Bankruptcy for Mum and SOA Help Please

FutureFreedom1

Hi Guys,

Your help would be much appreciated please. I called the national debt line regarding my mum's debts and the person I spoke to advised bankruptcy as she has no assets, rents and is not planning to buy a house, her debts are high and her income is low. I have completed a SOA below, but I am not sure if this is done correctly. This is a very worrying situation

My mum's income is low, as she has to be home for when my brother returns home from school, as he is suffering from trauma based mental health issues.

The electricity is dual fuel, I have told my mum this is high, but I think she is repaying some she owes, as this is her direct debit amount.

The medical is £12 towards optician and dentist, and £30 towards my bother's acne treatment.

The "other child related expenses" are my brother's hobbies etc, this does seem high, but with his mental health at the moment, I wonder if that is justified to keep those?

The "holiday" is to visit her elderly parents abroad once per year.

The school uniform is high, but that is what she pays compulsory and has receipts etc.

The school dinners are compulsory and that is the set price.

My mum also smokes, but I have not put this on here, as I read that it is not allowed, or has to be justified, I am not sure how that would be justified though? I read that you are allowed £30 for dry cleaning and £20 for newspapers/magazines, but I didn't see anyone else using this, so wasn't sure if it normally get approved?

I read in another thread that another mother and 1 child had £460 accepted for groceries, so I am not sure if I am estimating low?

Should I be increasing or decreasing anything on my list please and do you think that bankruptcy will be best?

Many thanks.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 1
Number of cars owned.................... 0

Monthly Income Details
Monthly income after tax................ 940
Partners monthly income after tax....... 0
Benefits................................ 415
Other income............................ 360
Total monthly income.................... 1715

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 85
Electricity and Gas............................. 133
Water rates............................. 25
Telephone (land line)................... 20
Mobile phone............................ 60 (Mum and Brother)
TV Licence.............................. 12.83
Satellite/Cable TV...................... 8
Internet Services....................... 20
Groceries etc. ......................... 350
Clothing................................ 50
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 80
Childcare/nursery....................... 0
Other child related expenses............ 60
Medical (prescriptions, dentist etc).... 42
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 26
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 30
Entertainment........................... 30
Holiday................................. 43.33
Emergency fund.......................... 30
School Trips............................ 5
Child's Pocket Money.................... 22
School Uniform.......................... 21.67
School Dinners.......................... 59.25
Meals at Work........................... 33
Total monthly expenses.................. 1566.08


Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 0
Other assets............................ 0
Total Assets............................ 0

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card 1..................13376.....310.......0
Credit Card 2..................6664......190.......0
Store Card.....................650.......40........0
Overdraft......................1800......78........0
Total unsecured debts..........22490.....618.......-


Monthly Budget Summary
Total monthly income.................... 1,715
Expenses (including HP & secured debts). 1,566.08
Available for debt repayments........... 148.92
Monthly UNsecured debt repayments....... 618
Amount short for making debt repayments. -469.08

Personal Balance Sheet Summary
Total assets (things you own)........... 0
Total HP & Secured debt................. -0
Total Unsecured debt.................... -22,490
Net Assets.............................. -22,490

Created using the SOA calculator at stoozing
Reproduced on Moneysavingexpert with permission, using other browser.

TheGardener

Obviously the objective is to ensure she doesn't 'skimp' and leave herself short.
You are right about the groceries - I would increase the groceries by about £100 for sure.
She should have contents insurance and that is a reasonable expense.
Has she joined a pension scheme at work and if so can she increase her contribution? up to 6% of her salary is acceptable.

MovingForwards

http://www.thedebtmen.co.uk/pre-agreed-expenditure-guidelines/

Have a look here as I'm sure your mom could find a way of hiding some of her outgoings to fit bankruptcy

TheGardener

MovingForwards wrote: »

http://www.thedebtmen.co.uk/pre-agreed-expenditure-guidelines/

Have a look here as I'm sure your mom could find a way of hiding some of her outgoings to fit bankruptcy

These figures are the kind of statement of earnings and expenditure used by debt collection agencies when they are looking to get debtor to make repayments. The OR uses the Standard Financial Statement agreed with the Debt Charities and the figures are more generous. However, I guess any guide is better than none.

Its not about 'hiding' its about legitimate and essential expenditure - it is common for people to underestimate their expenditure and this board attempts to help people make sure they don't do that.

FutureFreedom1

Hi,

Thanks both. Yes I think I’ve been going off of a similar guideline, so I have made some things very low, as I thought that they wouldn’t be allowed higher, so I’m not sure that it is 100% realistic, so any help is greatly received.

No one has said to reconsider bankruptcy, so I’m guessing you guys think that is her best option?

debt_doctor

Hi,

I agree with The Gardener's comments and would put an extra £100 on groceries and another £80 on entertainment.

DD

FutureFreedom1

Hi DD,

Thanks so much, I will do. This will make mum’s SOA into the minus for debt repayments for debts, is this allowed?

Is it likely the OR will dispute these figures and make them less? Also, do you think the 60 for my brother’s hobbies/classes will be allowed as he’s suffering mental health issues, so this is therapeutic for him?

When my Mum sees the OR, do they go through her credit cards and say that it is her own fault for getting into debt and she is not allowed to go bankrupt? Also, I have been helping her to pay some of her cards, will they say that I have to continue helping? I am an additional card holder, but it is not a joint account, it is her account. I am also a full time student, but I have been working part time and helping her to make payments.

Sorry for so many questions, I’m not sure how it works. My mum took credit to cover shortfall for a few things and it spiralled over the years.

She was advised by Debt Line to open up another bank account, as the 2 credit cards and overdraft are with her main bank that her wages go into etc, so he said that they could possibly take her wages if they think she is about to go bankrupt. So she just opened a Monzo account, will that account be frozen when she declares, there is no overdraft on it? If so I’m guessing she has to open a basic bank account with Santander after the bankruptcy? She’s worried her Monzo will be frozen after she gets wages into it, so she has to declare the bankruptcy at a particular time to ensure that doesn’t happen?

Also, I’m guessing that you all agree with Debt Line and think that bankruptcy is the only option? My mum was quite upset about this.

Sorry for all of the questions, thanks for your help

debt_doctor

FutureFreedom1 wrote: »

Hi DD,

Thanks so much, I will do. This will make mum’s SOA into the minus for debt repayments for debts, is this allowed? I like negative statements providing they are explained. My explanation would be that these are my reasonable costs that are limited by my income. iTgives room for an income increase.

Is it likely the OR will dispute these figures and make them less? Yes, they might do - but they all seem within the guidlines. It's up to the bankrupt to say no (or yes)Also, do you think the 60 for my brother’s hobbies/classes will be allowed as he’s suffering mental health issues, so this is therapeutic for him? I view that as ok

When my Mum sees the OR, do they go through her credit cards and say that it is her own fault for getting into debt and she is not allowed to go bankrupt? Also, I have been helping her to pay some of her cards, will they say that I have to continue helping? I am an additional card holder, but it is not a joint account, it is her account. I am also a full time student, but I have been working part time and helping her to make payments. You are not bankrupt, you don't have any liability and you will not have to pay anything. This bankruptcy looks like a run of the mill bankruptcy unlikely to receive much attention

Sorry for so many questions, I’m not sure how it works. My mum took credit to cover shortfall for a few things and it spiralled over the years.

She was advised by Debt Line to open up another bank account, as the 2 credit cards and overdraft are with her main bank that her wages go into etc, so he said that they could possibly take her wages if they think she is about to go bankrupt. So she just opened a Monzo account, will that account be frozen when she declares, there is no overdraft on it? If so I’m guessing she has to open a basic bank account with Santander after the bankruptcy? She’s worried her Monzo will be frozen after she gets wages into it, so she has to declare the bankruptcy at a particular time to ensure that doesn’t happen? It is right to open a new bank account. An account could be temporarily frozen by the bank, but the OR would issue that it be released. Doesn't happen much these days. It is often a good idea to draw extra cash from your account just before BR to cover any temporary issues.

Also, I’m guessing that you all agree with Debt Line and think that bankruptcy is the only option? My mum was quite upset about this.

Sorry for all of the questions, thanks for your help

It seems that your mum is insolvent as National Debtline have discovered.

DD

FutureFreedom1

Thank you for your help

sourcrates

FutureFreedom1 wrote: »

Thank you for your help

Bankrupcy is a realitivly simple online process these days, you pay the fee (currently £680) and that`s more or less it, the OR will discuss things with her in a phone call, after which it will run for 12 months, she will then be discharged, and free to continue her life debt free.

warby68

This isn't advice but just wanted to say how lovely it is that you are willing to get fully stuck in and help your mum and brother OP.

I know its practical advice you need right now but not every young person is able or willing to do that and it is well worth acknowledging your help.

Hopefully there will be a solution that's right for your mum and let her move on with her life in a reasonable timeframe.