Can I sell my car to fund bankruptcy?

AliceD84

Hi everyone

I'm just about to set the ball rolling on declaring myself bankrupt. I had my phone call this morning with Step change and it was agreed that this is my best option. I've printed out the forms and am ready to fill them out.

I had a massive list of questions which the step change lady answered and gave me lots of info on but I've since thought of something I forgot to ask and wondered if anyone could help on here.

I'm currently unemployed so have no income whatsoever. The only asset I have is my car which is probably £1500 in value which I told the lady about on the phone. My question is... If I have no way of getting the £700 fees together can I privately sell my car to raise the funds prior to going to court? I know that getting rid of any assets before hand is frowned upon but didn't know if it's different if you're using the money to pay for the bankruptcy. And obviously I'd pass the remainder of cash over aswell.

Or is that what the OR does? I'm a bit confused about what order things happen in. Do I speak with an OR/ examiner and pass assets over before going to court and paying? Or does the OR interview and hand over of assets happen after you've been to court with your forms and fees? I didn't know if your assets are sold by the OR and then they use the proceeds to firstly pay the £700 (if there's no other way of that being raised) and then distribute the remainder of whats left between the creditors?

Sorry! So many questions. I just want to set the ball rolling on this sooner rather than later and don't want to do anything that is going to be looked upon as fraudulent.

Thanks in advance!

Alice

PippaGirl_2

If you don't need the car then selling it to pay the fees seems sensible to me, and the OR will understand why it's been sold. It might be worth thinking of anything else you might need for the remainder of the money you get on selling the car. If you need things, you need things.

The only assets an OR is interested in, are cars if not exempt and are worth more than £1000 or more, (you'd be ok if worth mildly more than £1000 if they deemed you needed a car) expensive jewellery, antiques, savings, property as in buildings/houses etc. they aren't interested in normal household goods. I would say most people who go BR have little or no assets at all that an OR would be interested in. The only thing I had that was claimed was £5 of premium bonds.

Keeping_Positive

I sold shares to raise my fees and or had no issues

TheGardener

I sold loads of stuff on ebay to fund my BR - I used my paypal account to 'save up' rather than put the money in my current account and then made a single transfer from Paypal to my current account when I had enough which of course showed up on the bank statements as a large deposit (and then a large single cash withdrawal). The OR asked what this money was and had no interest in it when I explained.
If you sell the car (you don't hand it over to anyone) to raise the funds to go BR, that should be fine. Once you have the cash you pay the BR fee to the court clerk when you present your petition. Any surplus you keep but you declare it on your petition as 'cash in hand' However, if you are unemployed, you should be able to get some remission of the fees anyway - see the sticky posts on this forum.
Any surplus could quite reasonably be used to buy essentials - do you need shoes, new glasses, a winter coat? I'm not suggesting a spending spree but reasonable essential expenses.(I bought sons school shoes, school uniform and replaced a broken pair of glasses with what surplus I had)
Your OR interview will take place a week or so after your court date. If your car was worth thousands and you used the surplus to spend a weekend in New York then the OR might take a dim view but for the amounts you are talking about, I don't think you need to worry.

Gary_zero

Just curious what happens if you really can't afford the fee to file for bankrupcy?

alastairq

The only assets an OR is interested in, are cars if not exempt and are worth more than £1000 or more, (you'd be OK if worth mildly more than £1000 if they deemed you needed a car)

just to add to Pippa's excellent response....if the BR owns a car, and it is not exempted as an asset, the value really is irrelevant.

The OR will want to realise its value...even if that value is scrap value.

The ''£1000-or-thereabouts'' sum mentioned refers to the maximum value the OR will allow for a vehicle which is exempted as an asset.

I thought I'd clarify this a bit further, as we have had some posts on this forum in the past, querying why the OR would want to 'take' what amounts to a scrap vehicle....or a vehicle of such low value?

alastairq

Gary_zero wrote: »

Just curious what happens if you really can't afford the fee to file for bankrupcy?

You carry on as you were.

If there are no 'realisable' assets, and no surplus income, it really doesn't matter how much Court action a creditor takes....as long as the debtor responds to the Court, presents their SOA to the Court, etc..the Court then sets a repayment plan in place..this can be as little as a pound a month! [or, less] and is binding on both parties.

Of course, the letters & phone calls & visits continue, and it this embeggerance factor which gets to folk.

If property is owned [but is in negative equity]...whilst there is no chance of realising any equity..an unsecured creditor may go for a Charging Order..thereby making their unsecured debt, secured.

I suggest that, for this reason...it is worthwhile seeking to petition BR sooner, rather than later...to pre-empt any Charging Order??

wharty

My wife sold her car to pay for her bankruptcy and OR had no issue.
Only problem i can see is if you sold it below the Parkers guide value.

AliceD84

Thanks everyone for the replies. That's really put my mind at rest. I've had a sleepless night with the ins and outs of bankruptcy going round and round in my head and wondering what the best thing to do was with regards to the car. I tried to phone step change this morning to ask but didn't realise they were closed on Saturdays.

Well I went on parkers guide and my valuations were between 1000 and 1800 and I've contacted a dealer and he's provisionally quoted me £1500 so I suppose that would be looked upon as ok by the OR. It would be nice if I was allowed to keep the excess, funny that you mentioned it but I do actually need new glasses and I have absolutely no income so from what I've read I understand there's a strong possibility of cash not being taken. I'll wait and see though.

I'm finding this whole thing a bit daunting and stressful! After my phone call with step change I felt strangely positive and as if a weight had been lifted because I knew what the next step was. Today I've woken up feeling totally disappointed in myself that I've let it get to this point and sad and nervous about the fact I'll be starting all over again with absolutely nothing. And really sad about losing my car! I was so chuffed with it when I got it (even though I'd got myself in more debt to buy it!) but I realise that it's inevitable and really a consequence of my actions that I'm just going to have to swallow!

I'm thinking this entire process will be a bit of a roller coaster of emotions!

Thanks

Alice

rizla_king

AliceD84 wrote: »

funny that you mentioned it but I do actually need new glasses and I have absolutely no income so from what I've read I understand there's a strong possibility of cash not being taken. I'll wait and see though.

Buy them now. OR is not going to be bothered about you using it for essentials like that.

philnicandevan

keep ALL receipts just in case they ask during interview though..