Seriously considering BR now.....

fermi

Robflh wrote: »

As I understand it, even if they make hubby sell the car, he would be allowed to buy another one as long as it costs less then a £1,000.

I read it as.

When you are talking about a vehicle purchased to replace one that was sold to realise excess value for the estate the maximum replacement value is normally quoted as £2000.

But for the OR to allow funds to be used to replace a vehicle the OR must be satisfied that the original (or subsequent) vehicle is an exempt asset. For it to be exempt the vehicle must be necessary for the bankrupts domestic/work needs and not just convenient.

See TM's on Motor Vehicles.

• General
• Chapter 31.2 Vehicles subject to finance agreements
• Chapter 31.2 Part 3
• CHAPTER 31.2 .4 Disposal of motor vehicles

and: CHM. Motor Vehicles (March 2007)

31.2.21 Bankrupt claiming vehicle as exempt property

It the bankrupt's responsibility to satisfy the official receiver that a vehicle is exempt property, i.e. that it is necessary for his/her use personally in his/her employment, business or vocation, or is necessary to meet the basic domestic needs of the bankrupt and his/her family. In the case of a claim for exemption to meet domestic needs the official receiver must be satisfied that the motor vehicle is necessary to the extent that no practical alternative exists, to meet a genuine need and not merely a matter of convenience.If the use of a vehicle does not meet the test for necessity the vehicle is vested in the bankruptcy estate and the official receiver as trustee should instead pursue with the bankrupt the option to make a reasonable offer for the purchase of the vehicle.

The bankrupt's claim should be dealt with at the initial interview in either the narrative statement or in supplementary questions to the PIQ.
The bankrupt needs to be able to satisfy the official receiver that the vehicle is both necessary for his/her employment, business or vocation and is necessary personally to the bankrupt. This does not mean that the vehicle must be used exclusively by the bankrupt but it must be necessary to him/her not just to the other users.

Whether or not a vehicle is exempt property is in some cases a difficult question. In such circumstances, official receivers will need to use their discretion and consider each case according to its merits within the guidelines issued to official receivers.In all cases official receivers should apply the guidance strictly and rigorously. It is for the bankrupt to convince the official receiver that any motor vehicle is necessary within the exemptions. The value of the vehicle is not a determining factor.

31.2.25 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.

31.2.26 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.

But as always, each OR can take a slightly different stance and interpret as they feel fit.:rolleyes:

Scarlett.1974

Robflh wrote: »

Hi Scarlett.1974

As I understand it, even if they make hubby sell the car, he would be allowed to buy another one as long as it costs less then a £1,000.

If the car is in good condition and you sold it tomorrow, it would be worth £5,375. If I have read it correctly, you have had the car for six moths. To kill that debt, you might only have to pay about £4,000. That would leave £1,375 and after buying a replacement car you might only have around £300 left.

Now the car does not seem to be such an asset but again it would be up to your OR.

Hi Rob, thanks for your reply

I don't think he's actually allowed to sell the car is he, with it being on finance? Ideally we would like to be allowed to keep the car, continue with the payments and for the OR to allow him/us to include it in our I&E..... not hoping for much am I?!!

Scarlett.1974

Evening all

It's been quite a day here, with one thing and another. I told my mum what we're going to be doing and she was fabulous, VERY supportive and totally non-judgemental, it's a big weight off my shoulders I can tell you Even at the ripe old age of 33 I still need the approval of my mum

Anyway, I have a possible order of events in my mind, I was wondering if anyone would mind glancing over it and telling me if it's okay/doable/allowed?

1. Call CCCS first thing tomorrow.

2. Stop paying all debts with immediate effect, as in mortgage, secured loan, DMP payments.

3. Await the phone calls and progressively snooty letters to increase :rolleyes:

4. Save all monies from No.2 towards BR fees and first months rent & deposit/bond for rental property.

5. Aim to be in rental by end of Jan/beginning of Feb.

6. Aim for middle - end of Feb for BR.

Many thanks

Scarlett xx

fermi

Sounds OK to me.

If CCCS give all that the OK then start looking around for rental accommodation ASAP since that is the most uncertain part really.

Have you checked if there is a waiting list to petition at your court? While it's not a long wait (or any at all) for most, you do hear of the odd court that gets backlogged for a month or so. Best to make sure you know so you don't get a nasty surprise.

Scarlett.1974

Thank you Fermi and thanks for your reply about the car above, I missed that earlier

The car issue is very uncertain, but I guess we'll just have to wait and see what happens there. At the end of the day if it has to go then it has to go. As inconvenient as it would be, we'd cope well, we'd have to!

I admit to being slightly concerned about the rental part, only because of the fact that we're already on a DMP so our credit rating will already be pretty poor I imagine. If letting agents refuse us because of failed credit checks then we'll be pretty stuffed to be honest I have applied to the local council / housing association places, but we're very low down, priority wise, so I can't see that working for us. I have actually seen a rented house literally 2 minutes from where we're living now (I went for a nosey yesterday!) and it would be pretty perfect. Apparently it's available from the end of this month, but I'm wondering if it's worth contacting the EA that's advertising it and expressing our interest, but obviously telling them that we wouldn't be in a position to move in until the end of Jan at the earliest. Or would I be wasting my time do you think?

Scarlett.1974

Sorry Fermi, no I haven't contacted the local court yet to see what their procedure is, will do that tomorrow too

fermi

I haven't had to try moving since my credit record took a dive into the deep end, so others can advise better.

There's loads of people on here and the DFW board who have had to rent and house hunt with pretty dodgy credit records, so if you don't get any advice/help on this thread (and you feel that you need it) I would start a separate thread on here or DFW (or both).

Scarlett.1974

fermi wrote: »

I haven't had to try moving since my credit record took a dive into the deep end, so others can advise better.

There's loads of people on here and the DFW board who have had to rent and house hunt with pretty dodgy credit records, so if you don't get any advice/help on this thread (and you feel that you need it) I would start a separate thread on here or DFW (or both).

Thanks Fermi, good idea, I'll do that

Robflh

Hi fermi

I keep reading that the OR can make you sell a car if it is worth more then £1,000 but 31.2.26 clearly states that you can have a replacement car for up to £2,000 in value. If that is you can prove you need to have a car.

So, I am assuming you can keep a car, regardless of whether you can or cannot prove you need one if it is worth less then £1,000 or if the sale of the car would release less the £500.

If you can prove you need a car, it would seem to be if the car is worth less then £2,000 or the sale of the car would releases less then £2,500 they can keep the car.

Selling the car now and paying off the finance for it, would release more then £500 but less then £2,500. That means the car would have to be sold if they cannot prove they need a car.

However, it states the following in 31.2.9 whether the OR can make you sell a car that is still being paid for. I think it says they can.

Finance agreements generally
A vehicle may be subject to a simple rental agreement or an agreement under which the ownership of the vehicle is intended to pass to the insolvent at a specific date or when certain conditions have been met. Subject to any express terms in the agreement (see paragraph 31.2.10) the rights of the insolvent under the agreement, both to exercise rights over the vehicle (to use it) and acquire ownership will become exercisable by a liquidator or pass to a trustee in bankruptcy. Any such rights are referred to hereafter as the rights of the insolvent. The official receiver should establish the nature of the rights of the insolvent in order to deal with the vehicle in an appropriate way.

fermi

Robflh wrote: »

So, I am assuming you can keep a car, regardless of whether you can or cannot prove you need one if it is worth less then £1,000 or if the sale of the car would release less the £500.

The OR's can and frequently do claim cars that are worth less than £1000. It is at their discretion.

Robflh wrote: »

However, it states the following in 31.2.9 whether the OR can make you sell a car that is still being paid for. I think it says they can.

They can, but if they assess it to be an exempt asset they don't have to. There are many many examples of people being allowed to carry on with a finance agreement for a vehicle if:

a) Sale wouldn't realise significant value for the estate.
b) The OR is happy for it to be classed as an exempt asset.
c) The OR is happy that the finance payments and running costs represent fair value with regards to access to a vehicle to meet the needs it was exempted for.
d) The finance company is happy for the agreement to continue.