The "what do you need to know before you go bankrupt?" thread!

ClaireLR

Hi AOAD

Just checked to be sure and it says:-

What do you think are the reasons for you not having enough money to pay your debts? You should provide reasons to support your answer. For example, it would not be enough to state "the recession" without explaining its effect on your affairs.
(Maximum 4000 characters)

I'm really dreading being asked by the OR because my reasons as I said above are simple - no willpower and spend happy basically. I went through a period of depression and used to use shopping as a pick me up.

Shall I fill it in and when I have cut and paste it here so that people can advise do you think that would be ok?

Have you read my bit about the IPA above? Do you know anything about that its confused the hell outta me!

allofadither

Can't help on the IPA thingy wotsit....sorry, she's got me confused too.

But yes, post up your reasons for getting into debt, shouldn't be that much different from many others really, but it's well worth getting the reasons clear in your mind for when you speak to the OR.

Why did you choose BR? What has changed that means you can't service your debts anymore? Wage cut? Unemployment? Illness? These are all common reasons, but I'm sure there are loads more.

ClaireLR

I will do that, I'll get round to it tomorrow, I'm sooo tired now and my little fingers wont type anymore!

Thanks for the advice! Ill post again tomorrow. x

wherediditallgo

ClaireLR wrote: »

Internet - she said did I use it for work, I told her no, so she said realistically they would probably wouldn't allow this. Then I thought, sometimes I do use it for work - I'm a secretary and sometimes bring work home with me to type and then have to email it, I can't use discs due to the data protection act so technically I do need it! Also planning on doing a course soon ECDL (anyone know about this?) which I understand needs to be done partly on the net and I will have to do in my own time so theres another reason!

Holidays - I put £40, she said that she wasn't sure about this. Anyone put this on their SOA and had it allowed?

Now she also told me that as I live in a flat rented from housing association, that I should check my tenancy as some associations won't allow bankrupts to live in their properties. I was shocked about this and can't find my contract (I'm so organised, you can see why I'm in debt can't you) so I'm going to have to call them on Tuesday.

Now another thing that she mentioned baffled me and I'd like some advice on this one. IPA's. Now I know about them so when she asked I said yes I am aware of them, then she asked do you realise you wont be paying any tax. I said yes I understand that to. She said do you know why? I said yes because it goes to the OR instead of the taxman to help fund the bankruptcy (did I make that up?? Sure I read it on here somewhere!???) Well anyways she said no it doesn't go to the OR, it's extra for me in my take home pay?!?! I said I didn't understand why. She said something along the lines of the OR can then take this money and use it towards an IPA. I think I got confused because she then said if you change your job before the end of the tax year your tax code will go back to normal but if you stay in the same job then it's an NT tax code and that extra goes in your pay packet.

Now I think I've got this wrong somewhere because it doesn't seem to make any sense. Can anyone shed any light on this??

Hi Claire,

I put the £40 for holidays & gave home study for needing the internet - I'm doing the ECDL & another course from home. Many large organisations offer the ECDL (maybe the Insolvency Service do too), so it should be easy enough for the OR to confirm that the employer pays for the course, but the student has to cover their own internet costs & have a home computer to use. I don't know what they didn't allow on my SOA as they didn't send me a breakdown with the IPA agreement, but my IPA is only for £50 so I can't see that they disallowed both, especially as there were other things on my SOA that I thought they'd disallow too. I'd therefore say definitely put them both down.

As for the NT code, as I understand it if you end up with that code it's to allow you to have more money to put towards your debts, it's not for you to have more money to keep for yourself. You then have to declare the increased take-home pay to the OR, who takes it into consideration for assessing your IPA. I don't know whether the code will change if you change your job during the same tax year, but the NT code only stays in place for the tax year in which you go BR anyway. Have a read of here.

Hope that helps.

owetoomuch

Claire I put

Over committed myself on credit, started to use one card to pay off the others, using cards for day to day expenses. Unfortunately burried m head in the sand hoping something would turn up t sort it all out. Going bankrupt on the advice of CCCS.

Hope this helps

gettingitsorted

Im not very good at putting things in words so i borrowed a bullit point response off another forum .

ClaireLR

Ooooh now I'm really confused (re the IPA thingy)

It bascially confirms on the website (thanks btw WDIAG), that the "extra" you get in your take home pay can be used to put an IPA in place. Now I thought an IPA was for 3 years but on the insolvency.gov website it does indeed confirm that at the end of the tax year in which you were made bankrupt, a new tax code is issued, and so therefore there isn't going to be any extra for the OR to take.

I'm confused (not for the first time) please help!

owetoomuch

The IPA is in addition to the tax payments you make, when the OR has checked your SOA and your salary (excluding tax credits/child credits/childrens allowance) a percentage of the difference is set as your IPA amount and you have to let the OR know of any changes to your income during the period of your BR so that this amount can be recalculated, after your discharge the amount remains as is until the 3 year period is up. The IPA will not be set as all of the difference but most of it as they allow some breathing space for emergencies. This was explained to me yesterday at the ORs office.

ClaireLR

Thanks owetomuch! So basically I will have to pay the extra I am taking home in my pay due to not paying tax until the end of the financial year, but they will only set an IPA for 3 years if I have enough surplus, is that right?

ClaireLR

Ok I have filled in my reason on the forms where it says what is the reason you do not have enough money to pay your debts and I have written as follows: -

I overcommited on credit cards and loans when I was younger and lived with my parents. At the time I could afford to pay my creditors with no problems as I didn't have any real living expenses. I had loans and credit cards which I was managing to pay off in full sometimes.

Then I met my ex-partner and eventually we decided to move in together in April 2006. This is when I started to struggle with my debts. We started a Debt Management Plan together through Payplan as he also had debts. We were managing quite well and paying almost £700 a month towards our debts. We then split up and I was left again to pay my debts on my own. By now I had other expenses to consider than those I had when living with my parents such as rent and utilities and began to struggle. I spoke to Payplan who advised me to start a Debt Managment Plan alone. They worked out that I would pay £90 a month. At that rate it was going to take more than 20 years to pay off my debts but I agreed as I wanted to pay my debts off.

Further to this I then had an unexpected Vets bill for an illness that occured before I took out my Insurance policy and this was for £350. I had to pay this bill so I spoke to Payplan who advised me to reduce payments to them to £40 and pay the other £50 to my vets. The vets agreed but since I have reduced my payments to Payplan I have had solicitors letters, default notices and telephone calls from some of my creditors wanting more money that I cannot afford to pay. Some creditors are still adding interest at a rate that means my payment does not even cover the interest that is being added.

Does this sound ok or is it to much/little information?