Moving Out?

peterkay369

Hello all,

To cut a long story short, I am in debt of approx £60,000 (gambling - stupid I know!!) and I think bankruptcy may be the best option for me. I currently live with my parents (crowded 3 bed house) and I'm receiving help for the gambling problem, I haven't gambled for over 2 months now.

My partner and I have been looking for the past few weeks at places to rent and she's just secured a new job so now should be the time for me to move out. She doesn't know about the debt however I plan to tell her over the next couple of days and hope she will stick by me.

My monthly repayments are more than my income (income approx £1360, repayments approx £1600) , I'm about £5k into my overdraft at the minute. The only valuable asset I do own outright is my car which is worth around £10-15k. I've read quite a few people recommend it is best to move before declaring myself bankrupt, this way the rent/bills will be covered under the essential spending. From what I can see, the best course of action for me to take would be to sell the car, use the money to establish ourselves in the new home and then sort out the bankruptcy. What would others advise please?

Thank you!
A very exhausted and sleep deprived K22SR

worriedmamma

Hiya

Sorry you've found yourself here. Firstly, I'm no expert, but I've done a LOT of research, and am now almost 2 months into my bankrupt year.

With regards to the car. Its my belief that if you dispose of a vehicle within 2 years prior to applying for bankruptcy, the Official Receiver can legally reverse the sale and use the proceeds to pay into your bankruptcy. It's the same case if you put the car into someone elses name without them paying you market value. Basically you can't get rid of the car without accounting for the funds. In this case the car would be seen as an asset in bankruptcy and sold to pay towards it. If you have a need for a vehicle and can prove it, the OR allows between £1,000 and £1,500 for you to purchase a car.

It sounds like bankruptcy might be a good option for you. Have you spoken to StepChange or National Debtline to get some advice? I would recommend you do this as when applying for bankruptcy the OR likes to see that you have taken advice from the right sources before making a decision.

xx

peterkay369

Hi worriedmamma,

Thanks for your reply!
I thought the OR would only reverse the sale, if the car was clearly sold for less than what it's worth? For example if I sold it for only £2,000 when it is worth a lot more than that? If they reversed the sale and sold it at auction, they'd actually get quite a bit less I'd have thought. I do also have a second car which I use as my daily car that only cost me £300 so I shouldn't need to buy another vehicle. I will consult with StepChange though as I've spoken with them a couple of times and they've been great!

owlet

It does look as though br will be your best option. Make sure you speak to one of the debt charities though because the OR will expect you to have taken advice.

If you sell the car, then don't spend the money because the OR will probably expect to receive it. It used to be the case that you could sell an asset and use the funds to purchase any essential things you need (keeping receipts) but there was a case on here recently , where the OR was not happy at all with this. I haven't seen any other cases of that on this forum though. I'm sure others will be along who can advise further. I'm sure if you spent some of it on essentials and kept a good chunk for the OR, it would be ok but that's just my view!

If you are going to go br, then you can stop paying your creditors now and that should give you enough money to pay the br fees and sort out your living arrangements first. I'd have thought it would be easier to do all that before declaring br.

You will also need to open a br friendly bank account . It must be a basic account. Nationwide flex basic is very good, as is Barclays basic account. You can get your pay moved to the new account straight away and leave the old account sitting there. Cancel any directvdebits to creditors at the same time. You will get two or three months before creditors start giving serious hassle and it gives you breathing space to sort yourself out.

During this period , if you speak to creditors, you can simply say you are working with eg stepchange (or whichever charity you choose) towards a solution. Don't mention going br because they will start trying to get as much out of you as they can before you declare.

Do speak to Stepchange or National Debtline though.

NotEvanAPot

Do not sell vehicle pre-BR (which, on a broad overview, is your likely best course of action). I make this point strongly, but read on.

It will be claimed by the OR, but in all honesty, whilst you state it is owned outright, was this through savings or credit other than car finance? The OR may take a dim view of such expenditure and hand out a BRU/O if acquired before debts were properly serviced.

The value recovered isn't of consequence to you if entering bankruptcy. If you voluntarily sold the vehicle and then entered in to a tenancy, paying more than an equal share, this would be frowned upon - unless suffering a hardship through living at home means it is your only option, and the only way to secure accommodation was to dispose of the vehicle and pay 12 months rent (half, if living with a partner) as your credit scoring meant the agent rejected your application. Some here will think I've been smoking something, but I did not too dissimilar a play 3 days before BR - the examiner who interviewed me commended my planning and openness. I do not have a BRU/O in place or pending, with 3 months to discharge.

Have you had a significant reduction in income recently, or has the outgoings outweighing income occurred because of paying one creditor with funds from another? (I detest the phrase robbing Peter to pay Paul, only because I wouldn't wish to receive stolen funds!)

peterkay369

Hello all, thank you for your replies.

Could some money of the car sale be used for a deposit to rent a new place? I came clean with my parents last night and I've basically been disowned as they have very strong views on money, and I've been told to find somewhere else to live. I had to sleep in my car last night.

I have an appointment with Nationwide to open a new account. One of my current creditors is Barclays so I don't think it's best to open a basic account with them?

@NotEvanAPot
The car was bought over a year ago using a loan from Tesco, before all of my money issues spiraled out of control.
In regards to the tenancy, I would only be paying for half of the rent/bills and most likely with a private landlord if I can as I know some agents won't let to BR.

My wages have stayed relatively the same, but as my gambling has gotten worse I've been borrowing from creditors including the dreaded pay day loans, purely to meet my minimum repayments.

NotEvanAPot

If gambling is involved, OR can be harsh in their handing out of BRU/O as a penalty for recklessness.

Prioritise as below:

1. Speak to a debt charity (StepChange, Nationa Debtline, CAB etc)
2. If going to rent privately, get it done ASAP. As soon as BR, you'll struggle.
3. Make decision on going BR.
4. If necessary, sell vehicle, but have a receipt for the total amount paid to you and ideally sell it to a garage not a private individual - you do not want the issue should the OR wish to reverse a transaction that comes with a disgruntled person knocking on your publicly available address front door. Businesses spread and mitigate risks, but pay slightly less as a result. Spend a minimum and keep documents of what is paid out (deposit, rent, BR fees etc).

Advise your parents to do some research of their own. Bankruptcy isn't a punishment, it is a legal protection. They probably think their house will be on a "black list" and your name will be all over the papers - some education is needed.

peterkay369

Thanks NotEvanAPot. I'm fully expecting a BRU/O, I was the stupid one with the gambling and I know there will be consequences due to my actions.

I'm still waiting for a chance to speak to StepChange in full detail, but from the brief conversations I have had with them, they have been great.

Really appreciate your help

NotEvanAPot

Good attitude, it's refreshing to see someone taking responsibility. Showing remorse when speaking with the Insolvency Service goes down very well as a small piece of advice.

Far too much is written in the media that gambling is the fault of the game provider and not the player. As with all addictions, seek some help from appropriate sources. When the fun stops, stop applies to many things in life!

I don't have a personal story in relation to gambling, but I certainly have an addictive nature (the smoking, drinking and obsession with fast cars show it!) and know it can be difficult to change habits. Folk here will happily provide support and encouragement as you take things one step at a time.

peterkay369

Gambling isn't the fault of the provider at all imo, it's down to the individual. At the end of the day, I'm the one that made the stupid decisions and I'm the only one that can be held accountable.

So after a long weekend speaking with my stepdad who has managed to talk my mum around, I've finally been allowed back into the family home however relationships are frosty to say the least. After speaking with StepChange, I've put together a brief SOA. Would anyone be able to take a look at it please and advise on anything that may need adding/omitting?

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1360
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1360

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 400
Management charge (leasehold property).. 0
Council tax............................. 36
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 35
TV Licence.............................. 6.06
Satellite/Cable TV...................... 10
Internet Services....................... 10
Groceries etc. ......................... 180
Clothing................................ 40
Petrol/diesel........................... 200
Road tax................................ 25
Car Insurance........................... 110
Car maintenance (including MOT)......... 25
Car parking............................. 50
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 10
Entertainment........................... 15
Holiday................................. 40
Emergency fund.......................... 15
Total monthly expenses.................. 1247.06


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 10000
Other assets............................ 0
Total Assets............................ 10000

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Barclaycard Credit Ca..........2500......0.........0
Capital One Credit Ca..........500.......0.........0
Lloyds Loan....................9769......204.......0
Satsuma Loan...................1150......284.......0
Zopa Loan......................15227.....254.......0
Tesco Credit Card..............2729......0.........0
Tesco Loan.....................11000.....306.......0
Moneyway Loan..................15053.....251.......0
Lloyds Overdraft...............4100......0.........0
Lloyds Credit Card.............5000......0.........0
Total unsecured debts..........67028.....1299......-


Monthly Budget Summary
Total monthly income.................... 1,360
Expenses (including HP & secured debts). 1,247.06
Available for debt repayments........... 112.94
Monthly UNsecured debt repayments....... 1,299
Amount short for making debt repayments. -1,186.06

Personal Balance Sheet Summary
Total assets (things you own)........... 10,000
Total HP & Secured debt................. -0
Total Unsecured debt.................... -67,028
Net Assets.............................. -57,028

Created using the SOA calculator at new user link removed
Reproduced on Moneysavingexpert with permission, using other browser.

NotEvanAPot

Is this SOA based on living with parents rather than moving out pre-BR? If yes, have you run the numbers likely if you are living with partner? Council tax, gas, electricity and water rates along with groceries will probably eat a further £250.

By the car insurance monthly amount, are you under 25 or accident prone? Meant in a nice way if the latter! But some struggle during BR to pay car insurance monthly as this is a credit agreement - mainstream lenders pile on the interest or want the full premium at inception.