Bankruptcy and IPA

sallymeak

Hi there

I am new to the forum and after many sleepless nights feel bankruptcy is eventually going to find me.

Long story short - Have been a small business, Ltd company, am insolvent and business has stopped trading. The business has some outstanding HMRC debts and I personally owe the company £14000 which I can't pay. I have no assets and speaking with the (business) insolvency practitioner, as I have no money to pay for the insolvency I will apply for strike off or HMRC will wind me up and probably go down the route of bankruptcy.

I wondered, with regards the IPA - do they take literally every penny you have out of your income after basic living allowances? I am not trying to dodge paying something back but the thought of living hand to mouth as I have been recently for 3 years fills me with depression and dread.

Please can anyone give me an example of how much you pay out of your monthly salary for the IPA? From what I read, if you earn £1100 a month and basic living is £800 a month, they will take the remaining £300.

Would there be much point in considering an IVA? I know they are longer to pay into but have read they can be a little more accommodating in terms of living allowance.

Any advice or examples would be a great help.

Thanks

sallymeak

Anyone?

Years_of_debt

It’s not hand to mouth.
It’s impossible to say without knowing your income vs outgoings.
All cases are different based on your circumstances and income

broaps

Hi Sallymeak

It's not easy to answer such a general question. The liklihood of an IPA depends on your whole financial situation. For example, do you live with a partner who shares the household expenses and do you have dependent children? If you apply for bankruptcy you will be asked to complete a statement of affairs (SOA) listing your income and living expenses to see if you have a useful surplus of a least £20 per month to pay to the OR. If you look through this forum you will find plenty of examples of SOAs with comments detailing the different experiences people have had when they were bankrupt. Your SOA will include all your regular expenses such as rent, council tax, heat&light, travel etc etc. You can claim for clothes, dentistry, insurance, all sorts of stuff. Try searching the forum for SOA to find some examples and don't be put off by the occasional negative comments you will find. Most people who post here have some experience of the process and just want to help. I was terrified but nearly a month on feel a burden has been lifted and don't dread the post any more. In the meantime I can recommend the web site https://debtcamel.co.uk/ which I found helpful on bankruptcy and of course, the National Debtline who post here. Good luck.

sallymeak

Thanks so much Broaps, that is very reassuring! I live alone with no children, I’m 43 and have 7 pets. I am worried sick that the or won’t be sympathetic to why I have a higher spend than some on pets per month but rehoming then isn’t an option and this worries me.

I will fill in the soa to get a better idea of where things are. I own a property but it’s in 47k negative equity so probably unlikely they will take that but if they do, it’s not such a bad thing.

sallymeak

Here’s my SOA

Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary Amount(£)
Total monthly income 1,500
Monthly expenses (incl. HP & secured loans) 1,805
Available for debt repayments -305
UNsecured debt repayments 440
Amount short for making debt repayments -745
Personal Balance Sheet Summary Amount(£)
Total Assets (things you own) 0
Total Secured & HP Debt -4,500
Total Unsecured Debt -18,800
Net Assets -23,300
Household Information

Number of adults in household 1
Number of children in household 0
Number of cars owned 0
Income, Expense, Debt & Asset Details

Income Amount(£)
Monthly income after tax 1500
Partners monthly income 0
Benefits 0
Other income 0
Total monthly income 1500
Expenses Amount(£)
Mortgage 0
Secured/HP loan payments 98
Rent 440
Management charge (leasehold property) 0
Council tax 98
Electricity 50
Gas 50
Oil 0
Water Rates 40
Telephone (land line) 20
Mobile phone 100
TV Licence 0
Satellite/Cable TV 0
Internet services 35
Groceries etc. 300
Clothing 50
Petrol/diesel 120
Road tax 10
Car Insurance 35
Car maintenance (including MOT) 40
Car Parking 10
Other travel 0
Childcare/nursery 0
Other child related expenses 0
Medical (prescriptions, dentists, opticians etc.) 9
Pet Insurance/Vet bills 50
Buildings Insurance 0
Contents Insurance 0
Life Assurance 0
Other Insurance 0
Presents (birthday, christmas etc.) 20
Haircuts 30
Entertainment 100
Holiday 0
Emergency Fund 100
Total monthly expenses 1805
Secured & HP Debt Description Debt(£) Monthly(£) APR(%)
Mortgage 0 (0) 0
Hire Purchase (HP) Debt 4500 (98) 8.5
Secured & HP Debt totals 4500 - -
Unsecured Debt Description Debt(£) Monthly(£) APR(%)
Debt management plan 3800 70 0
Utility arrears 2000 120 0
Deb company insolvenc 13000 250 0
Unsecured Debt totals 18800 440 -
Asset Description Value (£)
Cash 0
House Value (Gross) 0
Shares and bonds 0
Car(s) 0
Other assets (e.g. endowments, jewellery etc) 0
Total Assets 0

MovingForwards

You have car outlay (petrol/repairs etc) but no car. How much is the car worth amd was it funded by loan/HP etc? How much is outstanding and how much you paid off?

Your mobile bill will raise an eyebrow.

Gas/elec are high for one person - what are you actually paying out as all your figures are rounded up /random numbers.

Do you really spend £360 a year on hair cuts?

You are allowed pets so please do not worry about that, again the figure will need to be tweaked.

How about you redo the SOA with your actual outgoings and you can get advice as to what figures can be altered to help you/get your SOA looking better. I assume your aim is in relation to the IPA element.

Years_of_debt

A few things to look at;
It’s a negation between you and the OR when you have your meeting, you need to justify why you need that much money each month etc. Below are a few things where I think you will need to lower it or they are going to take it down anyway, it’s up to them at the end of the day.


Mobile won’t allow £100 - they deffo won’t allow a £100 mobile phone more like £20

Groceries is quite high at £300 for one person. Unless you have specific dietary requirements that mean you need non gluten food etc. You might get away with £300 but it’s on the higher side.

£50 a month clothing is to high, prob around £25/30

£100 on entertainment is to much they won’t allow it. - if you can’t pay your debts you can’t have £100 a month to go to the pub etc, that’s what they will say.

They won’t allow a £100 a month emergency fund around £20 or less.


Do you own your car if so what is the value of it? £1000 and more value they will take it. If it’s on HP or finance etc etc, the company you owe the money might take the car back as you have gone bankrupt need to check your T&C

Years_of_debt

A few things to look at;
It’s a negation between you and the OR when you have your meeting, you need to justify why you need that much money each month etc. Below are a few things where I think you will need to lower it or they are going to take it down anyway, it’s up to them at the end of the day.


Mobile won’t allow £100 - they deffo won’t allow a £100 mobile phone more like £20

Groceries is quite high at £300 for one person. Unless you have specific dietary requirements that mean you need non gluten food etc. You might get away with £300 but it’s on the higher side.

£50 a month clothing is to high, prob around £25/30

£100 on entertainment is to much they won’t allow it. - if you can’t pay your debts you can’t have £100 a month to go to the pub etc, that’s what they will say.

They won’t allow a £100 a month emergency fund around £20 or less.


Do you own your car if so what is the value of it? £1000 and more value they will take it. If it’s on HP or finance etc etc, the company you owe the money might take the car back as you have gone bankrupt need to check your T&C

sallymeak

Thanks for your feedback. The mobile phone is so high as it was a company contract and with me being a personal guarantee I have to take this on so not something I can reduce sadly

My car is on hp. £4500 balance and £98 per month with 4 years left.

I’ll put down accurate figures and report back

philnicandevan

sallymeak wrote: »

Thanks for your feedback. The mobile phone is so high as it was a company contract and with me being a personal guarantee I have to take this on so not something I can reduce sadly The receiver will terminate the contract then early...they wont allow £100 a month for calls etc..

My car is on hp. £4500 balance and £98 per month with 4 years left.

I’ll put down accurate figures and report back Does the HP paperwork mention a bankruptcy clause at all?

Just a couple of thoughts