Bankruptcy - Partner Furloughed, I'm about to drop to SMP

sitcomp

Hello

I've lurked for a while and read pages and pages about people's experiences.

My partner works in a pub and has been furloughed due to Coronavirus. He thankfully has no symptoms, but the pubs had to shut. 80% of his salary will be about £200 a week, we are unsure when he will even start to get that. He was due to be paid next on Saturday.

I am 30 weeks pregnant so have been put on maternity leave. We have one son who is 6. I will get 90% of my salary (previously ~£1600 a month after tax and overtime) then statutory maternity pay only which is about £150 a week (goes up in April).

We have about £26k in debt, spread over a loan, an overdraft and credit cards. The loan has just under £4k on it and is in joint names. Other half has £2k on credit cards, and the rest (credit cards and overdraft) is in my name only. We rent our home and are completely up-to-date, never missed a payment on this or anything else up to this point but we have been treading water and this will cause us to sink. The rental agreement was a 2 year agreement and lasts until February 2021. We want to stay here, so are hoping landlord doesn't decide to issue a S21 or anything.

I have spoken to stepchange who were nice and explained they can't really make suggestions until our income drops. Same with Universal Credit. 

I don't want to be on a DMP until the end of time, and don't think I'm going to have enough spare income to make an IVA viable to creditors by the time I've paid half the bills, let alone while other half is furloughed (and let's face it he's only on about £1k a month on full pay). We have no savings.

Seriously considering bankruptcy for me.

I have questions - thank you in advance for your answers.

1) can I ask the OR NOT to tell our landlord? I have our tenancy agreement. It's an AST. I'm worried they won't renew us or worse, evict us straight away, and that would be awful as wouldn't pass a credit check and local authority waiting lists are awful

2) the joint loan - can he just continue to pay the contractual sum of £189 until it's cleared? Obviously he's jointly liable but don't want them to recall in one go

3) we have no car (we've already gotten rid of that and walk or cycle everywhere, prior to lockdown anyway) and no jewellery, etc. I own a laptop that cost £300 a few years ago - could they take that? I have a number of books on my bookshelf but nothing is really "worth" anything (have looked at selling? The PC is his.

4) can I reasonably return on less hours at work? I had been doing around 48 a week and it really has been tough with 1 child, let alone 2. Childcare costs become an issue (we previously worked pretty much opposite shifts to give us a zero childcare cost, but this will be much harder with a baby than a school aged child)

Thank you in advance. Just posting this gives me some relief if I'm honest. We've been struggling for so long.

mwarby

1 - if your not in rent arrears and you have your tenancy agreement, the or will have no reason to contact your landlord. Of course your name will be in a public register, and I’ve seen some landlord credit checks which claim to have an ongoing element. For your existing landlord in the current climate, it would seem silly to turf you out when your paying the rent and not causing trouble

2 - is the 189 the full monthly repayment (ie the total each month between you) if so they should let that carry on. The lender will want to be repaid and so if necessary they should enter into a repayment plan(although a plan that has reduced repayments will show on credit history)

3 - the laptop will be fine. Book wise if you have particularly valuable first editions or collectibles you should mention during the interview. It’s unlikely though from your description that the OR will be interested, as the cost of collecting and selling could easily be more than they would get for them 

4 - bankruptcy wise the OR can’t compel you to work, increase hours or change jobs.

if you post a full soa we can try and make sure you haven’t missed anything, and let you know if your likely to get an IPA or not (it’s possible that your salary will be high enough initially to warrant setting one up)

sitcomp

mwarby said:

1 - if your not in rent arrears and you have your tenancy agreement, the or will have no reason to contact your landlord. Of course your name will be in a public register, and I’ve seen some landlord credit checks which claim to have an ongoing element. For your existing landlord in the current climate, it would seem silly to turf you out when your paying the rent and not causing trouble

2 - is the 189 the full monthly repayment (ie the total each month between you) if so they should let that carry on. The lender will want to be repaid and so if necessary they should enter into a repayment plan(although a plan that has reduced repayments will show on credit history)

3 - the laptop will be fine. Book wise if you have particularly valuable first editions or collectibles you should mention during the interview. It’s unlikely though from your description that the OR will be interested, as the cost of collecting and selling could easily be more than they would get for them 

4 - bankruptcy wise the OR can’t compel you to work, increase hours or change jobs.

if you post a full soa we can try and make sure you haven’t missed anything, and let you know if your likely to get an IPA or not (it’s possible that your salary will be high enough initially to warrant setting one up)

THANK YOU for your kind reply

I was going to wait until I went onto SMP, mostly to allow for other halfs furloughed income kicking in. Shall I do my SoA as to what my income WILL be ready for that?

mwarby

You could do one now too, it may well be that it’s worth considering starting now (the sooner it’s done the sooner it’s done with and you can rebuild). It’s also possible that other avenues will appear (your not a million miles from the 20k DRO limit, it maybe feasible to pay down to that level)

you can always estimate in your soa, or come back and do another when more is known 

yoyr income and expenditure will both change by quite a bit in the coming months, both due to SMP and then with baby related costs

it might be worth considering buying some baby stuff early before you go bankrupt (I am not suggesting taking on new debt to do so)

sitcomp

mwarby said:

You could do one now too, it may well be that it’s worth considering starting now (the sooner it’s done the sooner it’s done with and you can rebuild). It’s also possible that other avenues will appear (your not a million miles from the 20k DRO limit, it maybe feasible to pay down to that level)

you can always estimate in your soa, or come back and do another when more is known 

yoyr income and expenditure will both change by quite a bit in the coming months, both due to SMP and then with baby related costs

it might be worth considering buying some baby stuff early before you go bankrupt (I am not suggesting taking on new debt to do so)

Thank you. I will get the SoA's done.

I don't think I can raise the £3k I'd need to get me under the £20k limit for a DRO.

Another question - I left my ex husband 5 years ago. We had a house that that we purchased jointly for £50k, with a 10% deposit. We had paid the mortgage for about 3 years at that point. The house wouldn't have been worth much more than what we "paid" for it. We had a joint loan with about £10k on it. I agreed to give him the house in May 2016 when he got a remortgage, in exchange for him paying the loan off. Obviously the OR would be interested in that.. could this be a problem? Or because the loan was cleared in exchange for the house, do you think they would be happy with that?

Edited- there was also a car on finance where I owned it at the end. The finance finished in the November of 2015, I believe. I left it with him, as we had a terrible deal and it was off the road more than on the road, and I also don't drive anyway. He part exchanged it to buy a newer car. He got £400 part ex for it. How does this work?

Edit 2 - got the figures from the ex husband. He did better than I thought at the time! He paid off £40k of joint mortgage and the revalued amount was £67k, so that's £27k of equity for a £10k loan (my share would've been £5k).

mwarby

The OR might be interested in the story, but I suspect the money is long gone, and there are no assets that can be repossesed to be sold. From the above it looks like the total was £5400 4 years ago, which is not a lot quite a while ago. The OR would be interested if you had sold at undervalue or gifted away your fortune, but these seem to have been genuine fair transactions for good reasons at the time

Fill the form in as best you can, mention the above in your interview with OR, let the OR do any digging that's required if any

sitcomp

mwarby said:

The OR might be interested in the story, but I suspect the money is long gone, and there are no assets that can be repossesed to be sold. From the above it looks like the total was £5400 4 years ago, which is not a lot quite a while ago. The OR would be interested if you had sold at undervalue or gifted away your fortune, but these seem to have been genuine fair transactions for good reasons at the time

Fill the form in as best you can, mention the above in your interview with OR, let the OR do any digging that's required if any

Thank you again for your responses

As the "equity" in the property was £27k, and I had a £5k loan, would the 'share' not be half of £22k = £11k?

mwarby

Your right, and the forms ask about the last 7 years I belive, so the OR will want to know.

However given it was 5 years ago and it's £11/12k that money was likely gradually used up in general expenditure or debt repayments over 5 years(£2250 a year or so, £200 a month).

The OR will be able to look into it and decide how to proceed, but there probably not a lot that can be done, and unless you were very stupid with it (like buying a flash car or using it for round the world trip, while not making loan repayments) it won't be held against you

sitcomp

mwarby said:

Your right, and the forms ask about the last 7 years I belive, so the OR will want to know.

However given it was 5 years ago and it's £11/12k that money was likely gradually used up in general expenditure or debt repayments over 5 years(£2250 a year or so, £200 a month).

The OR will be able to look into it and decide how to proceed, but there probably not a lot that can be done, and unless you were very stupid with it (like buying a flash car or using it for round the world trip, while not making loan repayments) it won't be held against you

Thank you for your help - it really is appreciated. I never received any money, I didn't ask him for it as tbh I didn't realise it was as much as that!

I'm going to try to use some of the 'spare' time I have now (before baby comes) to do a declutter and see what can be sold from around the house - A.) to give me something to do that makes me feel productive and B.) to try to raise some funds to get below the limit for a DRO.