bankruptcy

rcosgrove

UKBoy,

I filed last year (I hope none of my family are reading this, as they don't know).

The bankruptcy laws changed middle of last year to make it less punative.

Things you should do now (if you haven't already):

Open a basic bank account - one that doesn't have an overdraft, cheque book or debit card. All banks provide these, as well as the Post Office (I believe) but only a few provide direct debit and standing order facilities with them. When you apply tell the bank you are filing for bankruptcy. If they accept your application have all your direct debits and standing orders transferred over, and inform your employer you have a new bank account.

Your other bank account will be frozen within days of you filing, so this is vital.

When you talk to the Official Receiver office (you speak to someone immediately after filing), tell them you've opened a new bank account and it's in credit. Ask the Receiver to inform the bank that their office has no interest in the new account. This should stop the bank freezing your new account.

National Debtline (https://www.nationaldebtline.com) and Citizen's Advice Bureau (https://www.adviceguide.org.uk) have lists of banks that provide accounts to bankrupts.

Utility bills (water, gas, electricity) are more problematic - these providers are likely to cut your service after you file. So, if you are living with anyone have your name removed from the bills. Just write to your suppliers to request the change. If this isn't possible, contact the companies and inform them of the bankruptcy and check if they want to install pre-pay meters (coin or card).

When you file:

You need the money in cash. No money, no filing. The entire process takes a few minutes.

You sit in a judge in chambers - the judge wears a suit, sat at a table. Not in robes. He'll ask you how you got into financial difficulty, and what you have done to avoid and correct this.

You must have exhausted all other options - private agreements with creditors, IVAs, CCJ etc - before filing. Bankruptcy is a last resort.

The judge will then go through your list of creditors and decide who needs to be informed. This will be every person and company you owe money to. Utility companies will only be informed if you have not paid bills. Ditto with ISPs, TV rental companies, and mobile phone service providers. Remember, if your payments with a company are up to date, it isn't a creditor.

Once the petition is signed, you'll speak to the Official Receiver. They'll want your bank account details, and home address, and tell you what to do next.

As a rule, the Receiver will only be interested in high value items or investments - antiques, cars, computers, pensions, investments, property etc. But almost everything, except basic items (bedding, clothes, basic kitchenware and cutlery) can be sold from under you.

(While I'm talking about pensions, a private pension will be safe if you have opted out of the State pension scheme. If you haven't opted out, Receivers will have it. But, once seized you can stop payments to the seized pension and start a new one.)

Next, the Receiver will ask for a budget from you. It must be a realistic budget. They will go through it will you step by step. Anything they think is surplus to your needs will have to be removed. They will want to know how much surplus cash you have at the end of the month. A portion of this money will have to be paid back to your creditors as part of a Individual Payment Agreement (IVA) every month, for up to 3 years.

Now you are really scared, here is the good news.

Receivers are highly unlikely to seize your pay. Unless you screw them around.

You stop paying PAYE tax. However, this extra cash has to paid out as part of your IVA.

Although bankruptcy is a matter of public record, the only people who you have to inform are your current creditors and potential creditors (if they are going to loan you £500 or over. I think it's £500). NO ONE ELSE HAS TO BE TOLD: that includes friends, partners, parents, employers and landlords (if you're renting). You can tell as many or as few people as you like.

After one year, you are automatically discharged. Unless the Receiver suspects you are to blame for your bankruptcy, or have been dishonest with creditors or with the Receiver's Office.

Often, you will get an early discharge. Once the Receiver's office has investigated your finances and is satisfied that you have no more assests that can be disposed of you will be discharged. I filed in August, and was discharged just after New Year.

When I filed, everyone involved couldn't have been more helpful. The Court's officials did everything they could to make the process painless. Same with the Receiver's office.

With the Receiver, answer everything they ask of you as quickly as possible. If in doubt, ask. If still in doubt, give them more information than they asked for.

Please remember that you'll find it extremely difficult to get any form of credit for 6 years after filing for bankruptcy (that's how long it stays on your credit record), that you will have to pay out an IVA, and once discharged you will have to pay PAYE tax again.

And once discharged, get your certificate (costs £60) and inform the following you are no longer bankrupt:

Inland Revenue: Check if you owe any tax.
Credit reference companies: Equifax, Experian and CallCredit.
Your bank.
Whoever you pay your IVA to: Once discharged you start paying PAYE tax again, so your IVA will be reduced by that amount.
Any company or person you informed you were bankrupt and still have dealings with.

And have a kick-!!!!!! party.

Xbigman

Although it is possible to keep it quiet the name and address of any bankrupts are announced in the local papers. So you can get outed very easily. Its best to own up and face everyone with your chin up.

You want a scary story. I went bankrupt on a monday in 1990. On thursday I went to work and the list of bankrupts from the paper with my name highlighted was on the notice board. I'd already told everyone that mattered but this was a real sh*tter.
Regards




X

Debt_Free_Chick

rcosgrove wrote:

UKBoy,

(While I'm talking about pensions, a private pension will be safe if you have opted out of the State pension scheme. If you haven't opted out, Receivers will have it. But, once seized you can stop payments to the seized pension and start a new one.)

Not any more. Where the bankruptcy petition is filed on or after 29 May 2000, no pension becomes the property of the trustee in bankruptcy (usually the OR).

If you are recieving your pension, that counts as income and the OR could make an Income Payments Order against it. An IPO is an arrangement whereby you pay the OR a certain proportion of your income (including any pension you are receiving) so that this can be used to make a payment to your creditors.

As a rule, the Receiver will only be interested in high value items or investments - antiques, cars, computers, pensions, investments, property etc. But almost everything, except basic items (bedding, clothes, basic kitchenware and cutlery) can be sold from under you.

And the OR will not take "the tools of your trade" - anything that's vital to you earning a living. This could include a car (or other vehicle) and a PC. It depends on what you do for a living.

Generally, the OR is only interested in stuff that can be sold quickly for a good price - the OR's only interest to get money to pay off your creditors. In practice, second hand houshold goods are worthless, so the OR doesn't bother with them. Also, the OR is not looking to strip you of all dignity, so they won't "clear your house out".

I'm sure you meant well rcosgrove, but it's not helpful to have people scared of bankruptcy. There are many, many folk over on the Motley Fool who've been through bankruptcy and tell a much more positive tale.

I believe that bankruptcy exists for those who really have no hope of paying back their debts. It's not a punishment ... it's a process for release from the burden of debt.

Regards

Debt_Free_Chick

Xbigman wrote:

Although it is possible to keep it quiet the name and address of any bankrupts are announced in the local papers. So you can get outed very easily. Its best to own up and face everyone with your chin up.

You want a scary story. I went bankrupt on a monday in 1990. On thursday I went to work and the list of bankrupts from the paper with my name highlighted was on the notice board. I'd already told everyone that mattered but this was a real sh*tter.
Regards
X

What a sad bunch of people! Especially as the note in the paper is so discreet, you'd have to be actually looking for it. Who, in their right mind, scours the small classifieds to see who's declared bankrupt this week? Sad.

For UKboy .... take a look in your local paper and you'll see what I mean. Don't be scared about bankruptcy - it's there to help you, not to punish you.

pug_in_a_bed

wow, that is unbelievable. what a load of small minded horrors, bankruptcy is meant to be a new start. That really is horrifying. Mine didn't show in our paper, i think it came up in the paper of the next district, of course anyone who wants to know can look on the website which details all bankrupts details. Everyone who matters knows anyhow.
Don't be ashamed, good luck

rcosgrove

Debt_Free_Chick wrote:

Not any more. Where the bankruptcy petition is filed on or after 29 May 2000, no pension becomes the property of the trustee in bankruptcy (usually the OR).
If you are recieving your pension, that counts as income and the OR could make an Income Payments Order against it. An IPO is an arrangement whereby you pay the OR a certain proportion of your income (including any pension you are receiving) so that this can be used to make a payment to your creditors.

I have a private pension which has been seized by the Receivers (in my case officer's words "We'll have that"). This is because I'm still in the state pension scheme. If I had opted out of the state pension scheme when I applied for the private pension, the Receiver wouldn't have touched it. And that information came from the Receiver's office.

Now, I didn't have any other high-value assets (still don't), so the Receiver could have taken the pension because that was the only thing of value I had.

An IPO is a Court-ordered demand for a regular payment. Now it's only used rarely - say, if the Receiver suspects you have been lying or acting dishonestly, if you are judged to be a "reckless bankrupt", or if you keep failing to make IPA payments.

Now Individual Payment Arrangements are used - an agreement made between the bankrupt and the Receivers officer, to pay back a certain amount of money each month for up to three years. Mine is for £50 a month. Money from an IPA is a proportion of your disposable income. The Receiver will decide on the amount after seeing your budget. You continue to pay IPAs even after you have been discharged.

And the OR will not take "the tools of your trade" - anything that's vital to you earning a living. This could include a car (or other vehicle) and a PC. It depends on what you do for a living.

Forgot to mention that. But your tools of the trade are not completely safe. If the Receiver believes you can get a tool that does the same job for less money, you'll have to get rid of the expensive tool and replace it with the cheaper variety.

So if you have a car worth £20K you use for work, and the Receiver thinks you could use a car worth £2,000 for the same task - you'll be driving a £2K car. Same goes if you use a computer - if you have one worth £1,500, but can get one for £200 to do the same job, you'll be using the cheaper one.

Generally, the OR is only interested in stuff that can be sold quickly for a good price - the OR's only interest to get money to pay off your creditors. In practice, second hand houshold goods are worthless, so the OR doesn't bother with them.

Like I said "...the Receiver will only be interested in high value items or investments - antiques, cars, computers, pensions, investments, property etc."

When I contacted National Debtline about this the advisor I asked about this. Conversation went something like:
Advisor: "The Official Receiver is only interested in high value items."
Me: "What like cars, property?"
Advisor: "Yeah. Only stuff worth four figures."

But all of your assets, except a few basic items, are under the control of the Receivers from the moment the petition is signed.

When I filed the Receivers wanted a full list of my property - right down to the how much cutlery I owned.

After I filed, the Receiver seized Premium Bond certificates worth £1.50 (hadn't won anything on them. I checked), and was seriously considering selling my DVDs, videos, and books.

However, they didn't because they knew they wouldn't be worth their while.

Also, the OR is not looking to strip you of all dignity, so they won't "clear your house out".

Again, like I said: "When I filed, everyone involved couldn't have been more helpful. The Court's officials did everything they could to make the process painless. Same with the Receiver's office."

Receivers are not there to punish bankrupts. They are there to get as much money out of your estate as possible, so your creditors can regain some of the money you owe them.

I'm sure you meant well rcosgrove, but it's not helpful to have people scared of bankruptcy. There are many, many folk over on the Motley Fool who've been through bankruptcy and tell a much more positive tale.

I'm glad some people found it to be a positive process, but for most people it is stressful and frightening period to go through. You only need to go into the County Court waiting room to see how scared people are when they are waiting to see the judge.

And all of that post was from taken from my own experiences, and from the information I was sent by National Debtline and my local Citizens' Advice Bureau.

Let's be clear: filing for bankruptcy is not an easy option. Making it sound all nice a flowery and painless is doing anyone thinking of filing a disservice.

The outcome can be positive, once you are discharged. But getting their is extremely stressful.

Any debtor who has any other way of paying back the debts - whether it's private agreement with creditors, voluntarily accepting a CCJ, or arranging an IVA - should take it rather than file for bankruptcy.

But if you do have to file, be prepared for what you have to go through - emotionally as well as practically.

UKBoy: Visit the Insolvency Service's website for the official run-down on bankruptcy.

Two more things: any Student Loans you have won't be cancelled when you file. A ploy to make sure students across the country don't file for bankruptcy the second they graduate. However, the Student Loans Company will place a post block on your accounts, so you will not receive any deferment forms from them. If this happens to you, as if a block is on your accounts and for them to suspend it. This happened to me, and the SLC took a payment from my account, even though I'm earning below the deferrment limit. Good news is it refunded the money taken the next month, plus bank charges I had accured because of be short by £100 that month.

Final thing: if you have any rental or hire-purchase agreements in force, it is possible that the agreement will be cancelled. My ISP suspended my service - without informing me - when it learned I had filed. But it resumed my service, when I reminded the accounts dept I hadn't defaulted on my payments to it.

- Richard

Debt_Free_Chick

rcosgrove wrote:

I have a private pension which has been seized by the Receivers (in my case officer's words "We'll have that"). This is because I'm still in the state pension scheme. If I had opted out of the state pension scheme when I applied for the private pension, the Receiver wouldn't have touched it. And that information came from the Receiver's office.

You should contest this.

Quote Section 11(1) of the Welfare Reform and Pensions Act 1999. For the avoidance of doubt, this states ...

"(1)Where a bankruptcy order is made against a person on a petition presented after the coming into force of this section, any rights of his under an approved pension arrangement are excluded from his estate.

(2) In this section "approved pension arrangement" means
(a) an exempt approved scheme;
(b) a relevant statutory scheme;
(c) a retirement benefits scheme set up by a government outside the United Kingdom for the benefit, or primarily for the benefit, of its employees;
(d) a retirement benefits scheme which is being considered for approval under Chapter I of Part XIV of the Taxes Act;
(e) a contract or scheme which is approved under Chapter III of that Part (retirement annuities);
(f) a personal pension scheme which is approved under Chapter IV of that Part;
(g) an annuity purchased for the purpose of giving effect to rights under a scheme falling within any of paragraphs (a) to (c) and (f);
(h) any pension arrangements of any description which may be prescribed by regulations made by the Secretary of State. "

And the bit about "a petition presented after the coming into force of this section" is petitions presented on or after 29 May 2000.

You have the protection of the law here. The OR is either trying it on or out of date with what the law allows.

James240

You want a scary story. I went bankrupt on a monday in 1990. On thursday I went to work and the list of bankrupts from the paper with my name highlighted was on the notice board. I'd already told everyone that mattered but this was a real sh*tter.
Regards




X[/QUOTE]


Blimey Xbigman i see u had some nice people working with u then! who in there right minds would do that to someone else thats so nasty its unbelivable.........

kindanice

Rcosgrove,

Although I have no need to go bankrupt (thankfully), I would like to thank you for your post which was very clear and well explained. I am sure many people have learned alot from your post.

Well done!

rcosgrove

kindanice wrote:

Although I have no need to go bankrupt (thankfully), I would like to thank you for your post which was very clear and well explained. I am sure many people have learned alot from your post.
Well done!

Thanks. Nice to know that some good may come out of what I went through.

To quell my fears, I got some advice from National Debtline and my local CAB, but they only explained the law, not what is really likely to happen. You only learn that by going through the process. And that's what I was aiming to tell UKBoy - what really happens. Not the theory, what "should happen" or the urban myths you hear.

One more piece of advice for anyone thinking of filing - although you don't have to tell people you are filing for bankruptcy, tell someone close to you about it - partner, family member, friend, priest, whoever. You will need their emotional support.

RC