Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

Nancy_PepperPot

Hi
My husband and I have a debt payment plan with stepchange and have done for the past two years. Earlier this year I had to give up my job due to mental health issues and have since then signed up for a degree. We owe approx 30000 between us in loans, credit cards and overdrafts.
We also have two children, one at university and another in sixth form. We have to supplement my elder childs uni rent and living costs as he is finding it difficult to gain part time employment.

Our dmp payment plan has taken a hit and we have gone from paying in 500 per month to 70 per month which we are just about managing but this has resulted in our out of debt date is now in excess of 30 years.
One of your advisors suggested bankrupcy a few months ago as a possible action to take but we can't scrape the money together.
I feel really hopeless with our situation and feel in limbo. We are currently privately renting and feel terrified that BR could jepodise our tenency or the prospect of getting another one.

I will be able to earn more money after my degree, so i could hopefully up my payments then but this seems so far away.

One of the loans was applied for via our joint bank account under my login, when i asked for the credit agreement i could only see my name on it. Would this mean I am only liable? Therefore I could go bankrupt leaving my husbands debt under the DMP?

We are living hand to mouth weekly. I do get a small bursary but this is such a small amount. Feeding and clothing two near adults is also demanding. Have you any advice?

StepChange_Rachael

Hi Liam

Thanks for posting.

I’m sorry to hear that what should be an exciting time has also been a stressful one with your partner losing her job. I do hope that the situation is resolved quickly for you both.

As the changes you’ve mentioned will impact your financial situation I’d suggest that you contact the team dealing with your debt management plan (DMP) so they can do a review.

It’s possible depending on the changes to your budget that your debt solution is no longer the best option and that there are other solutions available.

As a registered debt advice charity we’ll discuss with you all suitable solutions and help you go forward with a chosen solution.

If bankruptcy is the best option we’ll be able to help you understand the impact and how to take the next step.

In general with bankruptcy the official receiver (OR) will look to release any assets to include in the bankruptcy. With a vehicle they’ll see it as an asset if the value is over £1000 and owned out right.

If the vehicle's essential and there are no cheaper options available to you such as public transport then the OR might allow a bankrupt to keep the vehicle. The OR could look into the option of public transport.

To be able to give you accurate advice I’d need a good idea of your full situation. So I’d suggest contacting the team dealing with your DMP to complete a review.

You can find their contact details here.

Thanks
Rachael

LEK wrote: »

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.

StepChange_Rachael

Hi

Thanks for posting.

I’m sorry to hear that you’re finding it difficult at the moment and that the changes to your finances mean you’re struggling further.

We can certainly explore all suitable options with you. I can give you general advice here on the questions you have, but to be able to give you accurate advice based on you and your partner’s individual situation then we’d need to discuss the changes to your budget with you.

Firstly if you’re considering bankruptcy but the cost is causing difficulty then there is the option that you can save towards bankruptcy little by little over time. You can pay this online but can’t apply for bankruptcy until the full amount has been paid.

Also depending on your income you might be eligible to apply to a trust fund that can help towards the fees. There are organisations that you can apply to for help. You can follow this link to find out more about this as an option.

It’s important to check your contractual agreement with your landlord if you’ve concerns about what impact certain solutions would have on your tenancy. If there’s a clause where insolvency would affect your current tenancy it would be written in your contract.

With personal loans it should say in the contract which of you is liable for the debt. Both parties would have needed to sign the agreement to take out the debt in both names.

Also separate solutions could be an option for you and your partner and if this is the case we’ll discuss this with you.

If you’d like to discuss separate solutions and changes to your financial situation it’s important you call the team dealing with your current plan and they can look into this for you.

You can find our contact details here.

Thanks
Rachael

Nancy_PepperPot wrote: »

Hi
My husband and I have a debt payment plan with stepchange and have done for the past two years. Earlier this year I had to give up my job due to mental health issues and have since then signed up for a degree. We owe approx 30000 between us in loans, credit cards and overdrafts.
We also have two children, one at university and another in sixth form. We have to supplement my elder childs uni rent and living costs as he is finding it difficult to gain part time employment.

Our dmp payment plan has taken a hit and we have gone from paying in 500 per month to 70 per month which we are just about managing but this has resulted in our out of debt date is now in excess of 30 years.
One of your advisors suggested bankrupcy a few months ago as a possible action to take but we can't scrape the money together.
I feel really hopeless with our situation and feel in limbo. We are currently privately renting and feel terrified that BR could jepodise our tenency or the prospect of getting another one.

I will be able to earn more money after my degree, so i could hopefully up my payments then but this seems so far away.

One of the loans was applied for via our joint bank account under my login, when i asked for the credit agreement i could only see my name on it. Would this mean I am only liable? Therefore I could go bankrupt leaving my husbands debt under the DMP?

We are living hand to mouth weekly. I do get a small bursary but this is such a small amount. Feeding and clothing two near adults is also demanding. Have you any advice?

rw1888

Hi,

I was bankrupt a few years ago - now discharged. I have recently learned that I may in theory be entitled to make a PPI claim. I have read that if an individual is entitled to a PPI refund, the right to make a claim lies with the Official Receiver and not the individual. I'd just like clarification on whether this still applies to a loan which was paid off in full some time before the bankruptcy petition was made, i.e. a company to which I was NOT indebted at the time of the bankruptcy.

Thank you!

Team_AA

I have just received notification that my bankruptcy application was successful. In the information they sent to me it states not to use my bank account and that it will be frozen. I have opened up a basic account with Nationwide and all my DD and any income is now being paid into it. This account is listed in my application. Can you tell me when it is likely to be frozen and if/when I will have access to it? I have some DD that are due to be taken an also an online payment I made this morning. Will these be returned?

StepChange_Rachael

Hi

Welcome to the forum and thanks for posting.

The OR would be entitled to any assets that pre date the bankruptcy and they would form part of the bankruptcy.

As the debt pre dates the bankruptcy then any PPI claim would form part of the bankruptcy, even though you’ve been discharged and it wasn’t a debt included in the bankruptcy.

If the debt was taken out after you’d been discharged from bankruptcy then the OR wouldn’t be entitled to this asset.

Thanks
Rachael

rw1888 wrote: »

Hi,

I was bankrupt a few years ago - now discharged. I have recently learned that I may in theory be entitled to make a PPI claim. I have read that if an individual is entitled to a PPI refund, the right to make a claim lies with the Official Receiver and not the individual. I'd just like clarification on whether this still applies to a loan which was paid off in full some time before the bankruptcy petition was made, i.e. a company to which I was NOT indebted at the time of the bankruptcy.

Thank you!

StepChange_Rachael

Hi

Thanks for posting.

The Official Receiver (OR) will freeze your account once the application is successful. This is so they can conduct an initial investigation into your finances.

In most cases this usually only lasts a few days. If you’ve opened up a basic bank account with your new bank that will allow an un-discharged bankrupt to use it then things should go back to normally relatively quickly.

Direct debits at this time won’t be honoured so you'd have to find an alternative way of making payments.

With payments that should have already gone out it might be worth contacting the companies to see if the payment went through.

Thanks
Rachael

Team_AA wrote: »

I have just received notification that my bankruptcy application was successful. In the information they sent to me it states not to use my bank account and that it will be frozen. I have opened up a basic account with Nationwide and all my DD and any income is now being paid into it. This account is listed in my application. Can you tell me when it is likely to be frozen and if/when I will have access to it? I have some DD that are due to be taken an also an online payment I made this morning. Will these be returned?

doorstep54

Hi I would like to ask about bankruptcy as any one gone bankrupt and been evicted out of housing association house for going bankrupt even not being in rent arrears as am about to go bankrupt I did ask my housing if I would be evicted they said I would be ok but the man I spoke to there as left now worried any help PLEASE

bucko7878

Hi

I went bankrupt in 2010 and discharged 6 months later. Included in that bankruptcy was a house I held jointly with my ex partner. I moved out in 2008 and haven't made any payments towards the mortgage since that date. My ex bought my beneficial interest in the property from the official receiver and I was advised that it was now up to him to transfer it into his sole name. I've been battling with the mortgage company for a few years now but they will not agree to a transfer of equity to remove me from the mortgage. I'm just wondering where I stand on this. The advice given to me at the time from the official receiver was that I was no longer liable for the mortgage payments as they are covered in my bankruptcy and if the property was repossessed the mortgage company couldn't come to me for any shortfall. Likewise if the house sold for a profit I wouldn't be entitled to that either. I'm just worried as my ex partner has now moved out of the property and is trying to change it to a buy to let mortgage but is struggling. I obviously need to resolve this issue anyway as it is stopping me and my partner from buying in the future. I do have a complaint in with the Financial Ombudsmen to see if they can help me get my name removed.

Any advice would be greatly appreciated.

Louise

luvchocolate

Hi someone from stepchange will reply after the weekend but I wanted to reply to you.
I am in a very similar position and have been told the same as you if mortgage not paid and the property is repo and sold any shortfall would fall into the B.R so you would not be liable.
Also your ex would have to take a new mortgage in their own name as you will not be taken off the existing one, like you I am tied to a mortgage which drives me mad.