Bankcruptcy and your vehicle

bumblecat_2

Hi sorry i'm new to this and have posted this somewhere on the forum by mistake so thought i should put it in this section as well.

After talking to a very helpful lady at the National Debtline we are considering bankcruptcy as an option for my husband but are worried about what we have been told about the vehicle we own which is 5 yrs old and is worth about £3700 according to the online Parkers guide, OH is self employed and needs the vehicle for the work he does, after reading other posts it seems that it all depends on the OR and that there are no set rules - is this so?

If they decide it is an asset will we be able to sell it and get a cheaper car?, hubby is unable to work without a vehicle .

Many thanks

wok_boy

I've already replied in your other thread but I'll re-post it here as well

If he is unable to work without a vehicle, I don't see why the OR would ask you to sell it. I'd speak to the CAB or CCCS before making any decisions about bankruptcy.

fermi

There is a sticky with information about 'cars and bankruptcy' in the following two places (same info at each).

http://bankruptcy.informe.com/cars-and-bankruptcy-dt72.html
http://www.debtquestions.co.uk/debt_forum/viewtopic.php?t=14954

They should probably answer your questions. Keep posting here if they don't.

philnicandamy

IF and only IF the OR decided the vehicle could be taken as an asset then the OR would sell & release funds to enable purchase of a cheaper vehicle...but if its proved use for business then you may be able to kep its up to the OR contact any of the below in my sig BEFORE you decide anything as they will be able to give you further advice on going BR should you decide thats what you want to do

bumblecat_2

Hi Everyone and thanks for the prompt replies, it really helps when you are trying to make a decision what is the best way forward, so many questions and getting help on here so promptly is great.

I think we may be able to claim the car to be exempt as hubby is reliant on a vehicle for work and we also have a daughter at a school where there is school transport but if she stays at clubs, societies or detentions after school she can't get home. By reading the useful info on other threads if we can get the OR to treat it as exempt its value is immaterial.

Once again thanks for the prompt replies, we are that bit nearer now to making a decision.

fermi

A vehicle that is exempt can still have some of it's value claimed by the OR for the estate, and a cheaper replacement allowed.

I know that sounds more that a bit contradictory, but there you go.:rolleyes:

Exempt vehicles of excess value

Where an exempt vehicle appears to have a significant value, the official receiver, when acting as trustee, may claim it for the estate if he/she considers that the realisable value of the vehicle exceeds the cost of a reasonable replacement. The vehicle must be claimed by notice in writing no later than 42 days after it came to the knowledge of the trustee (in the case of the official receiver, on his/her becoming trustee). Any notice after this time can only be made with the leave of the court. The official receiver should not normally take any steps to claim an exempt vehicle unless the potential net realisation to the estate is at least £500 after taking into account any costs of sale and of a replacement vehicle. A third party contribution equivalent to the net value of the car to the estate may be accepted to avoid the seizure, sale and replacement of the vehicle.

The official receiver will need to consider the nature of the bankrupt’s business in assessing whether a vehicle has excess value since in the past the courts have concluded that a bankrupt could retain a high value vehicle because he/she operated a business which provided chauffeur driven vehicles.

Provision of a suitable replacement

Where a decision is made to replace an exempt vehicle with a cheaper alternative the official receiver should inform the bankrupt of the amount he/she is prepared to make available out of the sale proceeds. The official receiver has discretion as to the amount allowed for the replacement which should be sufficient for the bankrupt to buy a replacement vehicle which is suitable for his/her needs. For consistency between official receiver's offices a guideline maximum figure of £2,000 has been introduced. While official receivers may exceptionally exceed this figure depending on the purpose for which the vehicle is used, it should be adhered to as frequently as possible.

Depending on the circumstances of each case the payment to purchase the replacement vehicle may be made to the bankrupt directly or to the vendor of the vehicle. The most secure way to undertake the purchase is payment direct to the vendor. It is recognised that a bankrupt may be able to obtain a better deal to purchase a vehicle by negotiating a private sale or attending a car auction and in such circumstances immediate access to cash is required. If an allowance from the proceeds of sale is made directly to the bankrupt then the official receiver should request evidence of the purchase of the vehicle within 21 days.

Unless you can convince the OR that replacing your vehicle worth £3700 with one for £2000 would mean that your OH would be unable to work, then they may insist on this. It is down to each individual OR though, so impossible to second guess with any certainty.

Peter_Pan

We are in a similar situation so i'm finding this thread useful, can someone clarify for me, if the vehicle is classed as an asset and they allocate you up to £2000 to get a chaper vehicle or offer you to buy your vehicle would the amount you have to pay be minus the figure they would have given you to get a replacement? (eg car valued at £3200, would they offer us it for £3200 - (up to £2000 for a replacemnet?)

bumblecat_2

Thanks fermi for pointing that out - had obviously missed that bit so its not clear cut by any means, sounds silly but the car is used for work and also as the family runaround - with 3 kids all at 3 different schools it really helps and we have really looked after it and it feels like part of the family and to think it could be taken is making me feel sick in my stomach and hubby who had finally come around to the idea that bankcruptcy was our only way out is now having second thoughts again - all over a car:eek:.

Thanks Peter Pan for raising that question because that could be one we need an answer to if the worst comes to the worst - can anyone help please??????

tigerfeet2006

bumblecat wrote: »

Thanks fermi for pointing that out - had obviously missed that bit so its not clear cut by any means, sounds silly but the car is used for work and also as the family runaround - with 3 kids all at 3 different schools it really helps and we have really looked after it and it feels like part of the family and to think it could be taken is making me feel sick in my stomach and hubby who had finally come around to the idea that bankcruptcy was our only way out is now having second thoughts again - all over a car:eek:.

Thanks Peter Pan for raising that question because that could be one we need an answer to if the worst comes to the worst - can anyone help please??????

I know a couple of people on the boards have written down exactly why they feel that the car is a necessity and not a conveinience and given it to the OR to help their case with the OR. I should think that 3 children at 3 different schools and the work journey would need a really reliable car.