Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

Former_StepChange_Matthew

Hello,

I am going currently going through a separation, and due to a high amount of unsecured debt and my soon to be ex not having an income, it looks like I may be facing bankruptcy... I will leave the whole story for another thread, but could you please help me with the following question?

I took on a large bank loan to fund my degree (which still has 30k remaining). A few years ago when I was starting to struggle with finances my parents very kindly offered to "buy" the loan from the bank so that I could repay them without paying further interest.

Now that I am facing bankruptcy, how would this be looked at? From what I can gather, they would be considered a creditor and therefore be given a percentage of any money collected through an IVA. However, would I be allowed to continue/increase my payments to them after the IVA finishes? How is this checked/regulated?

Secondly, I read everywhere that an IVA "usually" lasts three years. Are there occasions when this is extended?

Thanks you so much in advance for your response.

David

Hi David,

Thanks for getting in touch and welcome to the forum.

I'm sorry to hear that you're having to consider bankruptcy to deal with your debts however, I can answer your questions and provide you some guidance around this.

To clarify, bankruptcy and an IVA (individual voluntary arrangement) are two separate debt solutions and work very differently from one another.

You can view a brief overview of bankruptcy here and an overview of an IVA here.

In bankruptcy, money owed to family and friends are treated the same as another debt. This means they will be included and written off and you will not be able to resume payments after. The restrictions placed against you during bankruptcy can be extended if you are found to continue paying family and offering them "preferential treatment" so this is something you will need to consider.

In an IVA you can include family debts however, creditors are likely to refuse an IVA proposal if it includes payments to family or friends. If an IVA is set up, this usually lasts for 5 years however, this will be extended for an additional year if you own a property.

An IVA and bankruptcy are options to manage debts however, there are other options out there that may be better suited for your circumstances. Before proceeding with one of these options, it's worth exploring what your options are.

At StepChange Debt Charity, we can review your circumstances and advise you on the suitable solutions to manage your debt. You can create a budget online using our Debt Remedy tool here. This is annoynomous and available 24 hours a day.

Alternatively, if you would prefer speaking over the phone, you can contact our Helpline and their contact details are here.

I hope this helps
Matthew

purplekirsty

Hello. I did the debt remedy tool online and it recommended bankruptcy, but I am concerned as my boyfriend took a loan out for me to get my deposit for my house and I have been paying him back every month, but minimum to my creditors (£1 as per agreements I have with each of them). I know that they could ask for the money back from him - but is that for the total amount I've paid him or the money for the previous 12 months from when i file for bankruptcy?
Would I be better off ceasing payments to him and then going bankrupt after 12months? As he couldn't pay it back as it goes to his bank for his debts. I'm really worried about this as someone said I could get into trouble for paying him and they'd put me under some sort of order for 15 years - is this likely?? Will I get into trouble?

We would like to move in together some time this year, how would bankruptcy affect him if I went bankrupt whilst we lived together? Would they cut the household expenses down the middle and say that's my essential expenditure and leave him alone? Or what would happen if I went bankrupt and then he moved in? Would it have no effect on him but they may ask me to start some sort of payments back with excess income? Would that be for 1 year? 3 years?

My debt is £44k from a house I sold from 100% mortgage so now a £30k personal loan from Nram and the rest is old credit cards.

Any guidance would be appreciated as I now don't know whether to file or not.

JemmaAndrew

Hello,
I currently have 3 separate catalogue loans and am struggling to meet payments as all have different due dates. if I was to get myself a credit card with 0% no interest for a number of months will I be able to use this to pay these off and keep it all in one payment? If so, what specific credit card should I be looking for.
Many thanks,
Jemma

StepChange_Private_Messages

Hello. I did the debt remedy tool online and it recommended bankruptcy, but I am concerned as my boyfriend took a loan out for me to get my deposit for my house and I have been paying him back every month, but minimum to my creditors (£1 as per agreements I have with each of them). I know that they could ask for the money back from him - but is that for the total amount I've paid him or the money for the previous 12 months from when i file for bankruptcy?
Would I be better off ceasing payments to him and then going bankrupt after 12months? As he couldn't pay it back as it goes to his bank for his debts. I'm really worried about this as someone said I could get into trouble for paying him and they'd put me under some sort of order for 15 years - is this likely?? Will I get into trouble?

We would like to move in together some time this year, how would bankruptcy affect him if I went bankrupt whilst we lived together? Would they cut the household expenses down the middle and say that's my essential expenditure and leave him alone? Or what would happen if I went bankrupt and then he moved in? Would it have no effect on him but they may ask me to start some sort of payments back with excess income? Would that be for 1 year? 3 years?

My debt is £44k from a house I sold from 100% mortgage so now a £30k personal loan from Nram and the rest is old credit cards.

Any guidance would be appreciated as I now don't know whether to file or not.

Hi there,

Thanks for your post.

When you go bankrupt, the official receiver who oversees your bankruptcy will investigate your financial history and if they will be checking to see if you have offered preferential treatment. If the official receiver discovers preferential treatment to a creditor, they can ask for the money to be paid to them so they can fairly distribute this between all debts. The official receiver can reverse any preferential treatment made up to 6 months (2 years if a family member benefited from the preference) before the bankruptcy order was made however, the official receiver can look further back if needed.

In addition to this it is likely you will receive a bankruptcy restriction undertaking (BRU) and if this isn't declared when you go bankrupt, you are likely to receive a longer restriction.

A BRU extends the restrictions you receive during bankruptcy over a longer period of time. This can be anything between 2 - 15 years and this term is at the official receivers discretion so this is something that you would need to consider.

If you and your partner moved in together, and you went bankrupt if could impact your partner is a number of ways. Firstly some tenancy agreements may have a clause that states your tenancy will end if you become bankrupt so you will need to carefully check any tenancy agreement before you proceeded with bankruptcy. Secondly, if you and your partner have any linked financial products, your credit rating can impact your partner's so this is something else you may need to consider.

If you are using the Debt Remedy tool and would like some further guidance, it may be worth you speaking to the Digital Support team here at StepChange about your options. Their number is 0800 197 1704 and they are open 8 til 8 Monday to Friday and Saturday, 9am til 2pm.

I hope this helps
Matthew

Former_StepChange_Matthew

Hello,
I currently have 3 separate catalogue loans and am struggling to meet payments as all have different due dates. if I was to get myself a credit card with 0% no interest for a number of months will I be able to use this to pay these off and keep it all in one payment? If so, what specific credit card should I be looking for.
Many thanks,
Jemma

Hi there,

Thanks for your post and welcome to the forum.

I'm sorry to hear that you're struggling to meet the payments of your debts.

Here at StepChange we help people who are struggling with their debt repayments by exploring a suitable debt solution for you to manage your debts. We don't specialise in additional lending however so I'd be unable to advise you on which credit cards you should use to pay off your debts.

There is a helpful guide on moneysavingexpert here that may help you with this however, if you're struggling to meet the payments of your debts, it may be worth exploring if there are any debt solutions that can help you.

You can use our online Debt Remedy tool here which is anonymous and available 24 hours a day.

If you would prefer to speak to someone over the phone you can contact our Helpline who will be able to help you. Their contact details can be found here.

I hope this helps
Matthew

craigy68

Hi guys ....

Is there a website/link that details what the OR will allow for when composing a SOA ? Including the maximum values for things etc ?

Former_StepChange_Matthew

Hi guys ....

Is there a website/link that details what the OR will allow for when composing a SOA ? Including the maximum values for things etc ?

Hi there,

You can find the guidelines that the Official Receiver tends to use here however, there are a few things that you will need to consider.

These are guidelines only and the OR may decide that acceptable expenditure is higher or lower than this depending on your circumstances. In addition to this, if your SOA uses the exact figures in these guidelines, the OR is likely to examine your spending in closer details as they may assume that your figures have been manipulated to match the guidelines.

When completing an SOA, I'd always suggest that you are open and honest with your budget. This is because if the OR finds evidence that you have acted dishonestly they can extend the restrictions that are placed against you during bankruptcy from 2 years up to 15 years.

If you're considering bankruptcy, I'd recommend seeking debt advice first if you haven't already to make sure this is the right option for you.

Here at StepChange, we can help you find the right course of action for you to manage your debts. We will explore all suitable options for you and if bankruptcy is the best option, we can provide you support and guidance through this.

You can use our online Debt Remedy tool which is available here 24 hours a day.

If you would prefer to speak to someone over the phone, our Helpline are able to discuss this with you. Their contact details are here.

I hope this helps
Matthew

MapperleyFlyer

Hi, I'm after some advice - I took out an IVA in 2010 that subsequently failed in 2013 after getting made redundant and couldn't keep up with the repayments. My credit record shows the debt I owed to my main creditor on the IVA has been wiped off but the other creditor is still chasing me for money through a rather dodgy set of lawyers. A credit search carried out by my landlord before I moved into my last property showed a bankruptcy on my credit record. Have I been made bankrupt and if so how do I get the debt recovery people off my back?? I'm still unemployed and the stress has given me depression

Former_StepChange_Richard

MapperleyFlyer wrote: »

Hi, I'm after some advice - I took out an IVA in 2010 that subsequently failed in 2013 after getting made redundant and couldn't keep up with the repayments. My credit record shows the debt I owed to my main creditor on the IVA has been wiped off but the other creditor is still chasing me for money through a rather dodgy set of lawyers. A credit search carried out by my landlord before I moved into my last property showed a bankruptcy on my credit record. Have I been made bankrupt and if so how do I get the debt recovery people off my back?? I'm still unemployed and the stress has given me depression

Hi there

Thanks for your message and welcome to the forum. I'm sorry to hear of the redundancy and depression that you are now feeling, but please try not to worry as we can certainly help you with this.

The quickest way to find out for certain if you have been made bankrupt would be to search the Public Insolvency Register. Depending on the date of your bankruptcy (if it occurred) it should be listed on here.

If it's not listed on here, it would be worth contacting the Insolvency Service helpline to be certain as your details may have been removed from the insolvency register by now.

It's very hard to say if you have been made bankrupt without knowing more about your case, however, if your IVA failed, your insolvency practitioner can ask the court to make you bankrupt. In the majority of cases the insolvency practitioner will notify the creditors that the IVA has failed and take no further action, but in some circumstances there may be a clause within the IVA stating the actions the insolvency practitioner is obliged to carry out in the event of a failure. This could include an instruction to petition for yourbankruptcy.

Alternatively, once your IVA has failed, your creditors could apply for your bankruptcy through a statutory demand. This would mean that your creditor would have to pay the fees for your bankruptcy themselves.

It would be very unusual for you to not have been notified of this either way, but if the bankruptcy did occur and you did not object to it, it will very likely have gone ahead.

If you have been made bankrupt then you need to find out when this debt occurred and what it was for (some debts aren't included in bankruptcy). If it was before you were made bankrupt and it should have been included in your bankruptcy, you would need to tell the creditor to contact your Official Receiver or bankruptcy trustee (these are the people responsible for administering your bankruptcy). They will then deal with them.

If the creditor is chasing you for a debt that isn't included in your bankruptcy, you'll need to carry on dealing with them yourself. If you think the debt should be included in the bankruptcy but you forgot to declare it, you'll need to contact the official receiver. It may be possible to have the debt added to your bankruptcy depending on what it is for.

If this debt wasn't included in the bankruptcy and you'd like some advice on how to deal with it, you can contact us for some advice. We'll help you to build a budget and then we'll advise you on the best way to deal with this debt.

I hope this helps.

Take care
Richard

notmoneysavvy

Hi,
I'm thinking that due to very bad financial mistakes on my part (not my partner's(married() that a strong option is having to go Bankrupt (Debts are in my name)

All bills/financial agreements are up to date but living off credit which I just can't sustain.

We do have a house / mortgage which we bought last year.
In total there's probably about £10,000 - £20,000 equity at the maximum, meaning - from what I've read my 'share' of the beneficial interest would be £5,000 - £10,000 at most

I have debts of around £40,000 (OH only knows of half of them)

We both work (OH is on minimum wage and I earn just over £30k per year)
Now I know that the OR will be interested in my beneficial interest but what I don't want to happen is the forced sale of the house - want to keep it !

Based on the valuation / bought price of the house last year there's £10,000 equity - I doubt that house prices in my area have gone up too much more.

What's likely to happen and what options are likely to be available in terms of keeping the house!
Any advice appreciated.
Thanks