Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Rachael

Hi

Thanks for posting.

In bankruptcy it is the official receiver (OR) who overlooks the bankruptcy and it’s their responsibility to realise any assets into the bankruptcy. This includes equity in a mortgaged property.
If the equity is over £1,000 it’s likely the OR will look to release that equity and they have 3 years in which to do that, 2 years 3 months to decide and then a further 9 months to sell the property.

If the property is jointly owned then only the bankrupts share of the equity would form part of the bankruptcy. There is the option that a friend or family member could buy the equity so that the bankrupt can remain in the property and the money is still paid in to form part of the bankruptcy.

There are other solutions available to people struggling with debt. It’s important to make sure you know what all your options are as there could be other suitable solution that wouldn’t put the property at risk.

I’d suggest getting some free and impartial advice from a debt advisor so you know all the options open to you.

Stepchange debt charity provides free and impartial advice and tailors solutions to your individual situation.

Being a charity there is no obligation to go ahead with any recommendations given.

You can find the contact details here.

Thanks
Rachael

notmoneysavvy wrote: »

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

Rio1956

Hello, I have been advised through the Stepchange site to consider bankruptcy. My question is whether there is any chance of the OR allowing me to keep my car?. It is being bought with a Personal Contract Plan and is in negative equity. It is worth about £3500 - it costs £100 a month but is very cheap to run - road tax is only £30 and insurance really low. I need it for work as I work in a rural location and cant be without a car. I havent got the funds to buy an older car for cash and tried that last year. After spending £1000 on repairs the engine blew up which is partly why I am in financial trouble now. I dont want to keep it, go bankrupt to find it has then got to be given up leaving me with another debt to settle the finance. Can you offer me any advice?

StepChange_Rachael

Hi

Thanks for posting.

The official receiver (OR) who oversees the bankruptcy will decide what will form the bankruptcy depending on the bankrupts individual situation.

With an item that's in a contract like the vehicle on a Personal Contract Plan (PCP) it’s difficult to say if it would form part of the bankruptcy. This is because some agreements include a bankruptcy clause. This allows the creditor to end the agreement if the client goes bankrupt and the goods would need to be returned. So it’s important you check your contract for this first.

The OR will also check to make sure the vehicle is essential to the bankrupt. For example for work needs or if the client lives in a rural location where public transport isn’t a possibility. If an alternative is an option the vehicle may be taken to form part of the bankruptcy. This is usually if the vehicle is worth over £1000.

If it was the case you couldn’t keep the vehicle then any debt left owing would form part of the bankruptcy.

I can only give general advice without knowing details of your individual situation but if you’d like to discuss this further with a debt advisor you can find our contact details here.

Thanks
Rachael

Rio1956 wrote: »

Hello, I have been advised through the Stepchange site to consider bankruptcy. My question is whether there is any chance of the OR allowing me to keep my car?. It is being bought with a Personal Contract Plan and is in negative equity. It is worth about £3500 - it costs £100 a month but is very cheap to run - road tax is only £30 and insurance really low. I need it for work as I work in a rural location and cant be without a car. I havent got the funds to buy an older car for cash and tried that last year. After spending £1000 on repairs the engine blew up which is partly why I am in financial trouble now. I dont want to keep it, go bankrupt to find it has then got to be given up leaving me with another debt to settle the finance. Can you offer me any advice?

Rio1956

Thank you very much, that is really helpful.

One more question - if the company agreed to me keeping it and I kept it through the BR process until my interview with the OR, what happens if they say I can't keep it - can the balance still be put into the BR, even though I wont know the exact sum until the company takes it back?

StepChange_Rachael

Hi

Not a problem I’m glad you found the information helpful.

The Official Receiver (OR) will look into a bankrupts full situation to see if there are assets that can form part of the bankruptcy. If a car is on contract and it is going to be included in the bankruptcy then any debt left owing will be included in the bankruptcy.

Debts included in bankruptcy aren’t written off until the bankrupt is discharged this is normally 12 months after the date of applying for bankruptcy. Any provable debts that were taken out before the bankruptcy will be included.

I say provable as some debts won’t be included in insolvency such as debts arising from a criminal confiscation order etc.

So my understanding is that if you can’t keep the vehicle then anything left owing will be included in the bankruptcy and written of on discharge.

Thanks
Rachael

Rio1956 wrote: »

Thank you very much, that is really helpful.

One more question - if the company agreed to me keeping it and I kept it through the BR process until my interview with the OR, what happens if they say I can't keep it - can the balance still be put into the BR, even though I wont know the exact sum until the company takes it back?

kittykat31

Hello, my husband is currently in a DMP with Stepchange with a debt of £2500 split between two different HSBC loans. A lot has changed over the last couple of months - he has got a new job and has just passed his trial period so has been given a payrise. The job is nearer to home too so he is using less petrol. However, we also had another child a few months ago so that has changed our spending significantly. Unfortunately when I gave birth, my husband wasn't entitled to any paternity pay and then our daughter was unexpectedly rushed to hospital at a couple of weeks old and spent a week in intensive care, meaning that my husband ended up taking 3 weeks off work unpaid. I am a SAHM so wasn't receiving any SMP. As a result and feeling panicked about paying our bills, my husband opened a new debt (a credit card with capital one) to get us through that really tough period (which we now completely regret). Anyway, our hope was to pay it back quickly but, as is life with one wage, 2 young children and a credit card with a high interest rate, we feel ourselves struggling to make a dent in the debt again.

Obviously we need to update our budget and tell stepchange about all the changes above but I am petrified that stepchange will cancel his DMP if we ask for the new debt to be added as he broke the rule about getting new credit. I have looked at our new budget myself and if we add the debt on and pay a little extra to our DMP each month then HSBC won't be paid any less than they are now so would this help?

We are so annoyed at ourselves that we stupidly fell into the trap of think a credit card could get us out of another tricky financial situation and now feel like we've gone backwards in our attempt to clear his debts.

StepChange_Rachael

Hi

Thanks for posting.

I’m sorry to hear you’ve been going through a difficult time lately.

It’s important you contact us with any changes to your finances so we can support you in the best way possible for your individual situation.

As I can’t see your details I’d suggest contacting the department dealing with your plan so we can do a review with you.

You can find the contact details here.

We’ll look forward to hearing from you.

Thanks
Rachael

kittykat31 wrote: »

Hello, my husband is currently in a DMP with Stepchange with a debt of £2500 split between two different HSBC loans. A lot has changed over the last couple of months - he has got a new job and has just passed his trial period so has been given a payrise. The job is nearer to home too so he is using less petrol. However, we also had another child a few months ago so that has changed our spending significantly. Unfortunately when I gave birth, my husband wasn't entitled to any paternity pay and then our daughter was unexpectedly rushed to hospital at a couple of weeks old and spent a week in intensive care, meaning that my husband ended up taking 3 weeks off work unpaid. I am a SAHM so wasn't receiving any SMP. As a result and feeling panicked about paying our bills, my husband opened a new debt (a credit card with capital one) to get us through that really tough period (which we now completely regret). Anyway, our hope was to pay it back quickly but, as is life with one wage, 2 young children and a credit card with a high interest rate, we feel ourselves struggling to make a dent in the debt again.

Obviously we need to update our budget and tell stepchange about all the changes above but I am petrified that stepchange will cancel his DMP if we ask for the new debt to be added as he broke the rule about getting new credit. I have looked at our new budget myself and if we add the debt on and pay a little extra to our DMP each month then HSBC won't be paid any less than they are now so would this help?

We are so annoyed at ourselves that we stupidly fell into the trap of think a credit card could get us out of another tricky financial situation and now feel like we've gone backwards in our attempt to clear his debts.

Laurels1999

Hi I'm looking for some advice about how I should handle this situation.
I got my letter through about my IPA agreement.
Some things are unclear and I'm finding the OR isn't really answering my questions fully. I'm so afraid of causing a fuss but I don't want to sign such an important document when things are unclear.
I've emailed and asked questions and they are so short and didn't even address one of the things I asked at all.

I asked for a breakdown of how the figure for my IPA was arrived at and they said it is put into a government calculator. And that's it. Won't give me any figures at how it was calculated. Is this normal!? how can I understand it without a breakdown when I submitted an SOA.

Also what do I do if the OR I'm assigned won't help me understand things the email reply was so short. I don't want to be difficult or bring attention on myself but I want to fully understand what I'm signing before I sign the IPA letter.

This is so stressful feeling like I can't get things explained without feeling like I'm hounding them. I know they must be busy. But what to know what channels I should follow!

Thanking you for any help

StepChange_Rachael

Hi

Thanks for posting.

I can see how it would be frustrating if you feel your concerns aren’t being addressed with the Official Receiver (OR).

I can understand how you wouldn’t want to feel like you were being difficult but it’s important that you understand what you’re agreeing to.

You mentioned the OR had come up with the IPA through using a government calculator. In my understanding the information of the expenditure you’ve given them will be used against an average based on your household.

It’s used to see if any of your expenditure is higher than they allow.

Any expenditure over the average might not be accepted and this is why the IPA might be higher than what you feel is correct.

If you’ve any concerns with the advice given by the OR, or feel that you’d like to discuss the bankruptcy process further then I’d suggest contacting the insolvency service.
The insolvency service will be able to give general advice on the bankruptcy process, the process to follow and the roll of the OR.

You can find their website by following this link.

When you open the link If you scroll to the bottom the page you’ll find their contact details.

Thanks
Rachael

Laurels1999 wrote: »

Hi I'm looking for some advice about how I should handle this situation.
I got my letter through about my IPA agreement.
Some things are unclear and I'm finding the OR isn't really answering my questions fully. I'm so afraid of causing a fuss but I don't want to sign such an important document when things are unclear.
I've emailed and asked questions and they are so short and didn't even address one of the things I asked at all.

I asked for a breakdown of how the figure for my IPA was arrived at and they said it is put into a government calculator. And that's it. Won't give me any figures at how it was calculated. Is this normal!? how can I understand it without a breakdown when I submitted an SOA.

Also what do I do if the OR I'm assigned won't help me understand things the email reply was so short. I don't want to be difficult or bring attention on myself but I want to fully understand what I'm signing before I sign the IPA letter.

This is so stressful feeling like I can't get things explained without feeling like I'm hounding them. I know they must be busy. But what to know what channels I should follow!

Thanking you for any help

LEK

Good afternoon,

As of writing this message I am considering Bankruptcy, just to give a bit of an insight into the current situation - we learned a few weeks ago that my partner is pregnant, and sadly last week her old employer basically terminated her employment with immediate effect (we are looking to pursue this as unfair dismissal) - so she is currently out of work so therefore I am having to supply for the both of us to live. I privately rent which I also pay for solely, as well as all the household utility bills.

Also to note regarding my financial situation - I am in a DMP with StepChange, I have 2 x debt creditors with a total debt outstanding to around £18,500 and will take 6 years to clear, one of the creditors has marked my debt as a default which has obviously took a massive impact on my credit file and the other creditor keeps marking my payments as being late every month.

As it stands we are trying to make ends meet with my partner being out of work and the both of us now relying on my salary (£21,000 / year) but only this week I was also presented with a £715 over payment demand from HMRC for a previous working tax credit claim which needs paying, but as it stands I am not in a position to pay for it or arrange a payment plan. All in all and including the phone contract I have, my total debt outstanding to date is just over £19,500.

I have done a lot of research the last couple of days online into Bankruptcy in general, the pro's, con's and also the restrictions put in place and I am seriously considering it to say the least - not so much for me but also make things easier for me and my partner, especially because we now have a baby on the way which we will have to save for over the next few months (more so if she cannot find more work due to the pregnancy).

One thing that worries me at the moment if I do decide to go down this route, would the OR / relevant persons involved look to seize my car due to it being an asset? Taking into account that I solely own it outright, not leased or financed and I estimate it to be worth around £1,500. However, I really need it for commuting to work as the commute itself is 15 miles each way and involves the motorway. My partner also has a car but it would not be possible for me to make use of it in the meantime due to her needing it for other personal commitments / looking for work.

Many thanks for taking the time to read,

Liam.