Timing - now or wait - Plus IPA Question

ashes1985

Hi All

I am currently self employed however the business is about to wound up - part of the company debts are some that i personally guaranteed so i know they are going to come after me. I don't have any assets - Rent - car is leased - no cash

I have been offered a job with a basic salary plus commission - it would take the commission a couple of months to kick in,

Therefore i have a two part question - is it best to go bankrupt now while self employed and winding up the business or after i take up the position with the new job in a few weeks time. Can you do an inflated Budget to help?

The second part of my question is - when i start earning commission on top of my basic salary how would the OR know? is it up to me to inform them? or do they do regular checks on your income?

Because my debts ( Approx 50k) are due to a business going under these debts arnt a result of being extravagant or irresponsible therefore id like to still be able to maintain a certain standard of living when earning commission - we enjoy our holidays etc and if im working hard earning commission id like this to continue if possible, so keen to get through the first 12 months without an IPA

any advice would be appreciated

Minkym00

The OR can implement an IPA at any point during bankruptcy, therefore it doesn't matter when you do it. If you have a lower income now and no surplus income then you will be reassessed for an IPA when you are in work.


Yes, you have to inform them when you start a job and what the basic and commission you are earning is - not to do so is a misconduct and you could end up with your bankruptcy restrictions extended for longer if you don't. The OR will ask you for payslips and take an average of your commission to basic your income analysis on.


The OR has a legal duty to treat every bankrupt the same, the reasons for bankruptcy are irrelevant. If you have an idea of what your income and expenditure are going to be then post up here for advice. It is unlikely that you will be able to maintain the lifestyle you have become used to, but allowances you are given by the OR are fair and reasonable.


You may also lose the lease car as many HP companies will terminate the contract on bankruptcy. Even if they don't then the OR may not allow the amount you are paying for in your expenses (c. £200 is allowed). So my advice is to check what the HP company says as if they take it back then you will need the funds to buy a car for £1000 or under.

ashes1985

Ok thanks. Think I need to get some advice regarding the personal Guarantee debt

Minkym00

It would be advisable to. There *could* be a misconduct allegation that you gave personal guarantees for debt that you had no realistic expectation of being able to pay, seeing as you had no assets as collateral.

ashes1985

If I file for my own bankruptcy. Is it true that my creditors can request their own receivers to deal with me as an individual at which point the government OR steps aside?

Minkym00

Yes. If more than 50% of your creditors (in value of debt owed) request an IP be appointed to deal with your assets then the appointment is made.

However you don’t have any assets so there’s no point in them doing so.

RattyIrk

Circumstances not too different to mine. I have found the OR fine to deal with. They will cut you a little slack but think you can forget any fancy holidays!

I have remained self employed and work as a consultant on commission only now for someone else. My earnings do not cover all my outgoings. I have got through by my partner dipping into her small savings to keep us afloat and these are now nearly exhausted. She is looking to do more in the new year work wise and has irons in the fire. For my part I have to a degree dictated my own work levels and once clear of the bankruptcy can ramp those up a bit.

The OR asked me some questions at the beginning and after I filled in the financial questionnaire. However since then I have not heard further. That said I know someone else who went bankrupt around the same time and the person they are dealing with asks for updated information every three months so depends who you get. Whilst my income has increased I am still not earning enough to have to trigger an IPA. I am similarly hoping to avoid one.

My advice would be to be open with the OR and if you want to avoid an IPA limit your working to part time if you can.

MalMonroe

Have you phoned one of the debt help agencies, such as StepChange? With having been offered a job, your circumstances are about to change and bankruptcy may not actually be the best next step for you to take right now. You will also have to pay to go bankrupt, if your application is accepted. I had a DRO which began in 2013 and although it's true that DROs, like bankruptcies, are discharged after a year, credit files are marked for the following five years. It's only now, almost seven years after I started the DRO, that I am recovering financially from the effects. You have to be very honest when applying for any kind of debt relief. With your new job on the horizon, it does seem crazy for you to even consider taking such a drastic step. Please, before you commit yourself, contact StepChange and see what their advice is. It's a free phone call, won't take long, and could save you endless future hassles. I'll even give you the number - 0800 138 1111. Good luck. Please think carefully. I've been there, it is NOT a good place to be and I don't consider DROs to be as bad as bankruptcy.