non-essential spending during bankruptcy

doseduk

I realised my last post was just, very long and for one reason or another, had no replies.. I thought I'd put the questions more plainly and directly...

if when you declare a change in your income/expenditure to the O.R. (either voluntarily or when they ask by postal questionnaire as I was told they will towards the end of my bankruptcy) - you include expenses that are not considered essential (in this case excessive spending on alcohol and drugs during relapse) but have taken a chunk out of your money, and so are gone (in this case, spending a lump sum that was to contribute to future months) - what happens?

Obviously if the amount is just ignored as if it doesn't count for anything, then a surplus sum is reached but doesn't actually exist in my account in reality, so I wondered if they would still demand you find that money somewhere? or treat it as misconduct, BROs etc. Or whether it would be a criminal court matter?!

Hope this is easier to digest, sorry for my long post the other day x

PippaGirl_2

I'm confused. Are you in an IPA atm? If not, then you just declare your income and your expenditure at the time of completing a form and then they decide then and there what your IPA should be if there is one which will start at a set date given by them after that. Any money spent before hand is irrelevant.

National_Debtline

Hi there

Didn't see your previous post so can't comment on it, the query above seems clear enough though.

You refer to spending a lump sum that was earmarked for future months. Presumably you mean this money was designated for essential bill payments and everyday expenditure, as opposed to being destined for the OR?

If your income hasn't increased, but you've spent some of it on alcohol/drugs, we're guessing some essential bills e.g. utilities etc. have gone unpaid as a result? Any such bills that have accrued since your bankruptcy order will remain recoverable after your discharge. At OR's discretion but many will opt not to punish you twice over for this as you will have the debt to deal with as it is.

Hope this makes sense.

Dennis @NDL

doseduk

PippaGirl wrote: »

I'm confused. Are you in an IPA atm? If not, then you just declare your income and your expenditure at the time of completing a form and then they decide then and there what your IPA should be if there is one which will start at a set date given by them after that. Any money spent before hand is irrelevant.

hey pippa, thanks again... and thank you to debtline person, i much appreciate your reply and hope the following clarifies things..

the complications come as follows:

- no IPA @ current, had a monthly deficit in fact when declared br
- in may, income/outgoings changed, no effect on leftover money after essentials, more just that the actual things that were essential and needing money each month changed
- in sept, income increased a bit with student finance a bit higher (on top of wages/benefits) - but costs did too, so still left with nothing left over, whatsoever. flush each month essentially
- in oct, relapsed, accessed extra student finance i'd earlier turned down to avoid excess income (chose not to take maximum amount I was entitled to, but then took it at this point). got part of this as a lump sum. spent that, after relapsing, reduced my loan again, but had already had 300 extra, and spent a lot of the original student loan which was to last a few months, leaving me short now.

The problems, IPA wise:
- i didn't declare any of these changes in income as they happened.
- i spent £1000 (a mix of extra lump sum income - £300 - and spending stuff that was meant to be for essentials like fuel to uni, and just not going to uni etc.... so avoiding/doing without essentials and spending the funds on drink/drugs in relapse)
- i couldn't decrease the 'amount of student loan' i am requesting for the rest of the year back to the 'safe amount' that left me with nice flush essential-only-covering finances month to month when you average it over the year, because i've spent some of stuff that was meant to last, so can only decrease it so much without leaving myself with no money.
- the latter point means that if you average out my current student loan, all the income i've had, including that £300 lump, and DONT include the £1000 divided by 12 along with essential outgoings, then it looks like i have £70 or something a month spare, which i dont
- obviously, through all this, my intention is to never take more student finance out than I need to just live within my essential means, since it would be pointless to obtain such extra finance, only to pay into bankruptcy. (since i have work income too, they could do that if I took too much) - so once I've absorbed the repercussions of spending that £1000... if I then had that £70 spare (since I don't intend to regularly spend that £1000 every year) I would make sure I decreased the student finance for that year according.

That is actually the most coherently I've managed to even think the whole thing through so far... if nothing else, it has kind of rationalised to me the issues...

The obvious things that i'm scared of are misconduct of not declaring the changes, misconduct of spending the £1000 and not giving it to creditors, the risk of all of the above implicating on possible IPA when I come to update figures if they request them (the I.S. examiner told me before the end of the bankruptcy in march, they tend to send out a 'questionnaire' asking for changes in income if any)...

I'm so sorry that its a complicated mess toe xplain and think about - i've actually typed three replies for the past 30 mins and deleted the other two, because they just went on and on and made no sense!
this one probably isn't much better, but its the best I can do.

If you can't get your head around the crazy numbers and annualisation of student finance and the other awkward crap in my situation, I suppose the main things I'm worried about, regardless, are the implications as stated just now.

Thanks endlessly!!x

PippaGirl_2

Student finance and benefits aren't taken into account for an IPA, so as long as you weren't working as well then no payments would have been made anyway.

However, obviously you should have declared all of the changes at the time to the OR as per the agreement you signed at the time of BR so you have failed to keep to that agreement. It's not for you to say that despite increase in income your expenditure had changed so there was no left over monies, that is for the OR to determine.

doseduk

PippaGirl wrote: »

Student finance and benefits aren't taken into account for an IPA, so as long as you weren't working as well then no payments would have been made anyway.

However, obviously you should have declared all of the changes at the time to the OR as per the agreement you signed at the time of BR so you have failed to keep to that agreement. It's not for you to say that despite increase in income your expenditure had changed so there was no left over monies, that is for the OR to determine.

This is my point.. I know I should have. My point about knowing there was nothing spare was notional that if imposing some kind of punitive measure for that, it was a case of not updating more than hiding actual excess funds (in reality, I know the decision is with the O.R., but these were based on actual provable expenses at the most conservative levels, so in reality it would have been unreasonable for the O.R. to see it otherwise...

and at all times when I have recieved a student loan, during bankruptcy, I have been working - so they do take it into account as income, but wouldn't ever take more than you are earning from work etc, i do understand all that. i more meant did anybody know likely consequences and how they would look at my situation as it is now..

thanks again

National_Debtline

Hi again

The simplest answer we can offer to your query is that the OR may decide to impose a BRO, and thereby defer your discharge until they are satisfied that you have complied with their requirements to their satisfaction.

It really will boil down to their discretion and what they think this would achieve. The best you can do now is to report what has happened to the OR and leave it in their hands.

All the best

Dennis @NDL

katrina89

Hello,
I dont know if is appropriate to ask a question this way by jumping in via another thread but i am new to the forum and desperately need some advice !
My son is a student and up to his neck in debt cards loads overdrafts not to mention student loans. He has decided to declare himself bankrupt, ( i realise student loans do not get written off ) as his debt( not inc student loans ) is in excess of 17000 and it is making him ill with worry to the point where if he is not careful he will have a breakdown and ruin his chances of getting a degree.

My question is on completing income and expenditure on the statement of affairs.
His allowable living expenses total £785 a month the bulk of that being a rent on a student house that is payable throughout the year. His income is made up of student income of £500 a month and a summer job which he has confirmation of employment in letter form which will run from end may to sept..this income averages out at 325 a month. this gives him income of 825 a month against outgoings of 785 a month.
He wants to include the summer job details because he knows that he will be earning this money and needs it to survive each month as demonstrated in the outgoings on his statement of affairs. Will the judge accept this future income or will he fail it because he hasnt started the job yet ?? This is my big worry because obviousley without this job on paper my son is still insolvent even with the 17000 written off. if this happened what an earth would he do ? There must be many others like my sons situation..what do they put down?

He has an appointment to present his petition next week so i really need some advice here !

Thank you so much
Kat

National_Debtline_representative wrote: »

Hi there

Didn't see your previous post so can't comment on it, the query above seems clear enough though.

You refer to spending a lump sum that was earmarked for future months. Presumably you mean this money was designated for essential bill payments and everyday expenditure, as opposed to being destined for the OR?

If your income hasn't increased, but you've spent some of it on alcohol/drugs, we're guessing some essential bills e.g. utilities etc. have gone unpaid as a result? Any such bills that have accrued since your bankruptcy order will remain recoverable after your discharge. At OR's discretion but many will opt not to punish you twice over for this as you will have the debt to deal with as it is.

Hope this makes sense.

Dennis @NDL

tigerfeet2006

Your question has now been answered on your own thread.