Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Rachael

Starry1981 wrote: »

Hi, currently we are in an iva we started payin sept 15 but now I think we may have a problem paying mine and my partners iva was based on our income he's works full time and I get child tax/child benefit I've looked on the expenditure part and it includes both of my parts we currently pay £75 each a month but come April/may I don't think I'll be gettin much child tax due to my estimates being way out so will have been overpaid and will be paying that back to Hmrc so basically I don't think I'll be gettin much at all.....what we are worried by is that when my tax is reduced my partner will have to pay the the things I did that I used the money for so will leave us with no money after we've paid our bills food etc to be honest when this happens I will be having to reduce our food bills and anything else I can that's possible......so my question is if we can't make the payments can our ip make us bankrupt? we don't have any assets and tbh I'm starting to feel like I was at the beginning before we took the iva seeing no way out and scrimping and saving to try and live. We have read about bankruptcy and feel that's the only option as we don't see anything gettin better financially and it's upsetting me as I really thought we could do it

Would we have to pay for another 3 years after going bankrupt if we can't even meet our full iva payment a month ? This is one thing I am worried about as I never knew it could carry on for another 3 years

Hi

Welcome to the forum and thanks for posting.

When it comes to individual voluntary arrangements (IVAs) one feature is that they are flexible and are based on your individual circumstances. I’d suggest contacting your insolvency practitioner (IP) to discuss any changes such as those you’ve mentioned with reduced income and the overpayment to see if there’re changes to the IVA that can be made. Not all changes in situation would mean an IVA would fail.

The insolvency practitioner might discuss bankruptcy if they feel the IVA is no longer a viable option. As you’ve mentioned you’ll be really struggling with general living costs like food when your income changes then it might be an option to take into consideration and discuss with your IP.

An income payment arrangement (IPA) can be set by the Official Receiver or income payment order (IPO) by the court in bankruptcy if after you’ve paid your essential living cost there’s more than £20 left over. This monthly payment can last up to 3 years.

From what you’ve mentioned if you’d be struggling to pay for food and cutting back on other essentials it doesn’t sound like there would be anything left over that could be paid in to the bankruptcy, although I couldn’t say for certain as it’d depend on your income and living costs.

There’s certainly a way forward for you it’s just finding out what’s best for your situation and your IP will be able to help look at your options.

I hope this helps.

Kind regards
Rachael

The_Walking_Debt

Hi, I've chatted to a counsellor and have received the information pack. I'm a bit confused about changing banks. I know I need a basic account but do I transfer everything before I apply for bankruptcy. I have an o/d with present bank which I may be able to pay off but not yet. It's relatively small. I seem to have got myself very confused about this aspect.

Former_StepChange_Richard

The_Walking_Debt wrote: »

Hi, I've chatted to a counsellor and have received the information pack. I'm a bit confused about changing banks. I know I need a basic account but do I transfer everything before I apply for bankruptcy. I have an o/d with present bank which I may be able to pay off but not yet. It's relatively small. I seem to have got myself very confused about this aspect.

Hi



Thanks for posting.



Once you begin your bankruptcy your bank account will be frozen. This happens very quickly, usually on the day of the hearing for the bankruptcy itself. The bank is then notified of the bankruptcy and in almost all cases, they will then close the bank account down altogether. This is why we advise people to change accounts before declaring themselves bankrupt.

Please bear in mind that if you are thinking about paying your overdraft off with your present bank account, it’s likely that even if you do this, the account will still be closed down anyway.

There are a limited number of accounts that can be used throughout the bankruptcy process though. Be aware that all accounts will befrozen for a period of time, but there are accounts that can then be used throughout the rest of the bankruptcy. These are often referred to as ‘basic accounts’.

If you’ve taken advice from us, you should find details ofthe bank accounts that you can use in the information pack that you have received. Alternatively, our website has details of the types of account you should be asking for.

I hope this helps, but if there’s any further questions about bankruptcy we’ll be happy to help, you can contact us at anytime.



Kind regards,



Richard.

The_Walking_Debt

Thanks Richard, how do I pay my bills if the basic bank account is frozen? Will it be frozen for a long time?

Fluffy1012

Hi Im considering bankruptcy and am wondering how long bank accounts are frozen for? How do people continue paying their rent, electric bills during this process? Also with the OR let my landlord know even if I am up to date with payments?

Thank you

luvchocolate

my basic account with the co op was not frozen

Former_StepChange_Matthew

Thanks Richard, how do I pay my bills if the basic bank account is frozen? Will it be frozen for a long time?

Hi there.
Your bank account will usually be frozen on the day however, it's unlikely your bank will re-open the account. There are banks you can use whilst you are bankrupt. You can find details on our website here


If you are looking to declare yourself bankrupt, I'd recommend that you open your new bank account or a credit union first and use this as your main bank account going forward. Once this is done, if you declare yourself bankrupt, your account will be frozen for a short period of time then the freeze will stop and the account can be used as normal.

I hope this helps
Matthew

Former_StepChange_Matthew

Hi Im considering bankruptcy and am wondering how long bank accounts are frozen for? How do people continue paying their rent, electric bills during this process? Also with the OR let my landlord know even if I am up to date with payments?

Thank you

Hi there.
Thanks for posting and welcome to the forum.

Bank accounts are usually frozen for 2 days. Sometimes this can be longer however, depending on the type of bank account you have, your bank may choose to close your account down once the freeze ends. Before your account is frozen, we would recommend that you withdraw your full balance before the freeze if your account is in credit. If you are overdrawn, we would recommend that you that you only withdraw enough to cover basic food and travel for a few days.

The OR shouldn't inform your landlord of your situation unless you had rent arrears that were outstanding and to be included in the bankruptcy. The other thing you need to consider is if bankruptcy could impact your tenancy agreement. Certain tenancy agreements have a clause about bankruptcy which would mean your tenancy agreement will end upon you going bankrupt. It's worth checking this before you go bankrupt.

If you're not sure about your options and would like to see what solutions are available, we have a free online debt help tool called Debt Remedy which you can access here

This online tool will ask about your circumstances and then recommended suitable solutions to help you manage on the bank of this.

Alternatively, you can have a chat with someone over the phone and our contact details can be found here

I hope this helps.
Matthew

Janey60

Hi, i am new to this forum and unsure if i am posting correctly, so please forgive me if not. I was wondering if you could tell me whether or not ex bankrupts are able to buy a home with the help of the government help to buy schemes or the help to buy ISA?
thank you

Former_StepChange_Richard

Janey60 wrote: »

Hi, i am new to this forum and unsure if i am posting correctly, so please forgive me if not. I was wondering if you could tell me whether or not ex bankrupts are able to buy a home with the help of the government help to buy schemes or the help to buy ISA?
thank you

Hi,

Thanks for posting.

This isn't an area that I'm an expert in, but from what I have read, there is nothing that disqualifies you from being able to apply for these schemes as an ex bankrupt.

I would suggest you contact them to be sure or check the relevant websites for details; Help to buy ISA or Right to buy.

I hope this helps.


Richard.