Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Rachael

Hi

Not a problem, I’m glad we can help.

Council Tax (Poll Tax) is a provable debt in Bankruptcy. As you're issued the bill in advance for the year. When you go bankrupt the rest of what is owed will be included in the Bankruptcy.

You’d have to start paying Council Tax for the following year even if you aren’t discharged from the Bankruptcy yet.

So if you were made Bankrupt in August you would need to start paying it again the following April. As Council Tax is issued on the first of April each year.

The Official Receiver (OR) will look into your financial situation to see if you’d have to make a payment into the Bankruptcy called an income payment arrangement (IPA) or income payment order (IPO).

The OR may take this into consideration and your IPA or IPO may be set higher because you’re no longer paying Council Tax.

If you live with someone who is liable to pay the Council Tax and are not applying for Bankruptcy then they'd still need to pay the Council Tax for that year.

I should also mention that if you have Council Tax arrears which have been through court and a liability order has been obtained, then the arrears can still be collected after bankruptcy. A warrant of control would be used to do this.

This would happen once you've been released from the Bankruptcy if the local authority chooses to do so.

I hope this helps.

Thanks
Rachael

doorstep54 wrote: »

Sorry for keep posting there was just last question need to ask, is it true when you make your self bankrupt you have to stop paying poll tax ? As been told when you go bankrupt don't pay poll tax till next year, can't you get in trouble if you don't pay it

EB61

Hi there,
I have just found out that my basic bank account has now been frozen by The insolvency service. I went bankrupt in March 16 and have not had any official direct contact with official receiver other than speaking to her colleague who told me she would be in contact.
They were aware that I have NO FIXED ABODE and that it was easier to contact me by email but I have received nothing.
Now it seems, everything is closing in around me. My bank account has been frozen in last few days - all DD's an S/O's cancelled. I have very little income as still trying to find work. Am staying with friends a week here and there.
I feel desperate and can't seem to find anyone to help that isn't at a cost.
Can you help me in any way?
Am I able to set up another basic account that could give me a function to pay for things online even though I am bankrupt.
Without this facility - I am unable to get an enhanced DBS check for work, renew my passport - which I can't afford to do right now etc etc
Please help.
Thank you.

luvchocolate

Hi very unusual for a bank account to be frozen 5 months after B.R.
I would contact the O.R s.a.p to ask what is going on.

StepChange_Allen

EB61 wrote: »

Hi there,
I have just found out that my basic bank account has now been frozen by The insolvency service. I went bankrupt in March 16 and have not had any official direct contact with official receiver other than speaking to her colleague who told me she would be in contact.
They were aware that I have NO FIXED ABODE and that it was easier to contact me by email but I have received nothing.
Now it seems, everything is closing in around me. My bank account has been frozen in last few days - all DD's an S/O's cancelled. I have very little income as still trying to find work. Am staying with friends a week here and there.
I feel desperate and can't seem to find anyone to help that isn't at a cost.
Can you help me in any way?
Am I able to set up another basic account that could give me a function to pay for things online even though I am bankrupt.
Without this facility - I am unable to get an enhanced DBS check for work, renew my passport - which I can't afford to do right now etc etc
Please help.
Thank you.

Hello

Thanks for posting. I'm sorry to hear of the distress this situation is causing.

The scenario you describe sounds unusual and it's difficult to know what might have happened. I'll firstly explain the normal process for how bank accounts are treated in bankruptcy which will hopefully help:

All bank and building society accounts will be frozen when a person goes bankrupt. This happens quickly after the bankruptcy is approved. The accounts usually remain frozen for around two days while the OR conducts initial investigations into the person's financial affairs. In some cases, accounts may be frozen for longer. If they’re frozen for more than a week, the bankrupt person should contact the OR and ask them to contact the bank to request the account is unfrozen.

While the account is frozen, Direct Debit and standing order payments won’t be honoured, and it won’t be possible to make payments into the account.

Individual current accounts are almost always closed by the bank when the customer has gone bankrupt, with any credit balance being passed to the OR.

Some basic bank accounts are available to undischarged bankrupts which means they can still be used after a bankruptcy order has gone through. They still get frozen briefly, but then can be used as normal afterwards. Further information on bank accounts after bankruptcy is available on our website.

Most high street banks will allow an undischarged bankrupt to open their version of a basic bank account so yes this should be possible. We have a list of accounts that should be available to you, please send us a DM to StepChange Private Messages if you'd like us to provide this to you.

So, as you'll gather from this information, the account being frozen suddenly five months after the bankruptcy is very odd. Have you asked the bank why the account has been frozen? I'm not aware that the insolvency service would freeze bank accounts, only the OR, but as I say, not normally at this stage.

I'd recommend speaking with the bank to find out what's happened, and if it is related to the bankruptcy, contact the OR to find out what's going on. Opening a new account may also help as discussed.

I hope this helps.

Allen

doorstep54

Just wanted some advice please, I submitted for bankruptcy and got approved said I have to wait to get letter from the receiver in next to weeks, I know my bank account will be frozen its only basic account and don't owe any money to this bank, am just worried how I will get my wages that's paid in to this account weekly as I will have nothing to live on or be able to pay my rent, what do I do please

Former_StepChange_Richard

doorstep54 wrote: »

Just wanted some advice please, I submitted for bankruptcy and got approved said I have to wait to get letter from the receiver in next to weeks, I know my bank account will be frozen its only basic account and don't owe any money to this bank, am just worried how I will get my wages that's paid in to this account weekly as I will have nothing to live on or be able to pay my rent, what do I do please

Hi there

Thanks for your message and contacting us. I can understand your concerns about your rent and I'll do my best to help you with this.

Bank accounts (any bank account) will be frozen for a period of time when you are declared bankrupt. Usually this is around 2 days, but it can be longer. If you account is frozen for more than a week you can contact the Official Receiver (OR) and request it be released.

The government website has information about money that can be released to help with daily living needs should you require this.

Most people find their accounts are frozen for a short period and it does not affect their situation too greatly.

Please note that when you complete the bankruptcy application forms you are asked if you have any cash as an asset. If you need to withdraw cash before your account is frozen this must have been noted on your application.

I hope this helps.

Richard

firewall

Hi,

I am considering bankruptcy as I have 55k credit card debts on a low income.

I work for a bank, so will lose my job instantly...also stopping my entitlement to working tax credits because of this.

My only remaining income would be about £50 a week child tax credits and 82 a month in child benefit.

My questions are :-

1. Can I still get child tax credit and child benefit if bankrupt.

2. Would this money be taken by them anyway.

I have a child and no other income, and lodging with my pensioner dad so no rent to pay.

Many thanks.

kelpie99

Hi,

I was sequestered in February and had a trustee appointed then.

At the time I was on universal credit, and looking for work so my repayment was set at £0. I was forced to move in July and updated my address soon after and on Saturday just got what feels like quite an aggressive letter from the trustee telling me I hadn't submitted a form that they sent me detailing my income and expenditure, citing their ability to issue a compliance order.

I'm sure I sent this to them in February and if they are just checking that my circumstances haven't changed think it might just have been sent to my old address, but it's worrying me as at the same time as I moved (start of July) I was offered some one-off work for an annual exhibition/festival on a self-employed basis.

I did the right thing and closed my Universal Credit claim off before doing it, and will now be re-applying for these benefits as I'm effectively unemployed again and I don't intend to keep acting as self-employed as it was a one-off and I won't pass the individual small earnings allowance of £5950 with regards to National Insurance contributions etc. and although I was happy to be working my mental health has not been great and I've been several times to the doctors concerning stress and anxiety levels and the impact that's having on my overall health.

However, because of the timing of the trustees letter I'm worried about how this will look to them and if they will assume that my earnings over these two months are representative of my future earnings, as they are not. If anything, it would enhance my monthly income over the year to about £800 from £612, assuming I receive the same benefits. I don't feel like this represents 'extra' income as I was barely able to get by on my income support and living in sub-standard accommodation as a result (again, documented by medical treatment) and my new flat is consequently more expensive.

Am I going to be expected to justify all of the above and how much scrutiny will they pay to these changes given that I am still living on a very limited income?

Former_StepChange_Richard

firewall wrote: »

Hi,

I am considering bankruptcy as I have 55k credit card debts on a low income.

I work for a bank, so will lose my job instantly...also stopping my entitlement to working tax credits because of this.

My only remaining income would be about £50 a week child tax credits and 82 a month in child benefit.

My questions are :-

1. Can I still get child tax credit and child benefit if bankrupt.

2. Would this money be taken by them anyway.

I have a child and no other income, and lodging with my pensioner dad so no rent to pay.

Many thanks.

Hi there

Thanks for your post. I'm sorry to hear of your situation and I understand this must be a stressful time, but we'll certainly be able to help.

It's important to consider all possible avenues when looking at solutions to debts. Bankruptcy is a great tool for some situations, but it's not right for everyone. Certainly where there's a risk to your employment, it's worth considering any other options.

I would suggest using our advice service to look any other possibilities. There's no obligation to take our advice if you don't want it, we'll only suggest the best choices available to you. You can use our self-help tool Debt Remedy on our website to build a budget in your own time. Once this is complete the website will present the best solutions for you.

Alternatively you can call and speak with an advisor who can make the budget for you and then discuss the options you have available. All our contact details are here.

Just to answer your question about income, you will still receive the benefits you are entitled to. If you declare bankruptcy your finances will be considered for something called an Income Payment Arrangement (IPA). A review will take place to find out if you have any spare money after you have paid all of your essential living costs. If you do, you could be expected to pay this spare money in the IPA for a set period of time, usually 36 months.

I hope this helps. Please let us know if there's anything else we can do.

Take care
Richard.

Mich81

Hi can someone please help?

My partner has walked out on me, and I have 20k of unsecured debt.

I'd been managing ok, but now I have to cover all the house bills alone which means I don't have enough to cover those and my debts.

He's taken his name from our joint account so we're no longer financially linked, but I don't know if he's changed all his details to his parents house yet - will this matter if I want to go bankrupt? I don't want them to think he's still living here, but they can come and check if they want too.

I've nowhere else to go, so I'm stuck here paying all the bills and a big loan which I stupidly took out to consolidate both our debts