Rent & Council Arrears, with Bankruptcy

Madfool

So having used StepChange's calculator thingy, bankruptcy is my best option for my debts (which i knew anyway, just helps to have it in black and white from a professional)

There are 2 debts (rent and council tax) which i know can be included but i would like keep them out of the bankruptcy, and make monthly arrangements.

The reasons behind this is:

1. We rent privately, and the landlord is a family friend he's been very good to us and i would like to continue to pay him @ £200 as agree'd to pay off the arrears. (11 months left to pay) If not he will not get his money at all if i include him in the bankruptcy.

2. Council tax is in my name and my partner's, yes i can include it in the bankruptcy but then they will just chase her for the arrears, which is just the same as chasing me as i'm the sole bread winner. If i was able to make an agreement with them to pay 'x' each month, could i keep them out of the bankruptcy? (StepChange have advised an amount)

Can this be done? Or should i try and pay these off then declare myself bankrupt? Or do i have no choice but to include them and just get the ball rolling on the bankruptcy?

TheGardener

Madfool wrote: »

...There are 2 debts (rent and council tax) which i know can be included but i would like keep them out of the bankruptcy, and make monthly arrangements...

Sorry - to my knowledge, its not possible. Its all or nothing I'm afraid. Continuing to pay the landlord and the council would actually be illegal and could get you in all sorts of trouble. Its called making 'preferential payments' which basically means treating 1 creditor more favourably than the others.

Once you are discharged (in 12 months) you can pay who you like what you like.

John_G_Jones

Bankruptcy is not a pick and mix, and as above you may not make preferential payments just to make your life easier.

It is a drastic response to chronic insolvency, not an easy route to letting you walk away from debts you dislike and honour others.

Minkym00

I’d the CT is in joint names then, yes, they will chase your wife for the arrears. Therefore this is still a household expense, it just it’s now your wife’s expense. So on this occasion you will effectively continue to pay it so include it in your SOA and explain the situ to the OR.

With the rent, you’re pretty much screwed. If you are working you will get an an IPA that will last 3 years so you may still not be able to afford to repay him/her until after the IPA finishes.

ToxtethO'Grady

Council tax cannot be left out when you go BR the rest of your liability for that year is a provable debt so it goes in. As it's been said though your partner would become wholly liable so they would just show the full council tax payment on their SOA.

With your rent if possession proceedings are started or ongoing the OR may allow you to keep on paying but at a rate that they deem reasonable £200pcm to your landlord would be considered unreasonable, as you would be paying your landlord to the detrmient of your other creditors.

The rent arrears would still go in to the BR but as you may become homeless due to this the OR should allow an arrangement to be reached with your landlord. Reasonable is spread over a year or so, but it comes down to what the OR would class as reasonable based on your other debts.

If you have a Notice of Seeking Possession or Suspended Possession Order I know that the OR will allow a payment to the rent arrears. It's when there's been no action that it sometimes comes down to the case examiner you speak to...your best bet, if you haven't got proof of possession proceedings, as you've said, is to pay your rent arrears then go BR.

TheGardener

I do understand the wanting to pay a family member - my user name TheGardener came about because a family member had helped me financially and I didn't want them to lose out. The family member had employed a gardener and I took on that role and worked for free.

The OR may make an allowance for the CT but rent arrears or family loan is different. Is it possible for your partner to work? or for either of you to offer your labour for 12 months until you are discharged?

Madfool

Thanks for the replies all, looks like i just need to concentrate on clearing the rent arrears then asap, then i'll file for the bankruptcy in a couple of months. There is no eviction notice as such currently, there is but it's not been in forced yet as long as i keep to the agreement of paying the agreed amount each month. If any payment was missed then the notice would then be enforced, and eviction would then happen. Which i obviously want to avoid 100% as we have children etc, i know the council could re-house the Mrs and the children but it takes time and they could end up in temporary accommodation miles away which is not good for schooling etc and would just separate the entire family.

If i stop paying everything then i could clear the rent arrears in 3 months, i'm already defaulted on everyone of my debts by 6 months+ anyway so a couple of extra months isn't going to hurt, its not the right attitude but i don't see any other way

TheGardener

I think the real threat of eviction if the rent lapses is worth risk - there is a risk of preferential payment and the OR can come after your LL for repayment of the monies and distribute amounget other creditors. However, if the OR is aware this was the only way you could keep a roof over the head of the family they may let it go.

Have you/can you agree a token payment with your other creditors ? £1 per mth while you " work with the debt charities"
That way you are at least showing willing to deal with the debts in the meantime rather than just dumping them to pay the rent. Its about being seen to take responsibility

Madfool

TheGardener wrote: »

I think the real threat of eviction if the rent lapses is worth risk - there is a risk of preferential payment and the OR can come after your LL for repayment of the monies and distribute amounget other creditors. However, if the OR is aware this was the only way you could keep a roof over the head of the family they may let it go.

Have you/can you agree a token payment with your other creditors ? £1 per mth while you " work with the debt charities"
That way you are at least showing willing to deal with the debts in the meantime rather than just dumping them to pay the rent. Its about being seen to take responsibility

I'm sure this will be something that they would accept for now, considering I'm not in any payment arrangements with any debtors currently and actually pay them nothing atm.

The whole thing is just one big ball of mess tbh - borrowed WAY beyond my means thinking i could afford to pay it back each month, then rent was being missed because i started gambling trying to 'win' money to make monthly payments on everything. That's without taking further credit out in my partner's name, which is now maxed out >.< I'm a bad bad person, but trying to fix it. IT will work out eventually just going to take time and get my head around the whole thing and out of the sand.

This all started back in 2015, and everything has defaulted every single month since mid 2016.

The most annoying thing about the whole lot is if i hadn't started gambling, and just paid the bills each month most of the debts would have now been cleared and not defaulted and i wouldn't have debt under my partner's name either.

TheGardener

Gambling is a red flag for the OR - have you stopped - are you getting help with it?

Are there any other avenues to make money - even short term? Bar work - catalogue delivery? What about your partner - can she bring in any income?

Madfool

TheGardener wrote: »

Gambling is a red flag for the OR - have you stopped - are you getting help with it?

Are there any other avenues to make money - even short term? Bar work - catalogue delivery? What about your partner - can she bring in any income?

Yes all stopped now, except the odd Euromillions on a Friday or Tuesday, been clean about 6 months now.

No other avenues to make money, unfortunately. Other than bootsales, selling stuff on FB and Ebay (which we have pretty much run out of stuff to sell)