but if it is your partner who owns the car and paid for it you can explain this to the OR. Any supporting documentation to prove this would help.

It is true that any possessions owned by your partner will not be considered as assets to clear your debt.

To check whether bankruptcy is for you I suggest that you use Debt Remedy – our online debt advice tool – it will recommend the best way to deal with your debts based on your situation.

I hope this helps.

Thanks,
Jess

mountme

StepChange_Private_Messages wrote: »

Hi George,

You mentioned the car is second hand – if it is valued below £1,000 then it is not a considered in your bankruptcy.
...
The best thing to do is to have the documentation that the car was paid for with your partner’s money – do you have a bank statement that the money was in her account before paying for the car?

well we paid £750 for it ... although i'm getting market value ranges on insurance quotes (the automatic ones they put on as an expected amount) from £850-1050 so i'd personally say that yes that's covered. And thanks for that, I had no idea about that nugget of info!!
And we have the trail through bank accounts as we can show the lump sum was paid into her account a little while ago and then the £750 was transferred into my account the day I withdrew it as cash to pay for the car. Would you say that's enough evidence to satisfy them even if they did take the car into consideration if they value it at just over the £1000?
I would have thought so, they'd certainly see I didn't have enough money to pay for it myself!!!

George.

teddybear38

Good morning, this is my status, please can you aid my progression.
I would be a year discharged bankrupt, this December 8th. I know i wont be cleared until Dec 8th 2018. I have paid into Experian (£6.99 a month) and have found that two companies with a combined £10,000 debt, should be showing 'settled'. Im sending Experian a copy of my discharge of bankrupcy letter, which ive still to recieve. I was told it would cost me £50 to obtain, but i didnt need it !. I heard nothing from my official reciever, apart from the initial start of my year of being bankrupt. I have obtained a Vanquish credit card which i use to improve my credit score rating, and more importantly, have been paying £201 a month for my car loan since Oct 2011. The important issue is that Im 38yrs old and wanting asap to get on the property ladder, and get a mortgage. Do i have to wait until my bankrupcy is cleared from my credit score record ?. Or is there something i can obtain/do quicker ?.
Also, one other question. After 6yrs and banrupcy cleared from Experian and all credit scoring records, when asked by a lender, "have you ever been bankrupt", what is stopping you saying, "No". Surely it would hinder you saying Yes, even though it was over 6yrs ago. People who have been unlucky to have had no other way then to go bankrupt, want to put it in the past.
Thankyou and waiting for your reply

StepChange_James

mountme wrote: »

well we paid £750 for it ... although i'm getting market value ranges on insurance quotes (the automatic ones they put on as an expected amount) from £850-1050 so i'd personally say that yes that's covered. And thanks for that, I had no idea about that nugget of info!!
And we have the trail through bank accounts as we can show the lump sum was paid into her account a little while ago and then the £750 was transferred into my account the day I withdrew it as cash to pay for the car. Would you say that's enough evidence to satisfy them even if they did take the car into consideration if they value it at just over the £1000?
I would have thought so, they'd certainly see I didn't have enough money to pay for it myself!!!

George.

Hi George,

These decisions are always down to the Official Receiver, the person who's appointed to look into your finances. If your bank statements can show that it wasn't your money that paid for the car then I'd expect them to be happy with that.

Feel free to contact us for more in depth advice. If bankruptcy is your best option we've got an advice line that can help you through the process. The first step is to get advice from us, our contact details are in my signature below.

Thanks

James

StepChange_James

teddybear38 wrote: »

Good morning, this is my status, please can you aid my progression.
I would be a year discharged bankrupt, this December 8th. I know i wont be cleared until Dec 8th 2018. I have paid into Experian (£6.99 a month) and have found that two companies with a combined £10,000 debt, should be showing 'settled'. Im sending Experian a copy of my discharge of bankrupcy letter, which ive still to recieve. I was told it would cost me £50 to obtain, but i didnt need it !. I heard nothing from my official reciever, apart from the initial start of my year of being bankrupt. I have obtained a Vanquish credit card which i use to improve my credit score rating, and more importantly, have been paying £201 a month for my car loan since Oct 2011. The important issue is that Im 38yrs old and wanting asap to get on the property ladder, and get a mortgage. Do i have to wait until my bankrupcy is cleared from my credit score record ?. Or is there something i can obtain/do quicker ?.
Also, one other question. After 6yrs and banrupcy cleared from Experian and all credit scoring records, when asked by a lender, "have you ever been bankrupt", what is stopping you saying, "No". Surely it would hinder you saying Yes, even though it was over 6yrs ago. People who have been unlucky to have had no other way then to go bankrupt, want to put it in the past.
Thankyou and waiting for your reply

Hi teddybear,

One things that strikes me as a bit odd from what you've said is that you're still paying a car loan that you took about before your bankruptcy. I'd normally expect this sort of debt to be covered by your bankruptcy.

Obviously I don't know much about your situation, so there could be a straight forward explanation for this but if you've any doubts I'd recommend you call your Official Receiver's office and check with them. They'll be able to tell you if the debt should be included in the bankruptcy.

In terms of mortgages, credit ratings and bankruptcy, you're probably best talking to a mortgage broker about whether it's possible to get a mortgage with bankruptcy on your credit rating. Here's details on the ones recommended by Martin Lewis: http://www.moneysavingexpert.com/mortgages/best-mortgages-cashback#free.

I've spoken to people in the past who've managed to get mortgages relatively close to being discharged from bankruptcy but that was a while ago, when mortgages generally were easier to come by.

With mortgages it tends to be that the size of your deposit has a large bearing on the other factors they look at when deciding if you qualify. If you can pay £75k deposit on a £100k house then lenders tend to be more flexible than if your deposit is nearer £10k.

There's nothing to stop you from ticking the other box when asked about bankruptcy but it's not something I'd recommend. This would be seen as lying on a mortgage application, and could cause you problems.

People go bankrupt for lots of different reasons, so I don't think ticking that box would rule out mortgages but it's just something they want to take into account when making a decision.

I hope this helps.

James

STUDENTMW

Hi Everyone

I am currently considering declaring myself bankrupt but not too sure where I would stand on this situation.

I have no assets however, my brother has a car on HP which we share. I pay him half towards to car every month and pay my own fuel etc. The payments for the car come out of my account and my brother gives me the money (either by cash or bank transfer).

My question is, if i decided to declare myself bankrupt, would the car be taken as an asset?

Thank you

STUDENTMW

Also,

What documentation would I need to get together to show the official receiver.