HELP! Student & Self Employed - going bankrupt

timetofacethemusic

Hi,

If anyone could please help me with a few questions, I would be so grateful! I've done my best to research this as much as possible but I'm still really stressed out by not knowing what exactly is going to happen once I file for BR!

I'll try to keep this brief - basically, I have managed to get myself into a rather large hole, I owe a lot of money mainly to HMRC (about £30k) and also I estimate around another £50k to other places (credit cards, bank loans and business debts). I built these debts up when I was a high earner, but I had mental health issues (and a breakdown) which caused me to have to stop working, the debts all spiralled and I've been burying my head in the sand ever since. It's now about 3 years after I had to stop working, and I'm finally facing up to the fact that I need to go bankrupt but I have a few questions:

1 - I'm a full time student but also work part time self employed. Will I be allowed to discount all my usual allowable business expenses from my self employed income for the purposes of calculating an IPA? EG My gross income from self employment is £1103pm but after my expenses it is only £548.98 so that is what I've put on the below SOA. Will that be accepted? Or will I have to justify the expenses?

2- I don't have the details of my debts, I haven't been making payments since I went off work sick 3 years ago, and (maybe because I've moved a lot? or maybe because they can see I'm not earning a lot anymore) my creditors have pretty much left me alone. HMRC still occasionally contact me and for a while I was hoping the would make me bankrupt themselves to save me the £700 odd but they haven't. The result of this is that I actually don't really remember who I owe money to, or how much. I've tried getting a copy of my credit report from multiple different sources but all attempts have failed as they say I haven't past the identity checks - will rough estimates be ok? I know my tax debt and that alone is enough to qualify for bankruptcy so will it be ok if I just guess the rest?

3. I've included my student loan by dividing the full amount into 12 to get a monthly amount, is this correct?

4. MY SOA is showing a surplus but as I'm self employed, the nature of my work means that I have quiet periods of the year, and I need the surplus to help get me through those periods, will this be taken into account? i.e will I be able to to save surplus from September/October to get me through December for example? Also, even though this shows a surplus, I have to pay for things like CPD courses which aren't a monthly expense, but I need to do a certain amount of them each year so when I have to pay for them, that would take me into a deficit for that month

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 548.98
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 972.67
Total monthly income.................... 1521.65

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 850
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 30
Gas..................................... 50
Oil..................................... 0
Water rates............................. 10
Telephone (land line)................... 0
Mobile phone............................ 15
TV Licence.............................. 0
Satellite/Cable TV...................... 7
Internet Services....................... 0
Groceries etc. ......................... 300
Clothing................................ 20
Petrol/diesel........................... 0
Road tax................................ 0
Car Insurance........................... 0
Car maintenance (including MOT)......... 0
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 0
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 20
Haircuts................................ 20
Entertainment........................... 20
Holiday................................. 20
Emergency fund.......................... 10
Total monthly expenses.................. 1372


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
Total unsecured debts..........0.........0.........-


Monthly Budget Summary
Total monthly income.................... 1,521.65
Expenses (including HP & secured debts). 1,372
Available for debt repayments........... 149.65
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 149.65

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

mwarby

The OR will need to have confidence that the business expenses are legitimate, and not a way of disguising lavish expenditure or simply avoiding an IPA. CPD which is required I don't see as being a massive issue, but spending any surplus on CPD you would normally bother with is likely to be issue

The OR will however want you to continue as this income would allow for them to set up an IPA. I'm sure allowances would be made for seasonal aspect, although I'm not sure how it'd work, I suspect if you could show that over a year you only make enough to cover your reasonable outgoings the OR might decide to leave it(is admin overhead worth it if you only make a few hundred a year)

What I would say though is maybe it'd be an idea to think about scaling back or shut down the business and focus on studies. this way you can avoid an IPA (or complexities of trying to probe you shouldn't have one) and be through with bankruptcy after a year. Once your discharged you could restart

mwarby

On your expenses

Do you have no internet other than through mobile ?
The £7 for TV is this Netflix or Amazon or similar ?
Do you need/want a TV license even if just for iPlayer

What about travel, do you never take the bus or train I's suggest £20 or £30 to cover occasional travel would be sensible (or more if you spend more)

You should probably be putting something away for medical expenses, eg dental checkups, sight tests (and glasses if you wear)

I reckon the following would be ok (I think these are conservative)
£25-35 landline and broadband
£13 TV license
£20 travel
£10 medical

~£70 missing I reckon

MovingForwards

You are also missing contents insurance, that's another £20 a month.

Minkym00

You will need to detail your full income and expenditure. Even if your expenses are legitimate you will need to explain them. Otherwise you will look like you’re hiding something when they check your income.

Most people don’t know the full value of their debts. Just put down as much as you can remember and explain it at interview. All pre-bankruptcy debts (save for student loans, child maintenance arrears and debt obtained through fraud) are included in bankruptcy so if any creditors catch up with you later you can just inform them of your bankruptcy.

Student loan, yes, divide into equal parts.

Self-employed bankrupts are assessed based on average income. It’s usually three months but if that doesn’t work for you just provide evidence of income over a longer period (a year?). If you have expenses such as courses in that time then you need to put money aside to pay for them.

timetofacethemusic

Thanks - this is something to think about. I need to do some work, because it's not possible to survive on student loan alone but I am going to seriously think about scaling back.

timetofacethemusic

Thanks - I have quite high business expenses because I've invested a lot in courses and stuff like that, but I'm guessing that's not going to be allowed after I file for BR so need to think about what I do next.

username901

timetofacethemusic wrote: »

Thanks - I have quite high business expenses because I've invested a lot in courses and stuff like that, but I'm guessing that's not going to be allowed after I file for BR so need to think about what I do next.

What courses? Have you checked theyre an allowable expense by hmrc?