Bankruptcy and loan from parent

Cazntia

Hello, I live in a house owned by my mother and pay her rent. About 6/7 years ago she remortgaged the house I live in to help me with debt. The lump sum was paid to my creditors and I have paid the remortgage amount every month into by mums account which is then taken out by the remortgage company. My partner and I have split up and I’m left with over 30k in debt in my name along with this remortgage payment. I can’t see anywhere out but bankruptcy. I’m aware that I may not be allowed to continue this payment to my mum - and My mum has offered to pay half of the remortgage but is unable to pay anymore as she is retired and lives off her state pension so I will still have to pay the other half otherwise she would sell the house.

When I’ve done the SOA (including the half mortgage repayment) with all the expenses you are allowed it actually pushes me £100 over what I earn however with savings on food, clothes, hairdressers etc I can just about balance it. Should I put the £100 payment to my mam on the expenses form or should I up an expense and not write it on i.e. I have my groceries as £125 for a month should I up that to £225 and not write on about the repayment? Would the OR receiver question why the £200 I’ve paid to my mum each month has suddenly stopped?

Another question is that’s worrying the hell out of me, I have been unable to pay my creditors for a good few months but have continued with the remortgage payment, I am now aware that this could be considered a preferential payment, would they try and claim the money from my mum even though she hasn’t ‘credited’ from it, she doesn’t have any savings so wouldn’t be able to pay it.

Sea_Shell

Sorry to hear of your situation.

If your mum remortgaged, in her name, then she and only she, is responsible for the repayments to the lender. If the payments can't be maintained, then the house may have to be sold.

It's separate to your personal financial circumstances.

TheGardener

As you will be aware - your Mum will become a creditor same as everyone else so you wont officially be able to pay her. However, if you post an SoA on here so we can help make sure you make best use of the income available to you. There is a good template here http://www.stoozing.com/calculator/soa.php.

Once the SoA is agreed with the OR - you could make economies within your budget and that gives you a little flexibility.
We can't tell you how to pay your Mum because that is against the rules and not permitted in BR - it will be up to you to decide what you do with any savings/economies you are able to make.

silvercar

Do you pay your Mum rent and remortgage?

If the amount you pay is consistent with rentals in your area, the OR shouldn't have a problem with it. Whether you class it as paying the loan or paying rent isn't material.

silvercar

Cazntia wrote: »

Yes I pay both, rent £420 and remortgage £200. The house next door to me is rented out for around £525-550 I think

The loan to parent will fall into your bankruptcy.

Parent could charge you a reasonable rent (I'm assuming this isn't a property massively larger than your needs), backed up by a tenancy agreement. So £520 would look reasonable.

You shouldn't need building insurance if you don't own the property, so I would take that out but have some content insurance.

I don't know much about the other stuff; hopefully someone who knows more will be along soon.

Annie35

You absolutely cant put loan to parent as an expense.

£620 is just how much it costs to live there ie: rent, the single payment you pay every month.

Minkym00

Beware that the OR can look at your bank statements so if you try and add the £100 in to other expenses you may be questioned on it as it won’t match your previous outgoings.

Is there no way you could take in a lodger? If they rent direct from you mum then the money doesn’t have to pass through your hands.

Hardly_Quim

The secured loan will still have to be paid. The upside is you will clear all your unsecured debt.
You will be able to keep your car. You will probably have to make a contribution from your wages to your creditors.

silvercar

Hardly_Quim wrote: »

The secured loan will still have to be paid. The upside is you will clear all your unsecured debt.
You will be able to keep your car. You will probably have to make a contribution from your wages to your creditors.

The secured loan is the mother’s. as a bankrupt the op won’t be able to pay it. They also won’t be able to continue paying the mother a repayment of the loan, as that would make the mother a preferential creditor.

What they can do is pay a reasonable rent. As the landlady is a relative it would be better to be able to show a proper written tenancy agreement.

Kentish_Dave

Annie35 wrote: »

You absolutely cant put loan to parent as an expense.

£620 is just how much it costs to live there ie: rent, the single payment you pay every month.

That’s not correct though. As the OP says, part of this is a loan which they will need to include in the bankruptcy.

You can’t give priority to certain creditors and you can’t pretend a debt repayment is rent.

debt_doctor

Hi,

You could double your groceries to £300+

DD