Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

slowlycrackingup

Hi, I'm currently dealing with stepchange about entering a debt management plan. They looked at the budget I gave them and worked out that the plan was the best option. I have had to send a bank statement that shows extra income I have coming in but it's not regular and will be stopping for a few months. I'm worried that this might stop the plan, would I then have grounds for bankruptcy as I will not be earning the amount that they may think.

StepChange_James

slowlycrackingup wrote: »

Hi, I'm currently dealing with stepchange about entering a debt management plan. They looked at the budget I gave them and worked out that the plan was the best option. I have had to send a bank statement that shows extra income I have coming in but it's not regular and will be stopping for a few months. I'm worried that this might stop the plan, would I then have grounds for bankruptcy as I will not be earning the amount that they may think.

Hello,

I'd suggest giving us a call and we can review your budget. We're pretty flexible about dealing with variable incomes, so we can talk you through the options you've got. It certainly doesn't mean you'd have to give up on the DMP.

If your upcoming reduction in income is going to mean a DMP isn't your best option anymore then we can talk to you about bankruptcy and the other debt solutions. Though if we advised a DMP based on your basic wage and you're shortly going back to that level of income it may still be your best bet.

Hope this helps.

James

Scaredy-cat_5

Don't know if this is the right place to ask this question but I hope you can help. My ex and I have been separated for over a year now. I still live in the marital home. The mortgage and house are in his name and about 5yrs ago he took out a secured loan. I had to sign papers to agree to the loan being put against the house we shared. I always believed that was the only thing I was part of in terms of the loan but I want to know if that means it is actually my loan too? My ex is planning on bankruptcy and I will probably have to move into rented accommodation. I am a full-time student and have 4 children. Will the secured loan company come after me for money?

StepChange_James

Scaredy-cat wrote: »

Don't know if this is the right place to ask this question but I hope you can help. My ex and I have been separated for over a year now. I still live in the marital home. The mortgage and house are in his name and about 5yrs ago he took out a secured loan. I had to sign papers to agree to the loan being put against the house we shared. I always believed that was the only thing I was part of in terms of the loan but I want to know if that means it is actually my loan too? My ex is planning on bankruptcy and I will probably have to move into rented accommodation. I am a full-time student and have 4 children. Will the secured loan company come after me for money?

Hi Scaredy-cat,

The key thing will be whether you signed papers to give your ex permission to take out a secured loan in just his name or whether you signed up for a joint loan. If it's just in his name then you're not liable to pay any shortfall if the house was sold and there was money still to pay.

If the loan is in joint names then you'd be liable for the shortfall on the loan if you're ex went bankrupt, the house was sold and the sale didn't cover all of the outstanding loan.

Secured debts aren't automatically included in bankruptcy though. It's only if the house is sold (either through choice or being made to following bankruptcy). In that scenario the house is sold and the money raised clears the legal costs, mortgages and secured loans. It's only if there's negative equity that there'd be a leftover debt.

If he's not had any advice yet, I'd recommend your ex gets in touch with us and we can give him advice on bankrutpcy, how the property will be affected and whether it's his best option.

He can get our help online using our advice tool Debt Remedy (http://www.stepchange.org/msehelp) or by giving us a call on our helpline (http://www.stepchange.org/Contactus.aspx).

Kind regards

James

ILoveAFreebie

Hi there,
My sister is in the process of filling in bankruptcy forms and is wondering what might happen to her car.
She transferred the car to our mum because she borrowed money from her to buy the car, in the hope that it would not be taken as part of the bankruptcy. She only did it last month and is hoping to file within the next 2 weeks. Is this illegal and will they just take the car anyway? She occasionally needs the car for work but has no proof other than a manager being able to say so and even then, it's so infrequent, she could get public transport.
If the answer is yes, they will take it, what is stopping her from selling it and using the money to file for bankruptcy, or is this also a big no no?
Any advice appreciated.

StepChange_James

ILoveAFreebie wrote: »

Hi there,
My sister is in the process of filling in bankruptcy forms and is wondering what might happen to her car.
She transferred the car to our mum because she borrowed money from her to buy the car, in the hope that it would not be taken as part of the bankruptcy. She only did it last month and is hoping to file within the next 2 weeks. Is this illegal and will they just take the car anyway? She occasionally needs the car for work but has no proof other than a manager being able to say so and even then, it's so infrequent, she could get public transport.
If the answer is yes, they will take it, what is stopping her from selling it and using the money to file for bankruptcy, or is this also a big no no?
Any advice appreciated.

Hi there,

It's likely that the courts would see the transfer of ownership of the car as concealing property which is an offence. Also, the courts can reverse such transactions and take the car anyway.

Thankfully your sister hasn't yet gone through with bankruptcy, so there should be chance to put things right.

I'd suggest she gets in touch with the insolvency service (http://www.bis.gov.uk/insolvency/contact-us) and explains the cirucmstances and asks about the best way to undo things without it having a knock on effect on her bankruptcy.

It is possible to sell assets to pay for bankruptcy costs, but it's important to make sure that the asset is sold for it's true value and the money isn't used for things the courts wouldn't approve of (bankruptcy fees are fine, Caribbean holidays not so much).

Again, the insolvency service should be able to give guidance on the right way to sell an asset before going bankrupt.

I hope this helps clear things up a little bit.

James

Happyagain

Ok we have had some advice from Stepchange, which was fantastic and relived a bit of pressure. We are currently fighting bankruptcy - trying to delay HMRC taking action. We are in process of having house valued and putting it on market - this would release enough equity to deal with most of our debts - others are ticking over quite nicely.

If HMRC don't delay and force bankruptcy they will want to sell house as we have no other assets. I understand that you can get a year's grace from them selling house as we have 2 small children. In that time do we have to keep paying the mortgage as this would not really make things any easier. Do we have to accept the year's grace or can we move out? Any advice regarding what happens will be greatly accepted!!!

StepChange_James

Happyagain wrote: »

Ok we have had some advice from Stepchange, which was fantastic and relived a bit of pressure. We are currently fighting bankruptcy - trying to delay HMRC taking action. We are in process of having house valued and putting it on market - this would release enough equity to deal with most of our debts - others are ticking over quite nicely.

If HMRC don't delay and force bankruptcy they will want to sell house as we have no other assets. I understand that you can get a year's grace from them selling house as we have 2 small children. In that time do we have to keep paying the mortgage as this would not really make things any easier. Do we have to accept the year's grace or can we move out? Any advice regarding what happens will be greatly accepted!!!

Hello,

You could talk to the mortgage company and see if they'd be willing to give you a payment holiday while you tried to sell or perhaps request they don't take any repossession action.

They'll be expecting payments from you if you're bankrupt, so it would be a matter of seeing what the mortgage company are willing to agree to.

You are usually allowed a year to arrange an alternative place to live but you absolutely don't have to be in the property for that full year. It's probably better all round if it can be sorted out quicker as it means you can start moving on with things.

I hope you can get enough time to avoid bankruptcy but please keep in touch with us and we'll do what we can to support you.

Kind regards

James

Happyagain

Thanks for that - think we'll contact the mortgage company and ask for payment holiday. Will keep in touch - Stepchange has helped us see light at the end of a very long tunnel!!!

Whitewinston

I am in financial difficulty. 3 years ago I took out an iva as I had trouble meeting loan and credit card repayments. I have missed last months payment due to reduced finances. I was in receipt of housing benefit which I am now not entitled to, was receiving £450pm. I wrote to council telling them my daughter had started work, they didn't receive it and I admit I didn't check my payments to see if they had gone down. Last month I was taken to court and was fined with a 12 month conditional discharge. I have to repay £6k at £100 pm. Also child benefit told me the apprenticeship my other daughter was doing was not approved for continued payment even tho I had rung them up to ask, this resulted in overpayment of £1k and £2k child tax credit. Child benefit has been stopped till April 2014 and ctc reduced by half. I also have a 14 yr old. My job is under review due to the court case as I work for HMRC so may be dismissed. My outgoings are £140 more than my incomings without including £100 I have to pay to council. I have a car that I bought through a payment breaks rom my iva that I paid £1200 for last year. Using Parkers valuation it's worth around £700. I don't want to lose it as it was my brothers car who died of cancer last year and I bought it from my sister in law. Is there any chance I would be able to keep the car? And is bankruptcy the answer or struggle through and offer token payments to my creditors - iva ones? Please advise I am worried sick