More questions before we declare bankrupcy

katyp

Further to my first post, a few more general questions, assuming we do decide to opt for bankruptcy:

Bank accounts: We currently have a RBS One account, so the mortgage, our meagre savings and our current account are all rolled into one. What will happen to this account upon declaring bankruptcy? We have opened a joint Starling account which currently has nothing in it - could we use this account post-bankruptcy?

Extra cash: We usually have a surplus of around £2-3k in the One account. Is there anything I can do with this to stop the OR taking it? Of course, the less money in this account, the higher the monthly interest.

Cars: We currently run two cars, both needed to take children to schools (two children, different schools, same start time) and us to work. One was gifted to us by my husband's parents. My husband is the keeper, but we have the invoice to show the car was paid for by my FIL. The other (Car 2) has just been declared beyond economical repair. Could I buy another old car for around £650 before declaring bankruptcy? We would try to sell Car 2 for a small amount - could I keep the cash out of the bank for this?

Committed expenditure: We are going on holiday at the end of August so will need spending money for this, which would be some of the £2-3k currently sitting in our One Account. How can we protect this? The holiday is paid for (booked in better times), it's just spending money, which will not be extravagant. Would it be wise to draw the cash out for this in advance of declaring?
Our son is going on a school trip in September - shall I pay for this now?
School uniforms - both children need new uniform and shoes - should I buy these before declaring?
In a nutshell, should I get rid of as much of this surplus as I can on legitimate spends before declaring BR?


Matched betting: We have started to dabble in matched betting over the last month, and have around £700 in total in Betfair exchange and our own personal Starling cards. Shall I use this money to purchase the car to replace Car 2? What will happen to our matched betting upon declaring BR?

Additional future money: We are embarking upon a project (TV/radio script) about our story over the 10 years. If this is successful, what will happen to the money from this? We both stand to inherit at least £100k from our respective parents - what will happen to this money?

House: Is it a given that the house will have to be sold?

Timings: When is the best time to declare bankruptcy? Bizarrely, I was wondering if the day before we go on holiday might be a good time, as this will have less impact if our bank account is frozen.

BTL: As well as our family home, we have a BTL property, which will have to be sold. Does it make any sense to keep paying the mortgage on this house, or should we let it be repossessed? The tenant has expressed an interest in buying it, so he might get a better deal then also.

I hope I am not coming over too badly here - this situation has been caused by a failed business and a PG on European money. We feel rather bitter that we are in this situation after providing employment to five people for a few years and often going without ourselves, but hey ho.

We are facing this pragmatically and I am just trying to salvage as much as we legitimately can for ourselves before going under.

Clouds88

Omg that is SO many questions;

I!!!8217;m a recent bankrupt so to answer a few....

1st- work out your SOA, your guaranteed income going forward and monthly expenses.

2nd- the OR will take 100% of any surplus you have, once you!!!8217;ve put an allowance for mortgage, petrol, car running costs, any childcare, food, electric bills ect. Do not put any debts in this as they will be written off.

3rd- you can then be advised the best Route to take. Personally I!!!8217;d go on the holiday first and spend your money and declare BR when you get back as all of your money you have left after essentials will be given to the OR to distribute to your creditors. You will be giving 100% or any surplus in your wages for 3 years, so make sure, this, alongside the equity in your home far outweighs your debts or a DMP might be a better route. If you give a clear picture you can be advised better.

Hope that helps

Clouds88

Sorry I meant, make sure you!!!8217;re debts are a lot more than your surplus income for 3 years plus the equity in your home if that makes sense.

Flm67

Is the personal guarantee a joint one? How much equity is in your home?

National_Debtline

Hi Katy


You've raised a lot of important questions that you need to be clear on before deciding whether bankruptcy is the best option for you. However your situation is fairly complicated by the fact you have an offset mortgage, a BTL property and potential inheritances. I would suggest that these need to be dealt with by one of the free debt advice agencies so they can look at the situation in detail.


As you have a BTL property, which will be treated differently to your own residential property, I would recommend contacting Business Debtline. They'll offer you advice on both your personal debts and business issues. You can call them on 0800 197 6026 or webchat at www.businessdebtline.org.


Best wishes


Susie
@natdebtline

sammyjammy

If the tenant wants to buy why not sell the BTL now?

TheGardener

katyp wrote: »

!!!8230;.Bank accounts: We currently have a RBS One account, so the mortgage, our meagre savings and our current account are all rolled into one. What will happen to this account upon declaring bankruptcy? It will be closed by the bank We have opened a joint Starling account which currently has nothing in it - could we use this account post-bankruptcy? - what do the terms of the account say about BR?

Extra cash: We usually have a surplus of around £2-3k in the One account. Is there anything I can do with this to stop the OR taking it? Not really - if you have reasonable expenditure for living costs you need to make then fine but anything classed as 'surplus' will go to the OR Of course, the less money in this account, the higher the monthly interest.

Cars: We currently run two cars, both needed to take children to schools (two children, different schools, same start time) and us to work. One was gifted to us by my husband's parents. My husband is the keeper, but we have the invoice to show the car was paid for by my FIL. This should be fine if there is proof that car is not yours The other (Car 2) has just been declared beyond economical repair. Could I buy another old car for around £650 before declaring bankruptcy? Yes - in fact you could spent upto £1000 on replacing the car. However, want and need are arguments you will have to justify and a school run alone isn't really enough to justify the OR allowing running costs for 2 cars. We would try to sell Car 2 for a small amount - could I keep the cash out of the bank for this?

Committed expenditure: We are going on holiday at the end of August so will need spending money for this, which would be some of the £2-3k currently sitting in our One Account. How can we protect this? You can't - cancel the holiday and get anything you can back. this will be taken as an asset in BR. Keeping an expensive holiday and £2,3K will not happen (and please don't think it would be reasonable to expect keep all that!!)The holiday is paid for (booked in better times), it's just spending money which will not be extravagant. :eek: really! Would it be wise to draw the cash out for this in advance of declaring? That would be illegal and classed as depriving the OR and creditors.
Our son is going on a school trip in September - shall I pay for this now? Depends on what sort of trip and how much£ - a weekend GCSE geography field trip to Aberdovey? = probably fine - or 10 days in New York? - probably not so fine.
School uniforms - both children need new uniform and shoes - should I buy these before declaring? What we talking? Tesco loss-leader promotion full kit for £30 or £200 for a school colours Blazer? Former is fine - latter perhaps not so much...
In a nutshell, should I get rid of as much of this surplus as I can on legitimate spends before declaring BR? No! :eek: Only reasonable costs are ok - anything else is deprivation of funds for the creditors and the OR may make you the subject of a BRO which you really don't want.

Matched betting: We have started to dabble in matched betting over the last month, and have around £700 in total in Betfair exchange and our own personal Starling cards. Shall I use this money to purchase the car to replace Car 2? What will happen to our matched betting upon declaring BR? The account will be closed and the cash sent to the OR - gambling is a bit of a red flag for the OR.

Additional future money: We are embarking upon a project (TV/radio script) about our story over the 10 years. If this is successful, what will happen to the money from this? - if the profits come after you are discharged and not paying an IPA you keep it. We both stand to inherit at least £100k from our respective parents - what will happen to this money? Depends when they die - if before you are discharged then the OR gets it all - if after you are discharged you can keep it - although entirely depends on whether your parents need it themselves I rather think?

House: Is it a given that the house will have to be sold? If there is enough equity for it to be worth the ORs while to sell it and you can't find a way to buy the OR's interest back - then yes

Timings: When is the best time to declare bankruptcy? Bizarrely, I was wondering if the day before we go on holiday might be a good time, as this will have less impact if our bank account is frozen. Don't think the OR will be too keen on calling you aboard for your telephone interview (looks like a bit of a pi55 take really...). I think you have to make yourself available to the OR

BTL: As well as our family home, we have a BTL property, which will have to be sold. Does it make any sense to keep paying the mortgage on this house, No or should we let it be repossessed? yes The tenant has expressed an interest in buying it, so he might get a better deal then also. Any asset disposed of must be for the real market value - any less and the OR will claw it back so if you sell the tenant the house cheaply - the OR will go after the tenant to pay the difference

I hope I am not coming over too badly here (talk of £2/3K holiday money is a bit of a red rag TBH but we all have different lifestyles and different priorities. - this situation has been caused by a failed business and a PG on European money. We feel rather bitter that we are in this situation Don't we all after providing employment to five people for a few years and often going without ourselves, but hey ho.

We are facing this pragmatically and I am just trying to salvage as much as we legitimately can for ourselves before going under. I appreciate that but BR is not about salvage - more a 'fresh start' Once you go BR - none if it is yours

You need to get professional free help from Stepchage, business debtline or the CAB. This forum is no substitute for that.

lisyloo

We both stand to inherit at least £100k from our respective parents - what will happen to this money?

Presumably you will only inherit on second death?



I would suggest that you suggest to your parents to alter their wills during the BR perhaps in favour of your children. They are free to change them again later.


As discussed elsewhere you will only get proceeds after you are discharged or after the end of an IVA.

I hope I am not coming over too badly here

Not at all. Far more realistic than some. It's fine to ask questions but as per previous post you need proper advice.
I've had bad advice on here (and not taken it).

katyp

Thanks again for taking the time to respond to my long post.
To answer the questions:
Clouds: We have already worked out our SOA as part of the IVA proposal, which showed we had a surplus of around £200 pcm jointly (although I realise our bankruptcy will be as individuals, so it might change) However, that included the income we currently get from the BTL, which we obviously will not have once it's sold.
I tend to agree with you about when to declare, but I feel as if I have had by knuckles rapped by TheGardener.

Flm: Yes, it is a joint PG for £160k. The equity in the house is about £54k.

Sammy: I don't think he wants to buy now, but later this year.

TheGardener, answers below.

!!!8230;.Bank accounts: We currently have a RBS One account, so the mortgage, our meagre savings and our current account are all rolled into one. What will happen to this account upon declaring bankruptcy? It will be closed by the bank So what will happen to our mortgage, which is part of this account? I assume we will be expected to continue paying the mortgage until the house is disposed of? We have opened a joint Starling account which currently has nothing in it - could we use this account post-bankruptcy? - what do the terms of the account say about BR? It says no bankrupts, but I was wondering if anyone had any expereince of how strict they are? There are no overdrafts on the Starling accounts.

Extra cash: We usually have a surplus of around £2-3k in the One account. Is there anything I can do with this to stop the OR taking it? Not really - if you have reasonable expenditure for living costs you need to make then fine but anything classed as 'surplus' will go to the OR. So your advice is to basically ringfence this money now, and not spend it at all? That seems a bit unrealistic? Of course, the less money in this account, the higher the monthly interest.

Cars: We currently run two cars, both needed to take children to schools (two children, different schools, same start time) and us to work. One was gifted to us by my husband's parents. My husband is the keeper, but we have the invoice to show the car was paid for by my FIL. This should be fine if there is proof that car is not yours :j The other (Car 2) has just been declared beyond economical repair. Could I buy another old car for around £650 before declaring bankruptcy? Yes - in fact you could spent upto £1000 on replacing the car. However, want and need are arguments you will have to justify and a school run alone isn't really enough to justify the OR allowing running costs for 2 cars. We would try to sell Car 2 for a small amount - could I keep the cash out of the bank for this?

Committed expenditure: We are going on holiday at the end of August so will need spending money for this, which would be some of the £2-3k currently sitting in our One Account. How can we protect this? You can't - cancel the holiday and get anything you can back. this will be taken as an asset in BR. I am not prepared too do this, and i doubt if many people would be. I don't see much point in recouping money that has already been spent just to give to the OR. Keeping an expensive holiday and £2,3K will not happen (and please don't think it would be reasonable to expect keep all that!!) So what will happen if we declare BR after the holiday? It was booked in November last year. The holiday is paid for (booked in better times), it's just spending money which will not be extravagant. really! Would it be wise to draw the cash out for this in advance of declaring? That would be illegal and classed as depriving the OR and creditors. So is it not common practice to try to minimise the assets for the OR, or does everyone just stop spending as soon as they think they might have to declare BR?
Our son is going on a school trip in September - shall I pay for this now? Depends on what sort of trip and how much£ - a weekend GCSE geography field trip to Aberdovey? = probably fine - or 10 days in New York? - probably not so fine. £80 - I will pay it before declaring
School uniforms - both children need new uniform and shoes - should I buy these before declaring? What we talking? Tesco loss-leader promotion full kit for £30 or £200 for a school colours Blazer? Former is fine - latter perhaps not so much... It's standard school stuff. But - my son is changing schools this year so the whole uniform is changing. What ould happen if it WAS a £200 blazer?
In a nutshell, should I get rid of as much of this surplus as I can on legitimate spends before declaring BR? No! Only reasonable costs are ok - anything else is deprivation of funds for the creditors and the OR may make you the subject of a BRO which you really don't want. No, I'm sure I don't, but I am confused over this, I must admit. For the past nine years, we have been living like paupers, have renewed nothing and spent the bare minimum to survive as a family. Obviously, this means all our clothes are worn out, our house is a hovel and we have eg £700 debit on on electricity/gas account, so our monthly payment will be going up soon. Is it not wise to spend the surplus we have now to make things easier when we have to exist on a lower monthly amount. Does that not make sense? It does to me.

Matched betting: We have started to dabble in matched betting over the last month, and have around £700 in total in Betfair exchange and our own personal Starling cards. Shall I use this money to purchase the car to replace Car 2? What will happen to our matched betting upon declaring BR? The account will be closed and the cash sent to the OR - gambling is a bit of a red flag for the OR. Yes, I thought this might be the case, although I assume we can restart again once discharged?

Additional future money: We are embarking upon a project (TV/radio script) about our story over the 10 years. If this is successful, what will happen to the money from this? - if the profits come after you are discharged and not paying an IPA you keep it. We'll wait until we are discharged We both stand to inherit at least £100k from our respective parents - what will happen to this money? Depends when they die - if before you are discharged then the OR gets it all - if after you are discharged you can keep it - although entirely depends on whether your parents need it themselves I rather think? Well obviously :huh: But is this not worth bearing in mind?

House: Is it a given that the house will have to be sold? If there is enough equity for it to be worth the ORs while to sell it and you can't find a way to buy the OR's interest back - then yes I thought so

Timings: When is the best time to declare bankruptcy? Bizarrely, I was wondering if the day before we go on holiday might be a good time, as this will have less impact if our bank account is frozen. Don't think the OR will be too keen on calling you aboard for your telephone interview (looks like a bit of a pi55 take really...). I think you have to make yourself available to the OR I did think that, although I wonder why you think I am going abroad?

BTL: As well as our family home, we have a BTL property, which will have to be sold. Does it make any sense to keep paying the mortgage on this house, No or should we let it be repossessed? yes The tenant has expressed an interest in buying it, so he might get a better deal then also. Any asset disposed of must be for the real market value - any less and the OR will claw it back so if you sell the tenant the house cheaply - the OR will go after the tenant to pay the difference. Maybe the best thing to do is to let the OR sell it to the tenant, then there will be no risk of this?

I hope I am not coming over too badly here (talk of £2/3K holiday money is a bit of a red rag TBH but we all have different lifestyles and different priorities. - this situation has been caused by a failed business and a PG on European money. We feel rather bitter that we are in this situation Don't we all after providing employment to five people for a few years and often going without ourselves, but hey ho.
Right, I have to take exception at this, I am afraid. You have obviously formed an opinion about me and are now responding based on your perception of who I am. I did not say I was taking £2-3k spending money, I said my holiday money would be taken from the £2-3k savings I have. For the record, I am talking of around £500, to be used on groceries and petrol for the car mainly. We are not extravagent people. We are not going abroad.

We are facing this pragmatically and I am just trying to salvage as much as we legitimately can for ourselves before going under. I appreciate that but BR is not about salvage - more a 'fresh start' Once you go BR - none if it is yours

”You need to get professional free help from Stepchage, business debtline or the CAB. This forum is no substitute for that. I realise that, but I am using it as a sounding board

Clouds88

With regards to your savings, if you need something like a washing machine. Clothes for the children, a car, to me these are legitimate outgoings so keep the receipts and buy what you need. When you booked the holiday last November (do you have proof?) you weren!!!8217;t thinking about BR then and can!!!8217;t get a refund so best to go and enjoy yourself. If you have time on your side i would leave it for now and maybe file after you!!!8217;ve had your holiday and time to get advice and time to think...

If the debt is 160 k, and your available assets 54 k I think go for it. You may not even end up with an IPA if rent is £200 more and with the BTL going down. Don!!!8217;t sign an ipa form to accept if you think this will be unmanagble, come back to here and we can see.

Good luck.

Flm67

Would have been better if it wasn’t a joint pg but not much you can do about it. I can’t see using some of your money fir spending money being a problem.
Holiday is already paid for anyway. I was actually declared BR on holiday as like you ours had already been paid for. I was declared BR for a similar thing to you as in business related and not personal. In hindsight I should have tried to settle early as most of my funds were eaten up by solicitor fees etc.
School uniforms are a necessity so there would be no problems there. Not sure about the car as mine was on hire purchase and the house company didn’t have a problem in me keeping at as had no missed payments although not all go companies are ok with this.
Your interest in the equity on your house could be bought out by a relative so that may be something you could look into. There would possibly be a discount on the price rather than pay the full amount for the equity.
My six years is up on 31/7/18 so only a few days left. It wasn’t all plain sailing for me but was the only option available at the time. I did seek advice but a few things did come back to bite me.