Heading Towards Bankruptcy - Please Help

unsureandconfused

Hi

I ended up in debt to the tune of around £23,000. I had a credit card, the payments were too high for me to afford so I got a 0% credit card, transferred over the balance, couldn't pay, got another 0%, transferred balances over, had to use the credit card as I couldn't afford to meet the payments and so it snowballed. I have severe mental health issues and live purely on ESA and PIP.

I have had an IVA for just over a year but the company who are dealing with it are now trying to take my PIP off me and refuse to offset it as adult care costs - I do need to use my PIP for my disability needs which are both mental and physical.

I have been advised by a debt charity to stop the IVA and apply for bankruptcy as I can't afford to make the current IVA payments, let alone whatever hiked up payments they will want from my new PIP award.

I have a nationwide basic account already - I opened that over a year ago when the IVA was started. I am now terrified that if I do apply for bankruptcy, that my basic account will be frozen and that I won't get my ESA or PIP or be able to pay my bills. I have been told by the debt charity that the account is usually only frozen for a few days ... is this correct?

If I had to go and open a basic account with another bank - if they would even have me, and my ESA and PIP were paid in and my direct debits were moved over, then surely that account would be frozen also?

How many bank statements would I need to show to the people to deal with the bankruptcy? I am worried about this as my account is always looking like chaos - partly again to do with my mental health issues. If a friend needs something online, a lot of the time I will get it and pay for it through paypal and they will give me the cash money for whatever it is they wish to buy. I then use cash a lot of the time to pay for my grocery shopping and daily living expenses. It's one of the things I do because of my mental illness. I am worried that if I show my bank statements, they will not give any clear showing of what I spend on shopping etc?

I am going into meltdown and can't get my head around any of this! Please if anyone can offer some help I would so much appreciate it.

mwarby

The Nationwide bank account should be ok, yes it might be frozen briefly, but as it will be a bank you don't owe money to, and a basic account there nothing Nationwide need to do. Even if your account is frozen your benefits may still go in, to minise issues try to time bankruptcy to avoid such payment dates. It may also be worth talking to Nationwide who maybe able to reassure further

You could attempt to argue the PIP stuff further, but may crop up again in next 4 years, in bankruptcy could all be over in a year, or at worst 3 years

If the OR needs to they can request statements, I'm sure they are well used to chaotic statements as I suspect many banksrupts statements get very chaotic in run up to becoming insolvent

mwarby

Re ESA and PIP I'm pretty sure the OR just ignores these when looking at any monthly payment (IPA), they have a policy of not collecting benefit payments

fatbelly

mwarby wrote: »

Re ESA and PIP I'm pretty sure the OR just ignores these when looking at any monthly payment (IPA), they have a policy of not collecting benefit payments

This is true, so unless you have another form of income, you won't be making regular payments at all.

It sounds like you should not have had an IVA. But you will now have to wait for this company to terminate it, which could take a long time. In the meantime you need to be saving for your £680 bankruptcy fee.

unsureandconfused

I have been in meltdown and I mean total meltdown.

I think I was trying to get it down in like 2 days .. make decision for bankruptcy and also having the date of the next IVA payment being today. I think you get to a point where you can't take any more and just go into blind panic.

I think I have done the right thing ... earlier I called the IVA company and paid this months payment. I told them that I was so scared they would take my new PIP award but was told that they won't. I was told to call up tomorrow or Monday when i am not so much in blind panic and speak to them to see what we can do. They said I am due the payment review and to just go through everything with them and they would try their best to help.

If I call them up and things don't go well i.e., if they do decide I am to pay more, I will then go for bankruptcy. I'm a year into the IVA as it is and that money would be wasted.

Are there any tips or pointers to bankruptcy? Would that be my best option? I'm worried that it would be so stressful.

Flyright

You can't just 'go for bankruptcy' when in an IVA. It has to be formally failed by the IVA supervisor first, which can take some time.

fatbelly

unsureandconfused wrote: »

I have been in meltdown and I mean total meltdown.

I think I was trying to get it down in like 2 days .. make decision for bankruptcy and also having the date of the next IVA payment being today. I think you get to a point where you can't take any more and just go into blind panic.

I think I have done the right thing ... earlier I called the IVA company and paid this months payment. I told them that I was so scared they would take my new PIP award but was told that they won't. I was told to call up tomorrow or Monday when i am not so much in blind panic and speak to them to see what we can do. They said I am due the payment review and to just go through everything with them and they would try their best to help.

If I call them up and things don't go well i.e., if they do decide I am to pay more, I will then go for bankruptcy. I'm a year into the IVA as it is and that money would be wasted.

Are there any tips or pointers to bankruptcy? Would that be my best option? I'm worried that it would be so stressful.

That's a shame that you paid them as that money should have been going to your bankruptcy fee.

ESA is a very basic benefit and people on it are fortunate if they can make ends meet without support from friends, family or credit.

PIP is paid for your care and/or mobility needs.

No-one in normal circumstances should be going for an IVA if their income is ESA & PIP.

I take it that you do not own property.

Your debt charity (Stepchange?) recommended bankruptcy yet you are persevering with an IVA. I can understand that if you are almost at the end but you are only 12 months into a 60 month plan I think.

You should stop paying while you look at things in more detail. You are protected from enforcement by your IVA until it is terminated and, even if you stop paying now, it may take 6-12 months to terminate it.

GDB2222

Is enforcement action a serious issue for someone heading for bankruptcy? It's unlikely that there's anything of value that the enforcement people can take.

fatbelly

GDB2222 wrote: »

Is enforcement action a serious issue for someone heading for bankruptcy? It's unlikely that there's anything of value that the enforcement people can take.

Not really but the point I was making is that the protections stay in place even though you are not paying - and can stay that way for a long time.

I can understand that someone with mental health issues would want that protection.

So take that time to (a) save the £680 and (b) do your research so that you understand the options and know you have chosen the right one

....rather than be forced into an inappropriate one by an IVA ppusher.

thevdm

Hi, you sound like you are in a very similar situation that I was in. I was originally on an IVA and effectively forced to surrender PIP payments to pay the IVA. I could see that it wasn't working and spent some time doing a lot of research before finally going bankrupt in February (the best thing I have done in a long time).


I was banking with Lloyds (basic account) beforehand. This account was frozen and still is to this day, from what I gather Nationwide are a bit more bankrupt friendly, but make sure you have a backup plan. Prior to bankruptcy I transfered my income payments to be paid into my wifes account and they have been fine ever since. We tend to live out of one joint pot anyway so this doesn't effect our normal living style. If you have a partner who you trust with your money then transfer payments to them for a guarantee that you can access it. If not, keep in good contact with Nationwide when you go bankrupt so you know what is happening.


The second you press the submit button on the bankruptcy you can go and open a new account and it will be safe. At this point I opened an account with Nationwide, but have since opened a joint basic account with Co-Op who seem equally bankruptcy friendly (they don't have many branches, but you can use the post office as a branch).


Neither my Nationwide nor Co-Op accounts that were opened after I submitted the forms have ever been frozen.


When I went bankrupt I didn't have to show them any bank statements and pretty much no proof of income or expenditure. Because my only income was through benefits they knew that an IPA or IPO was not an option so my income statement was glossed over and kind of ignored. I would recommend downloading as many statements as you can though, just in case as every OR is different.


I also have a habit of buying things for people online and they give me the cash or transfer me the money. This wasn't an issue. They would only care if a single transaction was over £500, assetts under £500 aren't really cared about.


I too use cash for pretty much everything other than online shopping, it just makes life easier when you live to budget, the OR won't be phased by this as I'm sure a lot of people in debt problems use cash.


Some things you didn't ask, but I'll add for reassurance:



- If you go bankrupt and your only income is from benefits, you will not have to make any payments past the initial fees, therefor your PIP and ESA will both be safe.
- Before you stop the IVA, stop making payments to it as the IVA will take 3 months (I think) to cancel if you stop making payments. This gives you time to save the bankruptcy fees.
- After the IVA is cancelled there will be a period of time where creditors will have to catch up, this is useful if you need more time to save the bankrupcy fees. I'm not sure how long this is, and I'm sure it varies between creditors but I submitted my bankrupcy 3 months after my IVA was cancelled and I still hadn't heard from anyone.
- If possible, save a bit more than the bankruptcy fees so you have enough to live on for a week while accounts are frozen etc... Have a small cash buffer.