Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

Nex68

Hi,

I found out just a month ago that my ex-wife had sold our house over a year ago without telling me. There is a massive equity on the house which is just not payable; additionally she has also run up large debts for which I was a counter-signatory during the marriage (divorced 6 years since).

I'm an ex-pat in the EU and so I'm considering moving back to the UK and filing for Bankruptcy. I plan to move back with my parents and stay with them for the bankruptcy period.

My main concern is, as they are long since retired, will it affect their pensions? Will the OR look at their pensions as part of the process?

Additionally, I'm planning to only take a part-time job to keep any income to the absolute minimum so I can avoid a prolonged IPA. Is there any obligation to take a full-time job? Could I perhaps study or do voluntary work?

Finally, I have a small amount of savings that I was planning to use to get me started again in the UK, but what is maximum amount that I would be allowed?

All advice would be much appreciated.

StepChange_Rachael

Nex68 wrote: »

Hi,

I found out just a month ago that my ex-wife had sold our house over a year ago without telling me. There is a massive equity on the house which is just not payable; additionally she has also run up large debts for which I was a counter-signatory during the marriage (divorced 6 years since).

I'm an ex-pat in the EU and so I'm considering moving back to the UK and filing for Bankruptcy. I plan to move back with my parents and stay with them for the bankruptcy period.

My main concern is, as they are long since retired, will it affect their pensions? Will the OR look at their pensions as part of the process?

Additionally, I'm planning to only take a part-time job to keep any income to the absolute minimum so I can avoid a prolonged IPA. Is there any obligation to take a full-time job? Could I perhaps study or do voluntary work?

Finally, I have a small amount of savings that I was planning to use to get me started again in the UK, but what is maximum amount that I would be allowed?

All advice would be much appreciated.

Hi

Thanks for posting.

I can see you’re going through a lot of change at the moment and what sounds like a difficult time.

Firstly as you’ve mentioned you’re now divorced this might make a difference on what is liable to you depending on what was agreed in the divorce.

Even if you’re not named on the property it might be seen that you’ve beneficial interest in the property if you’ve contributed to it while you lived there. If you decide to go down the Bankruptcy route the Official Receiver (OR) might look into releasing you’re equity as part of the Bankruptcy.

Any debts that are in joint name will be seen as your liability as well and be included in the bankruptcy unless agreed otherwise in the divorce.

In regards to your parents their income including their pension won’t be included in the bankruptcy. They’ll only look to release assets of the individual looking to go bankrupt. If there are pensions you could release they’ll likely look into those but not of pensions in your parent’s names.

The OR won’t be able to tell you what type of employment you should go into or if it should be full or part time work. If you declare yourself bankrupt, they’ll look into your situation and if there’s any income that you’re entitled to they may tell you to enter into an Individual Payment Arrangement (IPA). For example if a person can access benefits. I can’t see that they’d be able to make you seek other employment for the benefit of the bankruptcy.

The OR might want to make sure that you can afford your priority living expenditure and wouldn’t be struggling with living costs or relying on further credit after being made bankrupt as part of their decision.

They’ll look into all assets you have to see if they can form part of the bankruptcy and this includes any savings. It doesn’t seem unreasonable that if the amount you’ve saved is needed to set up living arrangements and living costs then they’d not allow for this but it is up to the OR and they’ll make a decision based on your individual situation.

If you’d like help to look at your options with a debt advisor based on your individual situation you can contact us here.

Hope this helps.

Thanks
Rachael

Breakfastbar01

Hi
I had my own business which went bust, unfortunately i made myself personal guarantor for a few loans, i have managed to sort out payment plans for all but one who have issued a stat demand and have rejected any payment offer i have made, they have now filed t the court for bankruptcyMy question is the debt is £7000 but my mortgage is in joint names and we have 3 young children between 4 months and 4 years old,
If they sell my house which we have only had for 2years so the equity is not that much, what is the process will the equity in my name be shared amongst all the debtors??
if so i cant see them getting anywhere near the £7000 they are claiming for.
do solicitors fees and court expenses come out of my equity also?
and is my partners share protected, as she paid the mortgage on her own for 12 months and took out a personal loan in her name to do this as i was not contributing because of the business.

thanks in advance

Andrew

StepChange_Rachael

Breakfastbar01 wrote: »

Hi
I had my own business which went bust, unfortunately i made myself personal guarantor for a few loans, i have managed to sort out payment plans for all but one who have issued a stat demand and have rejected any payment offer i have made, they have now filed t the court for bankruptcyMy question is the debt is £7000 but my mortgage is in joint names and we have 3 young children between 4 months and 4 years old,
If they sell my house which we have only had for 2years so the equity is not that much, what is the process will the equity in my name be shared amongst all the debtors??
if so i cant see them getting anywhere near the £7000 they are claiming for.
do solicitors fees and court expenses come out of my equity also?
and is my partners share protected, as she paid the mortgage on her own for 12 months and took out a personal loan in her name to do this as i was not contributing because of the business.

thanks in advance

Andrew

Hi Andrew

Thanks for posting.

I’m sorry to hear that one of your creditors has decided to take this route.

The Official Receiver (OR) who oversees the bankruptcy would look to release any assets into the bankruptcy. This includes mortgaged properties with sufficient equity.

The OR will usually only look to release equity from the property if the equity is over £1000. They’ve up to three years to do this, up to 2 years and 3 months to decide if the equity is sufficient and then 9 months to sell. So the equity could increase in this time to make it worthwhile for the OR even if there is little or no equity to begin with.

If the property is seen to have enough equity to be included in the bankruptcy then this would only include the bankrupt’s share of the equity. Although this is usually half they might look into the percentage that’s yours if you can show that your partners share is more than yours.

If the property does form part of the bankruptcy and you want to stay in the property then you’ll have the option of finding someone such as family to buy your share of the equity.

If this isn’t an option but the property is still going to be sold then you can apply to stay in the property for up to a year longer to find somewhere suitable for your family to move.

Any assets that can be realised will be distributed between the creditors included in the bankruptcy. If the creditor is successful in the bankruptcy petition, the creditor will incur administration and legal costs for the process. The creditor will contact the OR to claim their costs back from the bankrupt’s assets.

I hope this helps.

If you’d like to discuss your situation further and look at your options you can contact us here and our debt advisors will be able to give you more tailored advice.

Thanks
Rachael

Tony_Doolin

Any help here would be greatly appreciated.
In 2000 I had to declare bankruptcy due to my business failure. I recently applied for and was granted a refund of my PPI from Barclays on a loan that I took out in 1996 (which was part of the bankruptcy). They sent the cheque (refund) to the Bankruptcy people, which I can understand, although I wasn't aware that the do that.
My question is that I have other PPI claims that I can make but will any refund go straight to the Bankruptcy people again ? These claims are on loans which were taken out after I was discharged from Bankruptcy.

[Deleted User]

Answered here;
https://forums.moneysavingexpert.com/discussion/comment/70457503#Comment_70457503

Former_StepChange_Richard

Tony_Doolin wrote: »

Any help here would be greatly appreciated.
In 2000 I had to declare bankruptcy due to my business failure. I recently applied for and was granted a refund of my PPI from Barclays on a loan that I took out in 1996 (which was part of the bankruptcy). They sent the cheque (refund) to the Bankruptcy people, which I can understand, although I wasn't aware that the do that.
My question is that I have other PPI claims that I can make but will any refund go straight to the Bankruptcy people again ? These claims are on loans which were taken out after I was discharged from Bankruptcy.

Hi Tony

Thanks for posting.

The right to claim back a mis-sold Payment Protection Insurance (PPI) policy on credit that was taken before the bankruptcy belongs to the official receiver (OR) as soon as you declare yourself bankrupt. So for your loan from 1996, the cheque has correctly been sent to your OR.

For credit taken after your bankruptcy, the OR does not have the 'right of action' to claim any PPI that you are entitled to. As these loans were taken after your discharge, you wouldn't have to give any PPI payments you receive to the OR.

You may have clicked on the link from Moneyineptitude already, this is a great thread that has more information about PPI claims relating to bankruptcy which may be of use.

I hope this helps.
Richard.

Herewego

Hi

Looking for some help, I have been helping a friend with a bankruptcy involving his ex-wife. We have just discovered there has been a meeting of creditors 2 weeks ago for
"The purpose of the meeting is to enable creditors to consider and authorise the Trustee to discharge legal costs incurred from realisations achieved."
Can anyone explain what this means ???

Thanks in advance

Former_StepChange_Richard

Herewego wrote: »

Hi

Looking for some help, I have been helping a friend with a bankruptcy involving his ex-wife. We have just discovered there has been a meeting of creditors 2 weeks ago for
"The purpose of the meeting is to enable creditors to consider and authorise the Trustee to discharge legal costs incurred from realisations achieved."
Can anyone explain what this means ???

Thanks in advance

Hi,

Thanks for the post.

It's difficult to be certain on this without knowing more details. I can only really give you some basic information on what typically happens in the bankruptcy process involving a Trustee. You may find speaking with the Insolvency Service directly will give you a more detailed answer. Here's what I think may be happening though:

When a bankruptcy order has been made, the official receiver (OR) will be appointed as the trustee. This means the OR administers the client’s bankruptcy and takes control of the client’s assets.

In some cases, the OR may appoint an insolvency practitioner (IP) to act as the trustee in their place. This is most likely to happen where the client has a mortgaged or owned property with a significant amount of equity. The IP may be selected by a meeting of creditors. The OR will pass the case to an IP to administer the sale of the property, but the IP will only accept the case if there’s enough equity to guarantee their fees will be covered.

This is what I am assuming the meeting of creditors you have been told about is for and they are probably deciding if the fees will be covered and if it's in their interest to continue.

I hope this helps
Richard.

Herewego

Thanks Richard that is really helpful.
We have taken equitable accounting into account due to the separation and divorce she had moved out when she went bankrupt so really there isn't much left for her as equity.
The bankruptcy was for about £18k but they are looking to reclaim 48k these charges are so high £30k in 2 years and 9 months, its also frustrating as he wasn't told until they approached after it had all gone through.
I'm worried they will take him to court now to force the sale of the property but I don't see them making much after all the costs and remaining mortgage is paid (house needs quite a bit of work).
It all seems very unfair as none of this was down to him yet hes fighting to keep the house just because they hadn't removed her from the mortgage and now he cant until this has all been sorted.
Sorry for the rambling just trying to advise him if there is anything he can do to save all the worry and his home