Bankruptcy, Urgent Advice Needed On Changing Circumstances - Please help?

Gr00vebird

Hi
I've not posted in this forum before, I've not used forums before and so please forgive any poor initial etiquette.
I'm reaching out to people to seek advice on a very tricky financial decision we find ourselves stuck in, I'm listening to as much advice as I can get, I hope you'll take a moment to read it. Thanks in advance.!

Myself and my wife have been together 15 years and have 2 children (age 4 and 2)!
We lost a long term family business to liquidation in which we were both involved; as a result personal bankruptcy followed immediately afterwards.
Myself and my wife are now 5 months into the 12 months of personal bankruptcy.!
After the initial assessment into our statement of financial affairs we were signed up to a three year income payment agreement and now pay £80/mth (£40 each)
This was originally worked out on two salaries of £30k each and payments are due to be paid for a further 2.5years.!
!
As can be expected we've found the process incredibly hard, however I find we've gone from a happy relationship of 15 years to near divorce and now have regular (albeit free) counselling sessions. I've contemplated suicide for a while and come fairly close three times. We're short of money every month and have to beg from parents to cover one off expenses that were outside the budget.!
On a more positive note, she has just been offered to transfer to a new job at £90k earnings. This is comprised of £40k basic and projected bonuses for around £50k. She's fully investigated and is happy with with proof on how realistic the bonus scheme is. These bonus payouts will fluctuate significantly on a month to month basis.!

The income from this one job is far higher than the income for two separate jobs.!
The job would involve a huge life change with personal sacrifices on both sides. It would probably also mean me stopping work to look after children full time. She would have to travel more, work away four nights of the week, see the children far less amongst other considerations, however in the weigh up in this area it seems at first definitely worth doing.!

It's also worth noting our childcare expenditure is also changing soon with one child moving from nursery to school saving £350/mth and in January the other child's nursery fees reducing by £150/mth as the 15hrs/week childcare allowance kicks in.!

There are plenty of variables for us to consider whether this is the right thing to do, we're seeking advice from this forum for knowledgable third parties on the main issue: It is to do with declaring the potential income and expenditure changes.!
What to declare, how much is handed over, how, when and for how long etc etc. !Basically this would help us know whether to make so many life changes and if it is all (at least financially) going to be worthwhile.!

Any input and ideas in relation to this issue would be gratefully received. Please also reference what experience you may have had in dealing with anything similar.!

owlet

Sorry to hear about your struggles. Firstly, it sounds as if your SOA isn't accurate. The allowances should give you enough to have a reasonable (not luxurious) standard of living. If you are having to borrow every month then you are either needing to look at your spending habits or your SOA is too tight.

Use the link below to post your SOA & format for MSE at the end & we can take a look for you.

http://www.stoozing.com/calculator/soa.php

Your SOA is an agreement, it's not set in stone therefore you can ask the OR to change it and negotiate. The same goes for your IPA. It's an agreement.

Start with the SOA & go from there. Others will be around during the day to follow up your other issues. You will get some excellent advice here.

tigerfeet2006

As Owlet has said it sounds like the SoA may be slightly out as you should be able to survive on what you are allowed. So pop it up for us to look at.

If you have any unexpected expenses as well you can ask the OR to suspend the IPA payments for you to pay the extra expenses.and it can be added on to the end. But as said lets look at that SoA.

You will have to let the OR know of any changes in your circumstances within 21 days oof the change. This is your legal duty and there are sanctions that can be applied if you don't do so including prosecution. Her Maj's Tax Men and the Insolvency Service talk to each other.

stundent

Hi, I too am sorry for your troubles.
I would like to echo the others in saying that there is either work to be done on your soa or your spending habits need to be reviewed.

I would suggest looking at the decisions in front if you in smaller stages. For instance I would suggest reviewing your soa as it is, and then as how it will be come the changes in child care at a later date.

With regards to the increase in income, I would presume the staying out overnight would result in extra expenditure for hotels or another rented accommodation.

Finally should your income increase above your reasonable expenditure the or will want to take 100% of the surplus. so it may be that your partner is working extra just to increase the ipa amount.


Hope to help


Dan

owlet

stundent wrote: »

I would suggest looking at the decisions in front if you in smaller stages. For instance I would suggest reviewing your soa as it is, and the as how it will be come the changes in child care

There's a lot going on here, so little steps.... let's sort out the current situation first as this is the most pressing need. We can look at the future potential SOA later on. It's going to get muddled otherwise!

Gr00vebird

Thanks for the swift response its good to know people are happy to volunteer advice and time.

I've done a budget out for the official receiver, in practise its obviously not worked out well since every week things crop out outside the budget and we're begging from parents, which just feels cringeworthy in our late 30's.

I'm going to re-do the budget and go back to the official receiver to see how they approach it.
Having run the figures through it myself if I stop work and become a full time house husband effectively, and her income figures go up to around £4400 net, then we're still not in surplus on our budget anyway.

I'm exploring all options, my main aim being to end this nightmare when the year of bankruptcy finishes which is this November, accept we made errors in the past, learn from mistakes, draw a line and start out fresh. What seems overwhelming is the idea that this can go on for two and a half more years, with us never having any money, a pretty dismal outlook.

So my questions right now are..
1) Is it realistic to expect the official receiver will cancel the IPA completely when we show its not affordable and therefore this ends in november once we complete a year of bankruptcy. As a result my wife could start a highly paid job without simply handing over the majority of the income from it.

2) If she takes it before november, would she have to declare the budget on a monthly basis, especially it being largely bonus related when the bonus goes up and down each month

3) Wouldn't this mean they look into all expediture as well as income every month, therefore seeing that in september nursery fees drop by £350 and in january the other childs nursery fees drop, as a result they'd request that money too

4) What happens if anything, at bankruptcy year end, is there another look at income and expenditure as standard proceedure, perhaps chance of spot check, or perhaps nothing at all

5) worst case scenario, how is this looked at - does she have to giev forward a self assessment, or perhaps the official receiver requests information from HMRC
The way i see it its us being the ones that offer all the information, from a moral perspective we know are informing them but i do want to approach it in a way i don't simply make life as difficult as i can for myself, given that I'e struggled to cope up to 5 months in and this could go on for 36 months.
As i said this ideally finishes this november, rather than intentionally tying ourselves down for a futher 2 years. Any problems with that plan then i'm concerned about:
- civil / criminal prosecutions or court hearings
- criminal records / jailterm (probably unlikely but just asking)
- having to payback any surplus that has been taken
- having to payback fine, if so how much

6) In the case of any surplus payments in the budget, is it 100% of surplus that is taken, or a different %, I read online at one point it was 70%, but that may have changed since then

thanks in advance for any thoughts of advice on how to approach this

tigerfeet2006

Gr00vebird wrote: »

Thanks for the swift response its good to know people are happy to volunteer advice and time.

I've done a budget out for the official receiver, in practise its obviously not worked out well since every week things crop out outside the budget and we're begging from parents, which just feels cringeworthy in our late 30's.

I'm going to re-do the budget and go back to the official receiver to see how they approach it.
Having run the figures through it myself if I stop work and become a full time house husband effectively, and her income figures go up to around £4400 net, then we're still not in surplus on our budget anyway.

I'm exploring all options, my main aim being to end this nightmare when the year of bankruptcy finishes which is this November, accept we made errors in the past, learn from mistakes, draw a line and start out fresh. What seems overwhelming is the idea that this can go on for two and a half more years, with us never having any money, a pretty dismal outlook.

So my questions right now are..
1) Is it realistic to expect the official receiver will cancel the IPA completely when we show its not affordable and therefore this ends in november once we complete a year of bankruptcy. As a result my wife could start a highly paid job without simply handing over the majority of the income from it. Nope! the IPA will not be cancelled. If you have no surplus then the IPA can be suspended but if your circumstances change again then you are legally obliged to let the OR know and the IPA can be re-instated again. The suspended months count towards the 36 months.

2) If she takes it before november, would she have to declare the budget on a monthly basis, especially it being largely bonus related when the bonus goes up and down each month If she has monthly changes then most likely that is what will happen and for the duration of the IPA.

3) Wouldn't this mean they look into all expediture as well as income every month, therefore seeing that in september nursery fees drop by £350 and in january the other childs nursery fees drop, as a result they'd request that money too They will not ask to look at bank accounts each months but again we are talking legally bound here. Also I am guessing the OR knows what age your children are so will expect certain things at certain times. They can also ask the bank for any statements if they feel you are being less than truthful and you could be prsecuted for not being.

4) What happens if anything, at bankruptcy year end, is there another look at income and expenditure as standard proceedure, perhaps chance of spot check, or perhaps nothing at all Not a normal thing as standard but you never know, it isn't impossible and has been reported a couple of times.

5) worst case scenario, how is this looked at - does she have to giev forward a self assessment, or perhaps the official receiver requests information from HMRC
The way i see it its us being the ones that offer all the information, from a moral perspective we know are informing them but i do want to approach it in a way i don't simply make life as difficult as i can for myself, given that I'e struggled to cope up to 5 months in and this could go on for 36 months. If you have a sensible SoA you shouldn't really be struggling. As you go through different changes though the 36 months then the IPA can be adjusted to fit your circumstances.
As i said this ideally finishes this november, rather than intentionally tying ourselves down for a futher 2 years. Any problems with that plan then i'm concerned about:
- civil / criminal prosecutions or court hearings If you do things wrong then this could happen.
- criminal records / jailterm (probably unlikely but just asking) Why do you think this is unlikely if you break the rules?
- having to payback any surplus that has been taken If you have a surplus after reasonable monthly costs have been deducted then they will go to the IS for the duration of the IPA.
- having to payback fine, if so how much Why do you think you will have a fine? We can not tell you the limits on these things as we are not judges.

6) In the case of any surplus payments in the budget, is it 100% of surplus that is taken, or a different %, I read online at one point it was 70%, but that may have changed since then It is 100% of any surplus the sliding scale has not been in use for many years and is very out of date information.

thanks in advance for any thoughts of advice on how to approach this

Please can you put up your current SoA and we can check it for you and see if you can go back to the OR to ask for some adjustments if nesecary.

elljay

Gr00vebird wrote: »

5) worst case scenario, how is this looked at - does she have to giev forward a self assessment, or perhaps the official receiver requests information from HMRC

Shortly after becoming bankrupt I do remember filling in a form (and signing it) which gives the OR permission to access all of my HMRC records, or perhaps it was the other way round, giving HMRC permission to pass on your HMRC records to the OR. Either way, the OR has regular access to your PAYE information. They can also access your bank accounts though they don't do so routinely unless they have a reason to,

In terms of being regularly reassessed for your IPA, I have had 2, soon to be 3, reassessments - in 9 months. Others haven't had any. I'm currently paying over £500 a month.

My salary also varies each month, the OR plumped for an average to work with, and for a while I had to send in payslips. That's now stopped however. I believe I'll have to send them in every now and then as evidence though as already said, my PAYE record will give them most of what they need to know.

Please post your current SOA, I have far more spare money since becoming bankrupt than previously, it sounds as though yours has been wrongly assessed. Put it up here and we'll give you some ideas about how to go back and ask for reassessment.

Once that's done, we can start to look at your future situation. One step at a time!!!

Gr00vebird

I've had a good look at the SOA site and posted figures in.
Our work situation has changed significantly since 5 months ago when we first did the SOA for the official receiver. As i said above I'm thinking of becoming a full time house husband, my other alternative is a part time position with a friends business who have offered me at role that fits in around childcare for £800/mth
My wifes role is now looking like a serious option it will actually start off at around the £45k mark which is around £2800 net/month, then as monthly bonuses kick in it will fluctuate between around £3500 and £4900 levels net/month
For the purpose of the SOA calculation i've gone with £800 and £2833 as the two net salaries as thats what is looking likely for the very near future

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 800
Partners monthly income after tax....... 2785
Benefits................................ 137
Other income............................ 0
Total monthly income.................... 3722

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 1225
Management charge (leasehold property).. 0
Council tax............................. 190
Electricity............................. 178
Gas..................................... 0
Oil..................................... 0
Water rates............................. 52
Telephone (land line)................... 70
Mobile phone............................ 65
TV Licence.............................. 16
Satellite/Cable TV...................... 30
Internet Services....................... 30
Groceries etc. ......................... 450
Clothing................................ 115
Petrol/diesel........................... 300
Road tax................................ 35
Car Insurance........................... 81
Car maintenance (including MOT)......... 50
Car parking............................. 35
Other travel............................ 110
Childcare/nursery....................... 1154
Other child related expenses............ 40
Medical (prescriptions, dentist etc).... 27
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 89
Life assurance ......................... 31
Other insurance......................... 0
Presents (birthday, christmas etc)...... 40
Haircuts................................ 45
Entertainment........................... 100
Holiday................................. 75
Emergency fund.......................... 50
Income Payment Agreement................ 83
Sports.................................. 60
Cleaner................................. 80
Lunch Meals at work..................... 100
Total monthly expenses.................. 5006


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 0
Total Assets............................ 1000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-


Monthly Budget Summary
Total monthly income.................... 3,722
Expenses (including HP & secured debts). 5,006
Available for debt repayments........... -1,284
Monthly UNsecured debt repayments....... 0
Amount short for making debt repayments. -1,284

Personal Balance Sheet Summary
Total assets (things you own)........... 1,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -0
Net Assets.............................. 1,000


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ess0two

Drop the cleaner and meals at work,£180 straight off,plenty more to go at,but its a start.

abcdave

Sports and entertainment is another £160.