Bankruptcy questions

Boredofitnow

Hi I am trying to plan for going bankrupt while I am saving the fees to pay for it. I am reading lots of threads here but wanted to check a few things that I am confused about. If anyone can help it would be much appreciated.

1) I work and live with my mum who is on state pension. She has her half of council tax paid and gets most of her half of the rent paid via benefits. I pay my half of council tax. When I go BK would my mum be expected to pay my half of council tax for that year?

2) when doing the SOA, do I put both my wage and mums state pension and the whole bills for each category. For example, the total cost of utilities and cost of groceries for both of us or just half everything? I find it confusing as some bills are solely mine such as car costs but others are both of us. To be honest I pay all of the cost of some other things like tv and internet as the state pension isn’t very much. Would the OR agree for me to pay a higher proportion of bills due to my income being a lot more than mums?

TheGardener

Hi - hate to see your post gong unanswered. There is a poster who is very knowledgeable about Council Tax but they mustn't be about just now.
Council tax is not divided as 'yours and her's' - the property owner or tenant is responsible for the whole CT bill. If its a joint ownership or tenancy then you can both be named on the bill. However, if one doesn't pay - the other will have to. So this means that if you don't pay towards the CT - your Mum will have to pay it all. However, if you make sure you do a good SoA you may be able to make some economies within your budget to make sure Mum isn't left short.

No - you don't include your Mums income. You do an SoA showing your costs including the amount you contribute to the household bills. If that is 50% - then that's what you put.

Boredofitnow

Thank you for your reply. My mum and I have joint tenancy and joint council tax bill but as she is state pension she gets her half of council tax paid. She’d never be able to afford to pay the other half. It’s odd how you can’t be allowed to pay your council tax when you go bankrupt. Am I right that it is only for one year they take it? So if I pay £80 a month council tax I will have to save £900+ to cover it for the year until discharge. Blimey. That with the £680 fee .........

TheGardener

I know you are paying half and you are joint on the bill - but if one of you doesn't pay - the other one has to - its the 'jointly and severally liable' thing.

You are not actually allowed to save up the CT and pay it up front(to the council or your Mum) before you go BR - if you did this then you are treating one creditor better than another (preferential treatment) and the Official Receiver would simply ask the council (or your mum) to give it back to them so they can share the money out between your other creditors. The reason you are not allowed to pay the CT is because the council are creditors - same as your bank or credit card providers. If you lived alone then no one would have to pay it but unfortunately as a joint tenant, the responsibility would fall on your Mum.

If you can post a SoA we can offer some advice to make sure you don't go too short and are able to ensure your Mum doesn't end up suffering because of it.

Boredofitnow

Thank you again for your reply. I understand it a bit better now. I will,post soa when I get to that point. I’m just trying to understand how it all works really. I assume then if I went Bankruptcy in March after paying all my council tax that year the OR would then take whatever was already paid that year and there would then be a bill for the whole year in one go for my mum. After the 12 months until discharge are up, if I get IPA would I then be paying council tax as normal or would my mum be landed with three years worth? Thanks

CIS

The overall issue it how other pieces of legislation interact with council tax.


At the moment you and your mother are both 100% responsible for the full council tax charge.

Your mother receives Council Tax Reduction (CTR) which works on a different principal to council tax (as it's means tested). CTR will only ever pay a proportional share of the charge, in this case 50%. It should be noted that receipt of CTR does not alter the liability under council tax legislation

Bankruptcy does not remove actual liability for council tax so your mother can still only claim 50% CTR but would be liable for the whole council tax charge. You being bankrupt means that they cannot enforce payment against you and they instead chase the other liable party.

Your mother could try for a s13A(1)(c) reduction and see if the council will pay anything extra.

TheGardener

Boredofitnow wrote: »

T... I assume then if I went Bankruptcy in March after paying all my council tax that year the OR would then take whatever was already paid that year and there would then be a bill for the whole year in one go for my mum. After the 12 months until discharge are up, if I get IPA would I then be paying council tax as normal or would my mum be landed with three years worth? Thanks

No - not quite. If you went BR in March and at that point, all the CT had been paid, I don't think the council can't make your Mum pay it all again. Once its paid, the OR can ask the council to give them the money (but I'm not sure how often that happens in practice) Its really about what time of year it is. CIS is excellent on CT and its great he's found your post.

CIS

TheGardener wrote: »

No - not quite. If you went BR in March and at that point, all the CT had been paid, I don't think the council can't make your Mum pay it all again.

Correct - the standard rules on payment remain so any payments already made will still come off the overall balance and only whatever is unpaid will remain due. The OR will not claim monies back from the council (unless there was a large credit they could take).

Annie35

Ct debt is only for the apr-apr period you go BR, so if you br in March any debt can be written off then you start paying the new bill issued in April as usual, your mum won't be stuck for 3 years if you're on an ipa.

There's plenty of anecdotal comments on here around if you're paying ct as a usual household bill as it's due, with no arrears that that just continues.

Where people have got ct written off they've had to push for it through the OR as they were struggling to pay. (Arrears would be written off obvs as that is an actual debt)

Personally the idea ct isn't 'allowed' as a general household bill when the OR has no interest in car insurance (1 bill with a line of credit) or mobile phone contracts (credit paying off a handset!) or utilities paid quarterly in arrears makes no sense & the annecdotal comments back this up, lol.

But obviously this is purely based on people written experiences & you should still get professional advice.

CIS

At one time the situation was unclear regarding the treatment of council tax in bankruptcy. That position was clarified some time ago (2014, off the top of my head) when a court decision ruled that council tax would be a provable debt for bankruptcy purposes and so the whole amount, regardless of whether instalments had been forfeited, could be included in a bankruptcy. Obviously there are the resultant considerations of the joint debt, where the ability to include it in a bankruptcy is different in that it simply become unenforceable against the bankrupt (in most cases).

Bankruptcy isn't my field but bankruptcy law and procedure is very clear on what debts can be paid and how they should be paid.

Boredofitnow

Thank you all for your responses, I understand the council tax situation much better now. I’m trying to gain a good understanding of bankruptcy so I have an idea what to expect ��