Could you answer a few questions please?

Toto

Hey guys,

One of my close friends is filling in her forms for bankruptcy. I've answered most of her questions but there are a couple I just don't know. She tried to prop up a failing business for 2 years and now has personal debts of 65,000.

Firstly, she and her husband have around 16k in savings from selling off their house, this is in her savings account as they are now renting.

She tried to offer full and final settlements but the creditors kept refusing so she feels her only option left is bankruptcy. Half of this money is her husbands, and he could do with it to pay off a couple of debts he has. Would it be wrong of them to pay off his debts with the £8,000 which is technically his but happens to be in her sole savings account? She does have a car which is worth about £6,000 and she knows that she will lose it. In fact she keeps searching the house for things she can offer the OR, she's very open like that. But they would like to clear her husbands debt so they really do have a clean slate, there's no point in him going bankrupt too with only £8,000 debt.

She isn't working at the moment, she is frankly exhausted and depressed. She has two adopted children who have Cystic Fybrosis and a host of other physical and learning problems. These children are in fact her brother's children. His wife passed away 3 years ago and he just couldn't cope. So, her and her husband adopted them. Now, these kids both get a disability benefit. Is this money hers in the eyes of the OR or the childrens? This makes a big difference to her I&E and is the difference between an IPA or none.

I realise her tax credits, carers allowance and child benefit are all her income but I really am unsure about the children's disability benefit. She could have this paid to her husband but she doesn't want to do anything wrong in the eyes of the OR. She would rather leave things as they are and let him/her decide, but she would like to know what will happen.

I read somewhere that if she is on benefits as her sole income it means she won't get an IPA, but does this only really mean Income Support etc? She doesn't claim any Income Support, housing or council tax benefit because her husband works. But, her benefits with the children's disability does mean she has a reasonable income, which makes me think she might get an IPA despite it being made up from benefits.

I don't begrudge her a penny of these benefits btw, she works 2 full time jobs caring for these kids, she gives them every ounce of herself. She is possibly the most devoted mother I know and really can't work, which is why the business failed.

I'm going with her to the courts, I'll ask her if she minds me posting her I&E on here for your thoughts too. Thanks for your help xxxx

Richard_S

Toto wrote: »

Hey guys,

One of my close friends is filling in her forms for bankruptcy. I've answered most of her questions but there are a couple I just don't know. She tried to prop up a failing business for 2 years and now has personal debts of 65,000.

Firstly, she and her husband have around 16k in savings from selling off their house, this is in her savings account as they are now renting.

She tried to offer full and final settlements but the creditors kept refusing so she feels her only option left is bankruptcy. Half of this money is her husbands, and he could do with it to pay off a couple of debts he has. Would it be wrong of them to pay off his debts with the £8,000 which is technically his but happens to be in her sole savings account? No problem there assuming that they both contributed equally to the house; her O.H may even be able to argue for a bigger percentage of the B.I if his contribution to the upkeep was greater than his wifes. They'll need to keep accurate records of any withdrawals and deposits to satisfy the O.R that there's been no attempt to show fraudulent preference. She does have a car which is worth about £6,000 and she knows that she will lose it. In fact she keeps searching the house for things she can offer the OR, she's very open like that. But they would like to clear her husbands debt so they really do have a clean slate, there's no point in him going bankrupt too with only £8,000 debt.

She isn't working at the moment, she is frankly exhausted and depressed. She has two adopted children who have Cystic Fybrosis and a host of other physical and learning problems. These children are in fact her brother's children. His wife passed away 3 years ago and he just couldn't cope. So, her and her husband adopted them. Now, these kids both get a disability benefit. Is this money hers in the eyes of the OR or the childrens? This makes a big difference to her I&E and is the difference between an IPA or none.Benefits are not classed as income when they're specifically for people with disabilities.

I realise her tax credits, carers allowance and child benefit I don't think child benefit is classed as income. are all her income but I really am unsure about the children's disability benefit. She could have this paid to her husband but she doesn't want to do anything wrong in the eyes of the OR. She would rather leave things as they are and let him/her decide, but she would like to know what will happen.

I read somewhere that if she is on benefits as her sole income it means she won't get an IPA, but does this only really mean Income Support etc?Benefits are never classed as income; I'm certain fermi has a link to the I.S website confirming this. She doesn't claim any Income Support, housing or council tax benefit because her husband works. But, her benefits with the children's disability does mean she has a reasonable income, which makes me think she might get an IPA despite it being made up from benefits.

I don't begrudge her a penny of these benefits btw, she works 2 full time jobs caring for these kids, she gives them every ounce of herself. She is possibly the most devoted mother I know and really can't work, which is why the business failed.

I'm going with her to the courts, I'll ask her if she minds me posting her I&E on here for your thoughts too. Thanks for your help xxxx

Hi Toto,

Apologies for this being brief but I think I've covered everything. If there's anything I've not explained clearly then please post again and I'll keep looking in through the day; bloody work getting in the way of more important things again.

Hope you're both keeping well,

Regards

Rich

Toto

Hi Rich

Thanks for that, this will be good news for her. We're doing great, my husband has up'd and left me though for two months, good start eh. How's things with you and the lovely Jane? Any new BCSC p*ss ups, I mean AGMs planned?

fermi

Richard is correct.

No income other than benefits = No IPA. Full stop.

The OR has no choice and no room to manoeuvre on that one.:D

From: http://www.insolvency.gov.uk/freedomofinformation/technical/techmanvol1/Ch25-36/Chapter31/part7/part2/part_2.htm

31.7.9 State benefits

An IPA should not be sought where the bankrupt's only or main source of income is state benefit payments without any other significant source of income [note 3]. This applies even in the rare circumstances where the official receiver's analysis of the bankrupt's income and expenditure discovers sufficient surplus for an IPA arising as a result of the income received by the bankrupt which either solely or chiefly comprises state benefits. The official receiver should consider that it is always open to the bankrupt who wishes to contribute, to make voluntary payments. If the bankrupt was minded to contribute on a voluntary basis, having been informed that their income appeared to be sufficient to produce a surplus taking in to account their reasonable domestic needs, a voluntary agreement could be incorporated into an IPA, but it would have to be clearly noted that no enforcement action would be taken if the bankrupt failed to make agreed voluntary repayments.

This does not mean that the official receiver must exclude all benefit payments received by the bankrupt when calculating available income for an IPA. Theperson making the calculation (usually the examiner) should first consider whether there is income paid to the bankrupt not comprising state benefit . If this is the case, an IPA may be a possibility, and any calculation of income should include all available income, including state benefits which are paid to an individual for the general benefit of that individual and their family. The notable exceptions to this rule when dealing with state benefits is child benefit. The High Court has stated as a matter of public policy that child benefit and similar benefits should not be included in the statement of income when applying for an IPO and there is no reason why this point should not be extended to cover IPAs. Whilst it is acknowledged that in the figures for expenditure there may be outgoings for the benefit of the children, at least to the value of the child benefit received, to ensure that there is no risk of them being deprived of it, child benefit should not be included in IPA assessments. The Department of Work and Pensions website provides useful information regarding allowances and benefits currently in force and can be accessed at http://www.dwp.gov.uk/

Where the bankrupt is in receipt of benefits and other sources of income, the total income should be established (see other income sources at paragraph 31.7.7) and the bankrupt's reasonable expenses deducted (see paragraph 31.7.19). An assessment can then be made as to whether the bankrupt is in receipt of income surplus to his/her reasonable domestic needs. If there is a surplus of income, this surplus should be less than or equal to income from the source other than benefits in order for an IPA to be sought. It should be remembered that whilst the bankrupt's total income including state benefits should be included in the calculation of surplus income, it is the income from sources other than the benefit(s) which is providing the payments under the IPA/IPO, the surplus income from which an IPA is sought should not be comprised of state benefit.

Toto

Thank you so much fermi, that is exactly what I was looking for (must brush up my google skills). I'm actually looking forward to her bankruptcy on her behalf, it will be lovely to see the worry go away.

Richard_S

Toto wrote: »

Hi Rich

Thanks for that, this will be good news for her. We're doing great, my husband has up'd and left me though for two months, good start eh. How's things with you and the lovely Jane? Any new BCSC p*ss ups, I mean AGMs planned?

Hi Toto,

Your friend might want to confirm what I've put about the treatment of benefits with the CCCS or one of the other charities, but I'm sure it's correct.

Left you for two months,:eek: that must be difficult for you both but time does seem to accelerate at an ever alarming pace so hopefully it won't seem too long.:D

We're both doing fine thanks, work is purgatory for both of us but we have managed to start trading again in a very small way and that's been a big boost. Last time we were at our friends house in Spain we met an Australian guy who's based in S.E. Asia and deals in all manner of things; we've had a number of samples and a small consignment and they're selling reasonably well.

We've had an incredibly busy six months and we're heading off to Spain again in October for a week for some R&R. Can't bloody wait to get sat in the departure lounge consuming large quantities of overpriced alcohol.:rolleyes:

No specific plans for another "AGM" at the moment. As people are getting to and past discharge date they're moving on and back into the fray again. Will definitely let you know if anything on the spur of the moment is planned.

Rich

Richard_S

Toto wrote: »

Thank you so much fermi, that is exactly what I was looking for (must brush up my google skills). I'm actually looking forward to her bankruptcy on her behalf, it will be lovely to see the worry go away.

You'll be lucky to beat fermi off the mark Toto,:eek: :eek:

I think he was a "Wild West Gunslinger" in a previous life;:D never seen anybody as quick or accurate.:D

debt_doctor

HA ha ! you tell em Fermi !:beer:

( do you know every inch of the technical manual ! ) Your advice, as with others on here ( Richard for one ) is invaluable.:T

Best wishes

DD.

fermi

debt_doctor wrote: »

do you know every inch of the technical manual !

Nope. But I must have read quite a large proportion of it hunting for answers to tricky questions.;)

The 'case help manual' part is handy as well.

http://www.insolvency.gov.uk/freedomofinformation/technical/casehelpmanual/chm_frames.htm

As is the 'Dear IP' section.

http://www.insolvency.gov.uk/insolvencyprofessionandlegislation/dearip/dearipindex.htm

In fact the whole 'Freedom of Information' section is full of useful info.

http://www.insolvency.gov.uk/freedomofinformation/main.htm

I expect you've seen all of that though.