bankruptcy - how bad is it?

emilyk

Hi there,

I have been getting support from CAP and they have come back to me with bankruptcy as the recommended route for dealing with my debts.
Im really nervous as I know its a big step to take - can anyone advise me on what will happen if I choose to go down that route?
Do you still have to make payments if you go down the bankruptcy route? My mum did it recently and the official receiver is taking money from her each month - i know one of her payments is the amount she would've paid on council tax (as apparently doesn't have to pay council tax for a year now so pays it to them instead). Do they take whatever money you have left over each month?
Will this affect things like paying for my car insurance monthly? and my internet and landline contract?

sourcrates

Hi,


Bankruptcy should be viewed as the fresh new start that it actually is, not something to be feared.

You would have a telephone interview with the official receiver, who will go through your budget with you, they will leave you enough to live on, so don`t worry about that.

If your budget shows any disposable income above £20 then you will get an IPA (Income payment arrangement) for up to 3 years dependent on your circumstances.

You can normally still pay for household bills etc monthly, you would need a new basic bank account though as yours will be frozen for a while, you will also need a supply of cash at home because of this.

Years_of_debt

You have all the questions that everyone does so don’t worry.
It’s worth checking previous posts on this forum as people ask this question almost daily.

There are many websites on google which give advice, I find the one below the best - just my opinion.

https://bankruptcyexpert.co.uk

Yes you will pay monthly to your debts - only if you can afford to, depends on your income vs outgoings.

It’s really not “scary” - after 12 months you’re usually debt free - aslong as you corporate with your OR (person in charge) - no reason why you wouldn’t.
After 12 months you back to normal with no debts. Able to keep all of your monthly earnings - aslong as you haven’t got an IPA (where you pay to your debts each month).

If you prefer to speak to the government insolvency line, I did and it was the best thing I’ve done! It is 0300 678 0015, it puts you through to someone in the insolvency team who works for the government and you can literally ask them every question/get them to explain everything. That way you can get 100% correct answers/ explantiaons.
All the best

broaps

Hi Emilyk

I found https://debtcamel.co.uk/ to be really helpful with lots of info in plain English. National Debtline and Citizens Advice are also good. When you look for stuff online just be aware that there was a big change in 2016 to the way bankruptcy is handled so comments/info from earlier may no longer be correct.

There are 3 sets of consequences from bankruptcy. The immediate and best one is getting rid of the worry about your debts and having a fresh start. Having those threatening letters and phone calls stop is a huge relief. The second is the possible payment of an IPA for 3 years if you have enough spare cash for one. The third and longest effect is on your credit rating as the bankruptcy stays on file with the credit reference companies for 6 years.

You are allowed a reasonable standard of living when the OR decides if you can afford an IPA and there is lots of advice on this site. CAP may be able to help with this. If you have a regular surplus of £20 or above the OR will expect you to pay it over and this amount can be adjusted up or down if your finances change significantly in the 3 years. If you start your bankruptcy with no surplus and are discharged (usually after 1 year) without one being set you will not have to pay anything if your finances improve later.

Hope this helps. Good luck.

emilyk

Thanks for the replies. I am not currently working due to my own ill health and caring responsibilities for my son (who is on receipt of DLA). Do they do an IPA if your income source is only benefits? I can't return to work for at least a couple more years yet, I have just signed up to do a part time open uni course and planning to study as much as I can for when I am able to return to work..

luvchocolate

No I.P.A if your income is solely from benefits.

ToxtethO'Grady

Hi Emily


Hope you find the responses helpful and as Luvchocolate says you will not have an IPA if your income is solely benefits.


You asked about your insurance and I would advise to check the agreement as some have an insolvency clause that takes away your ability to pay in instalments, so if your car insurance comes up for renewal during your year as an undischarged bankrupt they may request the payment in a lump sum.


How much is your debt balance? If it's under £20K have CAP discussed a Debt Relief Order (DRO)?


Your son's DLA is for his care and shouldn't be an issue with your surplus as this would not be classed as income you can use towards your debts. His whole DLA can be added as a Care/Disability cost on your budget and the Insolvency Service would disregard it.


Hope this helps

MovingForwards

I will cover the car insurance bit - the companies ask if you have CCJ / bankruptcy etc as some do not cover a policyholder in these circumstances.

When taking out a policy / getting new quotes carefully check the t&cs (comparison sites tick box is declaring no ccj/bankruptcy etc), phone a broker/insurance company and say you are/were bankrupt to avoid any risk of your policy being cancelled.

You may struggle to get a company to let you pay by instalments.

Do not think I am saying you wont get cover or you wont be able to do instalments, the insurance pool is a little smaller and the policy potentially more than if you wernt bankrupt purely because some companies wont take you on.

I could be paying £100 a year less for my policy if I didnt have the ccj.

You have to do what is right for you