More questions before we declare bankrupcy

TheGardener

Sorry in advance for the red&bold highlighting - I couldn't turn the bold off for my answers.

katyp wrote: »

Thanks again for taking the time to respond to my long post.
...I tend to agree with you about when to declare, but I feel as if I have had by knuckles rapped by TheGardener. Sorry, completely not intended - just trying to be concise as it was such a long post

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

TheGardener, answers below.

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 - No, you can stop paying, if you have decided not to resit repossession or try and buy the ORs interest back, you can simply stop paying the mortgage, find somewhere suitable to rent and hand the keys back. Any shortfall in the mortgage will fall into the BR. However, I think you are responsible for the council tax until the bank take possession. you can stop paying the mortgage? 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. Try a Barclays Basic Account (tried and tested with many BR's) - you have to specifically ask for a basic account in branch and explain you have debt issues. Also I found the Nationwide Flex direct great too - just make sure you select the zero overdraft option when you apply.

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. There is no problem using this money to pay for things you need such as the BR fees or an essential car repair. Spend it on things the OR is unlikely to challenge but don't just spend in on wants rather than 'needs' The OR will challenge you if they think you have just spent it to keep it away from creditors.

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 doubt many people on this board had had a holiday in years and certainly were not in a position to take one! My MIL lives abroad and I sent the grandchild to see her on a bargain bucket seat for £70 each way and the OR challenged me on what that flight was for.
... So is it not common practice to try to minimise the assets for the OR, No, not if they are being straight - no or does everyone just stop spending as soon as they think they might have to declare BR? WWell there I have to stick with the board rules and not encourage you to do something the OR may challenge. Most folk on this board didn't have anything left to dispose of and at the point of BR hadn't had a holiday in years, were struggling to keep a roof over their head and put food on the table - that was certainly my position.

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 Perfectly reasonable expense
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 would happen if it WAS a £200 blazer? Depends on the OR really - some are fine with kids expenditure - some are not. If he needs it he needs it -

... 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 This house will be sold? therefore its not reasonable to repair it unless dangerous and we have eg £700 debit on on electricity/gas account, so our monthly payment will be going up soon. The debt to the energy provider will fall into your BR so don't worry about that. Living on the financial edge is normal for people with debt problems. I got a lot of satisfaction from how much nice stuff I got for my new rented home from ebay and charity shops. By all means repair anything that needs doing and get yourselves some decent clothes - I was just trying to say that don't spend anything that the OR might consider 'more than was necessary' - 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.[/B] It may not make sense - but just tread carefully. BR rules are not for us to interpret. Its not about what we think is reasonable or sensible - its about the OR following their technical manual rules.

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? Once you are discharged you are free to make your own financial decisions again


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? Sorry again - my assumption was not reasonable.

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? Get professional advice on 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, Again, my bad - its such a long post it difficult to get it right on every part. 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 extravagant people. We are not going abroad. Great - in which case you should be fine but it would be reasonable for the OR to challenge this
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

!!!8221;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

Perfect - that's what this board it really good at. We are a supportive forum and sometimes the feedback can be 'direct' so think of us as critical friends/devils advocates. Most of the ORs are, reasonable people doing their job - but the OR's technical manual is a very blunt and inflexible instrument and what you or I think is 'reasonable' plays no real part in the process.