SO for B-in-law

KentishLady

Hello all

below is my first try at a SOA for my brother in law - who is hoping to regain some control of his finances by going bankrupt. Their previous property was repossessed and they are left with the balance of the mortgage outstanding plus a previously secured second charge. There may be more debt lurking around but this is what i have gleaned from his credit file and from talking to him. I'd appreciate anyone who can take the time to review and comment - all feedback appreciated before I think about completing any forms for him.

Income (4 weekly)
Employment & Support Allowance £480 (£240 fortnightly)
Disability Living Allowance £305
TOTAL Income: £785 (4 weekly)

Expenditure (4 weekly)
Lodgings £200
Food & Toiletries £185 (includes dog food and all toiletries)
Clothes & Shoes £25
Essential Travel £10 (disabled railcard plus 3 trips to Hospital)
Mobile Phone £15
Presents (birthdays, Christmas etc) £10
Haircut £10
Entertainment £80
Holiday £25
Savings for Vet Bills £10
Dentistry: £10
Hydropool: £27 (to assist with pain relief and to retain mobility)
TOTAL £607

Assets
Pension fund: £21,000 (can be taken at age 55, with 25% tax free lump sum of £5250 + annuity of £700 pa)

Debts
Debt description / Balance O/s / Monthly Payment required
Payday loan / £239 / £239
previously secured loan / £15,439 / £175 default
unsecured loan / £1,406 / £37 default
unsecured loan / £71 / £10 default
unsecured loan / £5,748 / no payments made default
Hire purchase / £106 / £106 2 months behind
Mail Order / £1,082 / £32 default
previous mortgage / £43,615 / £284 default
TOTAL £67706

Unknown amounts
Rent Arrears unknown
Water Bill Arrears unknown
Tax Credits overpayment unknown
Sky Broadband unknown

National_Debtline

KentishLady wrote: »

Hello all

below is my first try at a SOA for my brother in law - who is hoping to regain some control of his finances by going bankrupt. Their previous property was repossessed and they are left with the balance of the mortgage outstanding plus a previously secured second charge. There may be more debt lurking around but this is what i have gleaned from his credit file and from talking to him. I'd appreciate anyone who can take the time to review and comment - all feedback appreciated before I think about completing any forms for him.

Income (4 weekly)
Employment & Support Allowance £480 (£240 fortnightly)
Disability Living Allowance £305
TOTAL Income: £785 (4 weekly)

Expenditure (4 weekly)
Lodgings £200
Food & Toiletries £185 (includes dog food and all toiletries)
Clothes & Shoes £25
Essential Travel £10 (disabled railcard plus 3 trips to Hospital)
Mobile Phone £15
Presents (birthdays, Christmas etc) £10
Haircut £10
Entertainment £80 - this may stick out a bit but on the whole the figures are modest and some of this could easily be reallocated to food shopping and other areas
Holiday £25
Savings for Vet Bills £10
Dentistry: £10
Hydropool: £27 (to assist with pain relief and to retain mobility)
TOTAL £607 - it is reasonable to budget more of the DLA income specifically for "disability-related expenditure". In our experience Official Receivers (ORs) will allow some leeway where DLA is concerned.

Assets
Pension fund: £21,000 (can be taken at age 55, with 25% tax free lump sum of £5250 + annuity of £700 pa) How old is your B-I-L now? Is he due to receive any payments in the very near future? As long as the pension is "approved" by HMRC it will not form part of his bankruptcy "estate".

Debts
Debt description / Balance O/s / Monthly Payment required
Payday loan / £239 / £239
previously secured loan / £15,439 / £175 default
unsecured loan / £1,406 / £37 default
unsecured loan / £71 / £10 default
unsecured loan / £5,748 / no payments made default
Hire purchase / £106 / £106 2 months behind
Mail Order / £1,082 / £32 default
previous mortgage / £43,615 / £284 default
TOTAL £67706

Unknown amounts
Rent Arrears unknown do you know what sort of tenancy they have? Social landlord (council, housing association) or private?
Water Bill Arrears unknown these arrears could go into BR so precise figure not too important right now. Any court action yet that you know of though?
Tax Credits overpayment unknown is this being treated as a fraudulent overpayment by HMRC? (relatively rare)
Sky Broadband unknown are you referring to arrears or regular monthly amount (or both) here?

Hi KL

Some comments/further questions in bold above.

Kind Regards

Dennis @NDL

mattannar

As it looks as though all his income is made up of benefits, I would not worry too much about the SOA as benefits cannot be touched.

KentishLady

Dennis - sorry I couldnt work out how to quote your post quoting me (so out of practice on here!) I've answered your questions with my anwers in green


Income (4 weekly)
Employment & Support Allowance £480 (£240 fortnightly)
Disability Living Allowance £305
TOTAL Income: £785 (4 weekly)

Expenditure (4 weekly)
Lodgings £200
Food & Toiletries £185 (includes dog food and all toiletries)
Clothes & Shoes £25
Essential Travel £10 (disabled railcard plus 3 trips to Hospital)
Mobile Phone £15
Presents (birthdays, Christmas etc) £10
Haircut £10
Entertainment £80 - this may stick out a bit but on the whole the figures are modest and some of this could easily be reallocated to food shopping and other areas
To be honest the only money he spends on himself is for his cigarettes. Once he has paid his board and put some money aside for cigarettes he puts the rest of his money on the debt - no matter how many times I've told him he needs to look after himself.

Holiday £25
Savings for Vet Bills £10
Dentistry: £10
Hydropool: £27 (to assist with pain relief and to retain mobility)
TOTAL £607 - it is reasonable to budget more of the DLA income specifically for "disability-related expenditure". In our experience Official Receivers (ORs) will allow some leeway where DLA is concerned. There are other things he could use his DLA for which would make a difference - he desperately needs regular treatment from chiropodist to remove calluses on his feet and he'd probably benefit from a massage to loosen his back up. I'm struggling to think what else he could use his DLA for that he would feel comfortable doing.

Assets
Pension fund: £21,000 (can be taken at age 55, with 25% tax free lump sum of £5250 + annuity of £700 pa) How old is your B-I-L now? Is he due to receive any payments in the very near future? As long as the pension is "approved" by HMRC it will not form part of his bankruptcy "estate".
He's 50 now - but the pension company have said he can take it early once they receive a duly completed form from the GP confirming he won't work again. How do we find out?
Debts
Debt description / Balance O/s / Monthly Payment required
Payday loan / £239 / £239
previously secured loan / £15,439 / £175 default
unsecured loan / £1,406 / £37 default
unsecured loan / £71 / £10 default
unsecured loan / £5,748 / no payments made default
Hire purchase / £106 / £106 2 months behind
Mail Order / £1,082 / £32 default
previous mortgage / £43,615 / £284 default
TOTAL £67706

Unknown amounts
Rent Arrears unknown do you know what sort of tenancy they have? Social landlord (council, housing association) or private?
Water Bill Arrears unknown these arrears could go into BR so precise figure not too important right now. Any court action yet that you know of though?It was a social landlord - council. Ex still resides in the property and has taken over the tenancy. no court action that i know of re the tenancy (thought there is one CCJ on his credit file we think this relates to their previous mortgage)
Tax Credits overpayment unknown is this being treated as a fraudulent overpayment by HMRC? (relatively rare)DOnt think they are treating as fraudulent - he has confirmed today the amount is £346
Sky Broadband unknown are you referring to arrears or regular monthly amount (or both) here?his wife had already had a sky account which she failed to pay, so then she persuaded him to get one in his name - which she again failed to pay. Her current sky is (I think) in her daughters name.

Water Bill Arrears unknown these arrears could go into BR so precise figure not too important right now. Any court action yet that you know of though?Not too sure about court action. Total arrears is in the region of £2k but water company have agreed that he is not jointly liable for the whole lot as he was not resident there during the whole period the arrears were accrued.

KentishLady

Oh and I forgot to say - the board he pays is to us to contribute towards the household bills, upkeep and for the use of the "facilities". He can't claim housing benefit because he is living with us so we aren't asking him to pay the market rate. Is this likely to be a problem? We don't profit from it - it goes towards the gas, electric, water, council tax, landline, broadband and a bit towards upkeep on the house (eg things like his new bed & mattress cos the old one was knackered, redecorating etc). If he wasn't in the room we would be renting out for something like £300 per month and expecting contribution to the food kitty on top.

In fact at the moment he isnt even paying us what we're asking for because he's constantly being harrassed by his creditors and he gives them his debit card number to get them off the phone - as soon as his money goes in sometimes it all goes straight back out to one of the people he owes money to.

I haven't let my husband know this but his brother has only been able to pay £120 towards his upkeep since 2nd November - and he's had to borrow money for cigarettes already this month.

The situation is unsustainable for all concerned - I have had a salary cut of 1/3 since being made redundant last year. Whilst I am glad I have a job (that I hate!) we can't afford to support my BIL indefinitely in the way that we have been.

National_Debtline

Hi again KL

Thanks a lot for clarifying those points.

First things first - BIL must stop having any dealings with creditors over the phone. If he doesn't give them any airtime, they can't harass him.

The knock-on effect this has on you is obvious - it has to stop. There are no debts referred to here which pose any immediate threat, but the more time he spends listening to them, the less he will understand that.

If he has compromised his bank card by giving the details out willy-nilly, he may need to cancel it now by contacting his bank.

The main priorities right now are:

(a) Safeguarding his income
(b) Saving up the bankruptcy fees

While he does this, contact with creditors should be kept to a bare minimum and payments should be stopped altogether. It really doesn't matter now whether his creditors "agree" with this or not as they will not be able to opt out of the bankruptcy.

One other thing for now - your board arrangement with BIL doesn't appear problematic to me in the slightest. It's clearly below market rate and he would surely be paying a good deal more were he renting in the private sector.

Regards

Dennis @NDL

National_Debtline

KentishLady wrote: »

Assets
Pension fund: £21,000 (can be taken at age 55, with 25% tax free lump sum of £5250 + annuity of £700 pa) How old is your B-I-L now? Is he due to receive any payments in the very near future? As long as the pension is "approved" by HMRC it will not form part of his bankruptcy "estate".
He's 50 now - but the pension company have said he can take it early once they receive a duly completed form from the GP confirming he won't work again. How do we find out?

Just give the pension provider a call and ask whether it is a HMRC-approved scheme. Should just be a formality.

Regards

Dennis @NDL

KentishLady

Thank you for your help & advice. He's going away to his daughters for christmas so we'll field the phone calls on the landline - I have the letters drawn up to send to people telling them he will only correspond in writing.

We'll work out his budget properly now I think I have my head round it all so we are planning to include in his budget a) savings for bankruptcy, b) paying off the tax credit overpayment. The rent arrears have apparently been paid (we will double check!). Will the water bill definitely form part of the bankruptcy (cos if so then we wont try to pay that off). We may offer the remaining people £1 per month token payment until we can get the bankruptcy sorted.

And it will get him used to the idea of looking after himself a bit - by having a haircut for a start .

National_Debtline

KentishLady wrote: »

Thank you for your help & advice. He's going away to his daughters for christmas so we'll field the phone calls on the landline - I have the letters drawn up to send to people telling them he will only correspond in writing.

We'll work out his budget properly now I think I have my head round it all so we are planning to include in his budget a) savings for bankruptcy, b) paying off the tax credit overpayment. The rent arrears have apparently been paid (we will double check!). Will the water bill definitely form part of the bankruptcy (cos if so then we wont try to pay that off). We may offer the remaining people £1 per month token payment until we can get the bankruptcy sorted.

And it will get him used to the idea of looking after himself a bit - by having a haircut for a start .

Hi again

Yes, the water debt will definitely be provable in his bankruptcy. So will the tax credit overpayment for that matter - so there is not necessarily any point in paying this off in preference to other creditors.

I'm sure your BIL is very grateful for having someone fight his corner the way you are.

Regards

Dennis @NDL

debt_doctor

Hi,


Just to be sure - has your BIL gone BR yet?


In light of the fact that the pension lump sum may well be taken as a lump sum IPA, it may be prudent to delay the BR and use at least some of the lump sum to pay for things in the household that need to be replaced, and other costs associated with helping his illness.
My thoughts are that the £5250 would count as 'capital' for benefit purposes so would have no effect on benefit unless other capital already exists.


DD


DD

KentishLady

debt_doctor wrote: »

Hi,


Just to be sure - has your BIL gone BR yet?


In light of the fact that the pension lump sum may well be taken as a lump sum IPA, it may be prudent to delay the BR and use at least some of the lump sum to pay for things in the household that need to be replaced, and other costs associated with helping his illness.
My thoughts are that the £5250 would count as 'capital' for benefit purposes so would have no effect on benefit unless other capital already exists.


DD


DD

no he hasnt gone bankrupt yet. and no he hasnt taken the pension yet.

Im concerned if he takes the pension first that he would be tempted to "run away" from the situation - and that the money would not be used appropriately. He has a ladyfriend in the philippines............

My preferred course of action is to:

1) open up new basic bank account with cash card only
- get benefits paid into new account
- set up two savings accounts - one e-account for things he needs to save for, one cashcard account for his spending money

2) set up standing orders from the BBA into:
- my current account for his lodgings
- his spending account for his food and personal expenditure
- his savings account for the things in his budget he needs to save for
- remainder being left in the BBA to save up his bankruptcy fees, and to keep his creditors quiet with nominal payments if necessary

3) deal with creditors:
- to ignore all calls - only answering landline phone to tell them to write to him.
- clear water bill & tax credit overpayment (these are joint with ex and the only other joint debts are the mortgage and second charge shortfall - it will be worth clearing these to reduce the amount of conflict that will inevitbly occur once she realises he is going bankrupt)
- get up to date credit report so we can ensure all known debts included in bankruptcy.

4) once bankruptcy fees saved and water / tax credit cleared go for banktuptcy and let OR decide om pension.


so... is there anything else i havednt thought of in terms of the debt - and what happens if something comes out of the woodwork at a later date he is unaware of (eg debt from a previous address that hasnt caught up with him yet)