Whats my best Option

fooman

Have been reading these threads for some time while having my head in the sand and now things are finally catching up with me. I feel going bankrupt is the best solution. Here is a SOA so far.


House Value 230k

Mortgage £160000 £1050 pm
Nemo Secured Loan £60000 £575 Pm

Co-Op Visa £4500 £90 pm
Lloyds Gold Card £15000 £300pm
Cahoot £8500 £150pm
Egg Card £6400 £130 pm

Hp for work Van £7000 Van worth £5000 £170pm
HP for Car £15000 Car worth £12000 £270pm


Total Debts inc mortgage = £276400

Assets inc car,van and house = £247000

I am insolvent by about £29400.00


Payments per month £2735.00

What i want to know can you go bankrupt and still able to try and keep paying for the van and car or would these be repossesed as i need the van for work as i am a self employed electrician.

Work has been hard the last couple of years and you end up keep borrowing to try and keep you head above water hoping for the next big job to come along to get you out of a mess. But it never seems to happen.

I know i have made a right mess of things and is a terrible example for my 3 kids to have.

I earn after tax about £2000 a month so this would enable me to keep my mortgage payments up and the HP payments on the van.

Really don't know what to do.

To think at 44 i could lose the lot and have nothing keeps me awake every night and i end up shouting at everyone all day as its constantly on my mind. Its starting to make me ill and feel like disapearing.

anyone who has been in this situtation and managed to keep hold of things ?

Richard_S

fooman wrote: »

Really don't know what to do.

To think at 44 i could lose the lot and have nothing keeps me awake every night and i end up shouting at everyone all day as its constantly on my mind. Its starting to make me ill and feel like disapearing.

anyone who has been in this situtation and managed to keep hold of things ?

Hi fooman,

Your first port of call should be one of the debt charities, CCCS, CAB, National Debt Line, their services are free and the offer first class, impartial and professional advice. If you ultimately decide to declare bankruptcy the judge will ask you if you've taken professional advice so whatever you ultimately decide to do it won't be a waste of time.

The O.R won't sell your "tools in trade" and deprive you of the means to earn a living but how they would view your van given that it's on H.P will depend on a number of factors.

Bankruptcy will allow you a new start but it's seldom painless and assets like the car will almost certainly have to go. No two people's circumstances are exactly the same but we had a mountain of mainly business induced debt, and managed to keep the house and our sanity. Bankruptcy is a long arduous route but ultimately worth the struggle; for certain you can't carry on much longer spending more than you're earning.

Richard

fooman

how is a car an asset when its not worth what is owed on it ?

Bakeybadoo

If your car is in a HPA, you can ask to keep it and then negotiate with the lenders. As a HPA is a secured debt, it cannot be included in a BR but you can either end it and include the outstanding in your BR or you can negotiate to keep it going - outside of your BR.

Richard_S

fooman wrote: »

how is a car an asset when its not worth what is owed on it ?

fooman,

It's the treatment of vehicles on a HPA by the O.R that's relevant. If the agreement has got a number of years left to run the O.R isn't going to let you spend £270 per month repaying the outstanding balance while your other creditors get nothing. The vehicle will be returned to the HPA company who will sell it and any shortfall will become part of your estate in bankruptcy.

I'm not suggesting it's fair but that's the way it happens. If the HPA only had a couple of payments left and the car was worth a relatively small amount then you may have been allowed to keep it.

Richard

Richard_S

Bakeybadoo wrote: »

If your car is in a HPA, you can ask to keep it and then negotiate with the lenders. As a HPA is a secured debt, it cannot be included in a BR but you can either end it and include the outstanding in your BR or you can negotiate to keep it going - outside of your BR.

Bakey,

The only way to keep it going would be to transfer the agreement to a third party. The O.R wouldn't allow you pay that amount out of your I&E Account to one company, that would be showing preference.

Rich

fooman

ok fair enough about the car but how about the Van i need to continue my work ?

Richard_S

fooman wrote: »

ok fair enough about the car but how about the Van i need to continue my work ?

When you contact the CCCS or one of the debt charities they'll be able to give you a better idea about the van. I don't know the answer for certain, there's a couple of alternatives, they may well take the view that the repayments are part of the costs of your self employment and therefore not a problem. For certain, they won't put you out of business because that would be depriving you of the means to earn a living.

Believe me I know how painful this is, but on the plus side you should be able to keep your house, stay in business and put all the debts behind you. As I said before it's never painless but it will give you the chance of a fresh start.

Richard

Jonto_3

Richard_S wrote: »

Bakey,

The only way to keep it going would be to transfer the agreement to a third party. The O.R wouldn't allow you pay that amount out of your I&E Account to one company, that would be showing preference.

Rich

Are you 100% sure about that?

The HP agreement is secured against the car in the same way a mortgage is secured against a property. Now if there is a shortfall on the property is the OR going to say he can't pay his mortgage and he should handover his property. Whilst he has a Van for work which would could be classed as exempt i am going to hazard a guess that he will need a car aswell to take kids to school etc. Van will only have two seat remember.

There no preferential payment either as to be a pref it has to be a max of 2 years before the bankruptcy order for connected parties. We are looking here at post order payments.

Richard_S

Jonto wrote: »

Are you 100% sure about that?

The HP agreement is secured against the car in the same way a mortgage is secured against a property. Now if there is a shortfall on the property is the OR going to say he can't pay his mortgage and he should handover his property. Whilst he has a Van for work which would could be classed as exempt i am going to hazard a guess that he will need a car aswell to take kids to school etc. Van will only have two seat remember.

There no preferential payment either as to be a pref it has to be a max of 2 years before the bankruptcy order for connected parties. We are looking here at post order payments.

Hi Jonto,

I'm sure the O.R will only allow expenditure for essential items and H.P payments on a car are not an essential item. The O.R will allow a bankrupt to keep or purchase a modest car if they are sure it's essential for work or other commitments. A mortgage is essential expenditure in the same way as rent; you need somewhere to live. The equity (Beneficial Interest) of course is a different matter.

The van is different because the O.P needs it to earn a living and my guess is that he'll view the H.P payments on the van as a cost of his self employment. I didn't preferential in terms of "fraudulent preference" what I meant was that if the HP company were to receive payments from a bankrupt they would be receiving funds where other creditors weren't.

If the car was worth more than the agreement left outstanding the O.R would sell the car, pay off the outstanding balance, give the bankrupt enough to purchase a modest vehicle and the rest would go to the estate.

Richard

Jonto_3

Richard_S wrote: »

Hi Jonto,

I'm sure the O.R will only allow expenditure for essential items and H.P payments on a car are not an essential item. The O.R will allow a bankrupt to keep or purchase a modest car if they are sure it's essential for work or other commitments. A mortgage is essential expenditure in the same way as rent; you need somewhere to live. The equity (Beneficial Interest) of course is a different matter.

The van is different because the O.P needs it to earn a living and my guess is that he'll view the H.P payments on the van as a cost of his self employment. I didn't preferential in terms of "fraudulent preference" what I meant was that if the HP company were to receive payments from a bankrupt they would be receiving funds where other creditors weren't.

If the car was worth more than the agreement left outstanding the O.R would sell the car, pay off the outstanding balance, give the bankrupt enough to purchase a modest vehicle and the rest would go to the estate.

Richard

Do you not think that taking his children to school for example would be another commitment?

I know what you originally meant when you referred to a preferential payment but a preferential payment can only be made PRIOR to the bankrupt order. In this case discharging an ongoing HP agreement after the dated of the order is not a preferential payment. The only time you are able to extract post order assets for the benefit of the estate is through an IPO/A or an after acquired asset up to the date of their discharge.

Using your example you could argue that a debtor is until to have sky tv (a luxury I would say and certainly not essential) after he has been made bankrupt as that £50 should be used to discharge a creditor instead of the other bankruptcy estate creditors.

The fact remains that HP agreement creditors are secured creditors and have no claim in the estate, other than for a shortfall. I would be gobsmacked if the OR made him sell/hand the car back and extract what would have been the HP payments via and IPO.

Can you see where I am coming from?