Help needed - advice from StepChange

Lever75

I am looking for any help that anybody can give me

I have just spoken to step change, and am more confused than ever! Either I have completely misunderstood the posts from this site (certainly possible) or the advice I have been given from step change is wrong.

I have about £14,000 of debts,all in my name only, a CCJ for £5000, and a couple of other debts, all of which have defaulted. I haven't made payment to any of them for a few years and have been burying my head in the sand. One of the small debts was passed to a collection agent, and they are now chasing me. I really want to address the issue once and for all, especially after discovering the CCJ could be enforced in full at any time. They have never asked for any payment or made any contact in the 4 years since it was issued.

I don't work, my husband supports me & the kids. At the beginning of March he was given notice of redundancy, and he was finished on the 31st March. He had some savings, and with the redundancy payout, holidays in lieu etc, he will have about £11,000 in the bank. He has no debts at all, and no real assets - we rent the house.

He has been offered some self employed contract work, which he is starting next week. It will be a massive drop in income for him, he'll only get about £700 a month after covering his costs. However he wants to take the work, he thinks the pay may increase after Christmas and he says we can use the savings to get us through till then. We also checked out the benefits situation, and one site calculated we may get about £700 a month in tax credits etc. Our outgoings are approximately £2100 a month.

My husband has offered to pay for my bankruptcy to get rid of this debt - I have health issues and it is unlikely I'll ever work again, but I didn't qualify for disabled benefits when I applied so I don't get any income.

I called step change to talk through the options, and I am totally confused.

Firstly they told me I couldn't apply for bankruptcy as our outgoings are higher than our income, which would mean we would have to borrow to live. I explained my husband has savings to cover our shortfall, and if they run out before his income increases, we will re-assess then, but we could go for about 15 months or so before that happens, and my husband is confident that won't happen. My own income is unlikely to ever meet the outgoings as it is currently zero and unless the Government relaxes the rules on disability payments(!), then that won't change.

Secondly he told me that as we are married all assets are classed as joint, even though the money is in my husbands account, my bank account has less than £100 in it. He told me that they could claim the savings to pay my debt, but then we would be in trouble.
Also my husband bought the car, but put the V5 in my name. She told me that it would have to go as it was mine - I thought if my husband bought the car with cash from his bank account(which he did) it was his car not mine, regardless of the V5, but he told me I'd have to surrender it.

Finally as my debts were so 'low', then bankruptcy wasn't an option any way, the courts wouldn't accept my application, but I can't go for a DRO due to the car. I don't want to be paying £1 a month for the rest of my life, I just want a fresh start.

I thought bankruptcy was personal and as all debts were in my name only, they'd only take my income and assets into account - which are zero. Who is right? As I said earlier, I have buried my head in the sand, but now want to act quickly. Since speaking with the adviser yesterday, I haven't stopped panicking about the CCJ and bailiffs coming round

fermi

Firstly they told me I couldn't apply for bankruptcy as our outgoings are higher than our income

Not true. Many people do. Judge may query how you are going to address that, or they may not, but it's not grounds for refusal.

Secondly he told me that as we are married all assets are classed as joint, even though the money is in my husbands account, my bank account has less than £100 in it. He told me that they could claim the savings to pay my debt, but then we would be in trouble.

Not true. If it is his money derived from his income then it is his alone.

Also my husband bought the car, but put the V5 in my name. She told me that it would have to go as it was mine - I thought if my husband bought the car with cash from his bank account(which he did) it was his car not mine, regardless of the V5, but he told me I'd have to surrender it.

Not true. V5 is just the registered keeper. It does not indicate who the legal owner is. The legal owner is the person who funded the purchase, which is your husband.
The OR may enquire and ask you to show that, but in the end it is his asset and cannot be claimed.

Finally as my debts were so 'low', then bankruptcy wasn't an option any way, the courts wouldn't accept my application.

Again, not true. DRO might be a better option though as the car is not your asset. Court may point this out. In rare cases they may direct you to an alternate solution, but if you are insolvent they will in 99% of the cases grant the BR.

fermi

Please take advice from another free impartial advice source.

It's always best to seek an opinion from 2 or 3 separate sources.

That way if you get one source giving bad advice it gets shown up and allows you to make a better decision.

fermi

National Debtline https://www.nationaldebtline.org/

would be my first stop.

Lever75

Thanks for that - I thought I was losing my mind.

I'll call national debt helpline as suggested.

fermi

Also see the sources of help listed here:

http://www.moneysavingexpert.com/loans/debt-help-plan#help

Bankruptcy, DRO or whatever insolvency option is a very serious step, so I would say 3 unconnected sources of impartial help at a minimum is required.

StepChange_James

Hi Lever75,

Fermi tweeted us about your post, so I thought I'd post a reply.

I'm sorry to hear about the confusion caused by your debt advice session with us.

We can’t give specific advice on the forum as I don't know your full situation, but I'll clarify a few things where I can:

• We tend to advise against going bankrupt with a deficit budget as it's better if you're in a position where your income and support your outgoings after bankruptcy. Your situation could be slightly different as you've got a lump sum to cover the monthly deficit while you look to make changes to improve your situation
  
• The V5 for the car being registered in your name isn't proof that you own it but the official receiver (OR) will want to see proof that you’re not the owner of the vehicle and confirmation that the car wasn’t gifted to you when it was bought. So it’s likely they’ll want to see documents that confirm that you didn’t pay for the car
  
• Your husband’s redundancy money (and any other money he has) wouldn't usually be considered as your asset in bankruptcy unless you were somehow linked to it, such as joint savings etc. Again the OR would make a decision on this kind of thing and would be looking for evidence that the money was somehow linked to you
  
• If your debts are under £15,000 then it's worth considering DRO as an alternative to bankruptcy but if there's a reason that a DRO isn't appropriate then bankruptcy could be an option for you but I couldn’t confirm this without knowing all of your details. There aren’t hard and fast rules about which solution suits a certain level of debt, it’s a matter of finding the best solution for your circumstances

Without knowing all the ins and outs I can't say more but we never like to hear that someone's got off the phone to us without understanding what happens next.

If you email your reference number and contact details to moneyaware@stepchange.org I can arrange for a colleague to look into this and get back in touch with you. Alternatively, if you'd like to make a complaint you can find the details about how to do this here: http://www.stepchange.org/Legal/Complaintsprocess.aspx.

Thanks again to Fermi for making us aware of this post – does this address your concerns?

Kind regards

James

TheGardener

Thanks for posting the 'clarification' James - I personally was advised very well by StepChange but it does highlight that training of StepChange (and any other organisation) advisors is critical and getting it wrong can have awful consequences for the debtor aswell as undermining the public trust in the information you give. I know when people are stressed, they don't always understand completely what they are being told but it did sound from the OP as though a couple of things weren't quite right.
2nd opinions are always a good idea if you have the luxury of the time to seek them.