Should I consider bankruptcy?

bunkbed

Hi

I've got about £35k in debts to about 6 different creditors.

I was in a DMP with PayPlan since 2009 till early 2014 but stopped paying due to a change in circumstances at home. Even when I was on the DMP I ran up more debt
My DMP was going to run for 20 years or so, but which time I'd be retired.. I hope!

The house is in my wife's name (she had it when we met), I give her £880 a month.

If I do go bankrupt then could any of the creditors try to say part of the house is mine and try to force a sale?

Is bankruptcy my best option?

Would it be a year of "pain" and then discharged?
Does everyone get discharged after a year?

A relative often sends money for Christmas for us and the kids, around £500, if I was bankrupt would this go to the receiver?

Thanks.

tigerfeet2006

bunkbed wrote: »

Hi

I've got about £35k in debts to about 6 different creditors.

I was in a DMP with PayPlan since 2009 till early 2014 but stopped paying due to a change in circumstances at home. Even when I was on the DMP I ran up more debt
My DMP was going to run for 20 years or so, but which time I'd be retired.. I hope!

The house is in my wife's name (she had it when we met), I give her £880 a month.

How long has she had the house and how long have you lived there? Property can be a bit of a grey area and you really need to talk to someone about it.

If I do go bankrupt then could any of the creditors try to say part of the house is mine and try to force a sale?

If you are BR then the creditors will have nothing to do with it, it is in the hands of the OR from then on in.

Is bankruptcy my best option?

As we don't know all your details it is hard to say. You need to contact one of the debt charities and go through your options with them. If they suggest BR may be an option then we will support and help you all we can.

Would it be a year of "pain" and then discharged? No pain and yes a year.
Does everyone get discharged after a year? Yes, unless they refuse to co-operate with the OR.


A relative often sends money for Christmas for us and the kids, around £500, if I was bankrupt would this go to the receiver? No but get the cheque made out to your OH to be on hte safe side.

Thanks.

Have a look at the links in the first posts of this thread https://forums.moneysavingexpert.com/discussion/4886414

debt_doctor

Hi,
It is possible that you may have accrued a beneficial interest in your wife's property due to payments you have made to the household bills, and in particular the mortgage.
However, in my nearly 10years in my job, I (or my colleagues) have never seen an attempt by the OR / IP to realise a beneficial interest in a home that the bankrupt did not have legal title to.

Whether bankruptcy is right for you can only be decided by you when you have received advice unique to your situation - perhaps from CAB or National Debt line.

All bankruptcies end after one year providing you have co-operated with the Official Receiver.

If you are deemed to have surplus income over and above what's need for your 'reasonable domestic needs' then the OR will want that surplus in monthly payments for 3 years.

If someone simply gives you £500 cash whist you are bankrupt it is likely to be seized as 'after acquired property' - perhaps this person should buy presents for the children direct - no one can claim a child's presents / belongings.

DD

debt_doctor

Sort of 'snap' with Tigerfeet really!
DD

alastairq

Hi...you need to read the stickies at the top of this forum first.......Most of your questions will be answered from the info there.

If I do go bankrupt then could any of the creditors try to say part of the house is mine and try to force a sale?

Firstly, in Bankruptcy, your creditors have no 'say' whatsoever in your affairs.

When Bankrutpcy is petitioned, the individual places their entire financial affairs into the hands of the Court. The Court's Officer is the Official Receiver.

The OR will seek to realise the value of all the BAnkrupt's assets I][U]in simple terms[/U][/I....for the benefit of the BAnkruptcy estate. Any creditors who prove their debts to the OR will then get a share of whatever is left, after all costs associated with administering the Bankrutpcy are deducted. [ie, not-a-lot in the pound!]

What you refer to above is Beneficial Interest.

The percentage of BI you accrue will depend on how long you have been married , or together?

However, it will be difficult for the OR to identify [or prove] you have acquired an interest in this case.

[It is also quite possible for another party [ie, family] to purchase the OR's interest.]

Is bankruptcy my best option?

Ultimately that is your decision. You firstly need to consult with one [or more] of the debt charities such as NDL, CAB, etc. [This is an essential act, because a Judge might refuse to grant a petition if that Judge felt the petitioner had received insufficient advice concerning the implications of BR...ie, was not aware of the implications]

Would it be a year of "pain" and then discharged?

There is no real 'pain' with bankruptcy....merely certain limitations....

A BAnkrupt is entitled to a 'reasonable standard of living', ie household expenditure. This is not meant to mean, sackcloth-&-ashes stuff.

The OR will seek to identify if the Bankrupt has any surplus income, after all expenditures.

Once the amount [if any?] of surplus income is agreed, between the BR and the OR....then an IPA is established.

This will last for 3 years from inception.

The amount payable into the IPA can be varied should financial circumstances change.....since it is not a debt repayment. During the 3 year period, the BAnkrupt has a legal obligation to inform the OR of any changes in financial circumstance, within 21 days of that change.

Does everyone get discharged after a year?

That is normally the case.

However, the OR has the option to go back to Court to postpone Discharge...usually in cases where the BAnkrupt has not co-operated with the Official Receiver.....or, the OR's investigations into the BR's affairs have struggled to reach a conclusion.

If the causes for the Insolvency are discovered to be for certain reasons [for example, a gambling habit?]....then the OR can apply to impose a BRO/BRU...which effectively extends the Restrictions imposed [on an Undischarged Bankrupt] for a variable period of time .

alastairq

Re-the Xmas prezzies? Simply have the payments made out directly to your other half.....[not involving you yourself?]

bunkbed

alastairq wrote: »

There is no real 'pain' with bankruptcy....merely certain limitations....

A BAnkrupt is entitled to a 'reasonable standard of living', ie household expenditure. This is not meant to mean, sackcloth-&-ashes stuff.

The OR will seek to identify if the Bankrupt has any surplus income, after all expenditures.

Once the amount [if any?] of surplus income is agreed, between the BR and the OR....then an IPA is established.

This will last for 3 years from inception.

The amount payable into the IPA can be varied should financial circumstances change.....since it is not a debt repayment. During the 3 year period, the BAnkrupt has a legal obligation to inform the OR of any changes in financial circumstance, within 21 days of that change.
.

Thanks for the reply.

Does the IPA always last 3 years even if you're discharged after 12 months?

I've done the Step Change questionnaire and it recommended bankruptcy, I'll call them and have a chat.

owlet

Yes an IPA will last 3 years however you are discharged (free) from the bankruptcy after 12 months. An IPA can be adjusted throughout those 3 years- up, down or nil payments depending on circumstances but it will run for the three years.

An NT (nil tax) IPA only lasts for the current tax year. You don't pay tax at source & receive it in your pay. You keep the tax amount to one side and arrangements will be made for you to pay it to the OR's agent.

This will all become clear as you go along.

Remember an IPA is an agreement and can be negotiated & changed as financial circumstances alter. It isn't set in stone.

The only time someone isn't discharged after 12 months is if an BRO/BRU is issued but you have to have been really silly and/or not cooperated with the OR to get that. Alistair explains it in more detail in his post.

tigerfeet2006

owlet wrote: »

The only time someone isn't discharged after 12 months is if an BRO/BRU is issued but you have to have been really silly and/or not cooperated with the OR to get that. Alistair explains it in more detail in his post.

Excellent post Owlet apart from this bit.

You are discharged after 12 months even if you have a BRO/U. It has to be set up before discharge. A BRO/U just extends the restrictions of BR after discharge. If they haven't got a BRO/U in place before discharge and they really want to then they can apply to court to suspend your discharge to get it in place and then you are discharged.

Discharge after 12 months can be suspended if you do not co-operate with the OR ie: you do a runner and don't reply to the OR when he contacts you. You refuse to disclose information etc. The OR then has to apply to court for the suspensioN.

These situations are as rare as hens teeth.

owlet

Sorry guys & thanks Tigerfeet!

bunkbed

I spoke to both the bankruptcy team at StepChange and also the official receiver help line.

Both said the same thing, it's up to the OR I get whether or not a beneficial interest is present.
The beneficial interest (if any!) would be applied due to the monthly money I give my wife, I've never contributed a lump sum to any improvements etc.

The problem being the OR is only appointed after I've gone bankrupt, so if they do decide to to apply it then there's noting I can do
The OR helpline wouldn't say what calculation or criteria they'd use.

From what I could get out of the OR helpline, if there is a beneficial interest then they'd allow me to find someone to buy my share of the house (there's no one to do that).
If not, then if it's £10k or less they'd probably apply a charge to the house.
If greater than £10k, they'd probably force a sale.

Things like "probably", "may", "could do" were sprinkled throughout the both conversations, so it comes down to the words of Dirty Harry

Do I feel lucky?