Considering bankruptcy but could use some info before I proceed.

Mandy9966

Hello, I am considering bankruptcy and have a few concerns  that I need to clear up.

1: I owe £3500 for a car finance, my debt left is £2500 this would be secured debt, my brother has offered to pay the debt off and take the car as his own, would this be legal?

2: I have one item worth new £1,189.00 and have £599.00 left to pay on it, personal loan for a bike, I have advertised it for £900 and have been offered £700 cash now for it, this money would be used to pay the £680 bankruptcy fee, I have fallen of the bike and caused a few scratches on the paint work, so first question is am I allowed to sell this for this reason, and second question is £700 considered to low, the bike is now five months old.

3: I have nothing other then the above worth over £500 and nothing in my banking history to show that an item over that amount was bought, but I do have quite a lot of items below £500, can these be taken?, this accumulation has been over five years and I have always paid my debts I just can no longer afford to.

More questions to follow.

fatbelly

I can only make fairly general comments - if you wanted to post a soa we  could give better guidance.

I'd be interested in why you are going for bankruptcy rather than any other strategy.

OK, general comments. In the run-up to bankruptcy, when you know you are insolvent, your conduct will be looked at. Having said that, the OR knows you have to get your  fee from somewhere so if you are selling a £700 bike and that is the market value, and you have a cash buyer, then that would be fine. I'm assuming when you say it is a personal loan, it is a personal loan and not hire purchase. The bike is therefore owned by you, unlike the car.

The car on HP (I presume) is a bit more complex. Your brother is effectively giving you £2500 for you to pay off the HP and then transfer the car to him. How much is the car actually worth?  I was a bit confused by ' I owe £3500 for a car finance, my debt left is £2500' - are you saying the value of the car now is £1000?

The OR has no interest in small items that are probably worth less than you think if sold at auction. If you've got an original Banksy on your wall, that might be different.

Willing2Learn

Hi Mandy and welcome to the forum 

As suggested by fatbelly, we need to see your Statement of Affairs (SOA) before you can receive any meaningful advice, guidance and support.

When you complete it, please remember to click on the 'format for MSE' button.  Then you can simply copy & paste the whole lot into this thread.

The link for the SOA is below:

https://www.lemonfool.co.uk/financecalculators/soa.php

sourcrates

SOA is the first step, as we need to know how much debt you have in total, what your income is, and what your outgoings are.

Mandy9966

fatbelly said:

I can only make fairly general comments - if you wanted to post a soa we  could give better guidance.

I'd be interested in why you are going for bankruptcy rather than any other strategy.

"I spoke to debt charity and was advised bankruptcy due to me having less income to even meet my necessary important living expenses, without parents support in the form of food package and helping me pay utility bills, I would be on the streets."

The car on HP (I presume) is a bit more complex. Your brother is effectively giving you £2500 for you to pay off the HP and then transfer the car to him. How much is the car actually worth?  I was a bit confused by ' I owe £3500 for a car finance, my debt left is £2500' - are you saying the value of the car now is £1000?

"I got a car on finance for £3500 I have paid £1000 up until now, and so have another £2500 to settle account, the car is worth now about £2000, but my brother is trying to help me out by paying £2500 to settle the finance."

My total debt is £40,000 which I have managed to pay for the last 5+ years no defaults, but its over I cannot pay anymore, I used debt to pay debt as well which was a huge mistake, of course I also used my wages..

Minkym00

Your brother paying off the balance of the finance is not a problem, but this doesn’t make it his car. It’s still your car as it’s in your name and, if you transfer it into his name right before going bankrupt, then you will be committing a bankruptcy misconduct, possibly get a BRO/U, and the OR will take legal action to claim it back anyway. 

How much are the repayments?

fatbelly

It sounds like your brother is trying to help but he's trying to acquire a 2k car by paying £2500 and getting entangled in your bankruptcy. I don't think it's going to help, and if you have 40k debt, not a homeowner and little surplus income, then it does sound like a bankruptcy situation.

mwarby

If the brother really wants the car, perhaps mention this to the OR or the finance company once bankrupt. If car is genuinely worth around £2k I’m sure the OR or finance company would happily sell him the car for 2.5k (without any risk of bankruptcy misconduct issues)

Mandy9966

Minkym00 the agreed repayments were £100 per month.

It seems trying to do the right thing is going to possibly get me in to trouble, my view on this car thing was I am doing my best to pay back as much as I can before going bankrupt.

 I even rang a company and paid them £450 for an item I bought on a 9 month interest free plan not due until July 2020, because I felt guilt, at the time of purchase I did not think I would be in this situation, but because I have been advised now  to go bankrupt I thought it only best to pay this debt because at-least the other debts have had large amounts of money paid back and interest from me.

 I have also managed to pay four out of the eleven debts up until next month, minimum payment debts low total around £120 month, I now beleave these could be classed as "preferential payments" along with the interest free 9 month £450 I paid, this is all becoming more stressful then I thought.

I as of next month will not be paying any of the debts as I am out of funds.

Minkym00

mwarby said:

If the brother really wants the car, perhaps mention this to the OR or the finance company once bankrupt. If car is genuinely worth around £2k I’m sure the OR or finance company would happily sell him the car for 2.5k (without any risk of bankruptcy misconduct issues)

The OR can't sell it to the brother as they don't own it, the HP company does until it is paid off.

Car finance is a secured loan and so treated differently than unsecured debt. £100 a month is not a ridiculous amount of money and very likely be allowed by the OR is your reasonable living expenses - therefore you may be allowed to keep it. Check the Ts and Cs of the finance agreement and see if there is a termination clause relating to bankruptcy, as many HP companies simply enact their termination clauses on bankruptcy. They take the car back and, any debt remaining after the car is sold, vests in your bankruptcy. If they don't have a bankruptcy termination clause then, if your OR allows you the £100 a month, you just carry on making the repayments.

sammy32683

Yea I had car finance roughly 3000 outstanding when I went BR paying 114 per month. The OR said I can keep it but I've spoken to the finance company and they have said they will seize it now and won't let me keep it.