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Advice on next steps having been advised to go BR

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Hello,
I'm a DFW forumite and am trying to help a family member, who has been struggling with debt for some time now and having punched his numbers into the SC online debt remedy tool, the recommendation is bankruptcy.  Initially, when he reached out to me, it seemed that a DMP would be the best option - but now I have more information to hand, it would take him in excess of 10 years to clear his debts and he cannot cope with that thought.

His partner is 1 year into an IVA and having seen the paperwork - she's included his income and some of his outgoings (car related expenses) and all the joint household expenses are also included.  

So I'm not quite sure how to proceed with his online application.  I assume he will have to do likewise and include her income and, again, all the joint household expenses and her IVA payment.  Or does he just include his income, his proportion of the household expenses (which I guess can be pro-rated based on their income levels).  
He has thought that maybe he should go down the IVA route, which might be worth exploring - perhaps.  

His debt is approx £28k and his car isn't worth more than £1k - his 2 main creditors (both £11k each) have already defaulted his accounts and he has a £3k O/D with his former bank.  Other than those he has 2 other smaller loans around £1.5k each.  Oh and they rent, so have no other assets to protect.

There is a further complication in that his income has fluctuated over the last 6 months or so, largely due to long term sickness and receiving little more that SSP and then he did a phased return to work and was just getting back to his full income when CV-19 rocked up and he was furloughed on 80% of his pay.  He's now back full time, but still not getting his full pay, yet.  So should he hold off on his application until his income returns to what it should be (with fingers crossed that it does) and assuming he doesn't get made redundant.  Or should he just apply using his last 6 months as an average.  Is there a way to find out what the allowances etc are, I can't find anything online.  But if not can he fill in the form, pay the fee and discuss with the OR before committing - would that make sense, or is that not how it works?

For me the issue is that whilst I really want to help, I have little to no knowledge or experience of BR and IVAs and whilst I know these solutions can be the right one for many, I don't want to be pushing him down the wrong route (BR or IVA)  I can't get him to talk to NDL or any other - he's quite fragile at the moment.   

One thing I'm not doing is rushing him into anything and am reading as much as I can, but any advice offered (or insight, or shared experiences) will be gratefully received.

Thank you :) 

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Comments

  • sourcrates
    sourcrates Posts: 29,171 Ambassador
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    Hi,
    He has no assets to protect, and his job is a bit uncertain due to prior health issues, not an ideal candidate for an IVA, I have  to say, as they are really meant for people with stable incomes, who have assets they wish to protect.
    I would rule out IVA on the basis of what you have told us, bankrupcy is the better choice here, if he has a reasonable income, then an IPA (income payment arrangement) is liklely, that can last for 3 years normally, but the bankrupcy will be discharged after 12 months.
    As for the budget allowences, fatbelly may be able to help out there, they are not public knowledge, but resonable assumptions can be made, income should be household income i would assume, again fatbelly is your oracle here, best to over budget, and let the OR reduce them if nessessary.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Suseka97
    Suseka97 Posts: 1,562 Forumite
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    Thanks Sourcrates - it's kinda what I've been leaning towards.  He's quite happy to go down the BR route, he just wants things sorted so he can move on.  No doubt his financial situation has impacted his mental health quite significantly over the last several months and he's looking for the most sensible way out of it.  He's keen to draw a line and start afresh.  

    Do you think an OR would allow me to assist, help with the telephone interview aspect?  I know that will be something he'll find very difficult - and he's undergoing counselling for his mental health issues at the moment.  

    It's going to have to wait a while anyway, because until his income is a little more stable - it'll be difficult to evidence a consistent income level, unless they'll take an average over the last 6 months as the starting point to get the ball rolling.

    You've certainly given me hope there's light at the end of the tunnel for him - it's tough when you see someone you care about suffer the way he has been.
  • sourcrates
    sourcrates Posts: 29,171 Ambassador
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    You don`t need an income to go bankrupt, the arrangement can be changed as your circumstances do, within the first 12 months before discharge anyway.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing forumteam@moneysavingexpert.com. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
  • Suseka97
    Suseka97 Posts: 1,562 Forumite
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    Another quick question about this...

    I had believed his car to be worth less than £1k, but I checked this on Parkers Guide and its coming out about £1,500 - so would this mean he would have to give that up and purchase one for less than £1k, or could he possibly keep it?  His car is one of his most precious possessions!  Would there be an option for someone to pay the OR whatever the actual difference is above the £1k.

    Also, I've read that sometimes the OR won't consider a car essential if he/she feels alternative, public, transport is sufficient to commute even if it were inconvenient.  He works about 30 miles from where he lives and does have to be able to be flexible with his start and finish times, so a car is the most efficient form of transport for him.

    I had a good read through Debt Camel's website and its a useful resource, but it would be helpful to know a little more about the bankruptcy process from application to decision making from anyone in a similar situation, or knowledge or this method of debt solution.
  • luvchocolate
    luvchocolate Posts: 3,272 Forumite
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    edited 12 August 2020 at 8:01AM
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    Hi I had to have a car as a relief manager covering 36 shops.
    Mine was valued at £1500 and was allowed to keep it. 
    I have to say my examiner was very kind and moved my SOA around to make it work. 
    My experience was very positive. 
  • Suseka97
    Suseka97 Posts: 1,562 Forumite
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    Thanks, that's helpful to know.

    This may seem a strange question, because applying for BR means you need to go bankrupt due to your circumstances - but I'm trying to prepare him for what's coming down the line.  So how does the process work... in broad terms?  Did you complete the online form, pay your fee and then have an telephone interview?  Is it at that point you decide whether to go forward, or is it that once you've applied and the interview takes place then you've essentially agreed to whatever the outcome is.
  • luvchocolate
    luvchocolate Posts: 3,272 Forumite
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    edited 12 August 2020 at 10:07AM
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    Mine was 8 years ago so it was done through the courts. 
    Now it's all online I believe you submit your application and fee and within a couple of days its approved. So technically you have been declared B.R.
    Then you get a phone call again usually same week to discuss your everyday bank account. 
    Then at a later date another call the date arranged to suit you to go through things in more detail. 
    This can take anything from 15 minutes to a lot more depending upon your situation 
  • Suseka97
    Suseka97 Posts: 1,562 Forumite
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    Again thanks luvchocolate - much appreciated.  I can imagine it being a lot more 'intense' having to go through the court back in the day.

    I've read more on the Debt Camel website and I'm going to encourage him to speak with national debtline before taking the plunge.  Hopefully they will be able to indicate whether an IPA will be put in place, and how much - also give him some assurances, or advice, re the car.  I'm going to give him the money to pay the BR fee, so hopefully in the next month or two he'll be in a better place.

    The one fly in the ointment might be his partner who is already in an IVA and keen that he does likewise.  So I'll need to convince her that BR is the better option here.  She took advice from friends and went into the IVA with less than £10k of debt, so I'm not convinced it was the right choice.  That being said, she's happy enough with the arrangement and will pay back about 2/3rds of her overall debt.  The thing that swung it for her was that the company allowed her to flex her I&E to a point she was happy with and she kept her car which was more than £1k in value.

    Anyway, I have more reading to do and appreciate all and any advice :) 
  • Suseka97
    Suseka97 Posts: 1,562 Forumite
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    Have hit a hurdle.. just as I was getting everything together to submit the BR application.  I visited my relative and found out that he's been sign off (yet again) with depression and worse still, he has to attend a disciplinary hearing at his workplace due to unauthorised absences.  From what I've gleaned he's been heading to work, but not arriving -instead he's driven off to some remote location and just sat in his car all day :(

    He eventually went back to his GP and has been put back on medication for his depression and hopefully will be re-referred for counselling.  He'll have to deal with the disciplinary, but I've insisted he take someone in with him.  His memory is very poor, probably a result of the meds, and he's quite confused about a lot of things.

    So, I know he doesn't have the mental capacity to handle this right now and I'm going to write to his creditors to update them.. This has been going on for over a year.  I've been reading up on mental health and debts, trying to understand how creditors respond to people suffering mental illness, but it's a minefield.

    Once he's a little more settled I will sit with him and get him to call national debt line for proper advice, but in the meantime I'm keeping my fingers crossed that his creditors don't escalate collection activity, given the situation.  I have copies of his sickness certificate that I'll send off to them to try and hold them off for a while longer.  

    It's such a stressful situation and I do feel a little overwhelmed, but am glad I can be of some help to him because of the wonderful advice and support of this forum - so thanks to all :) 
  • Suseka97
    Suseka97 Posts: 1,562 Forumite
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    Am looking for a bit more advice re this situation.....
    So, I've been helping out by contacting his creditors to appraise them of the situation, both in relation to his mental health (providing copies of the various sick (fit for work) certificates) and how he struggles financially as a result.  They've all be very understanding and his two major debts (both around £12k each) have now defaulted his account.  Barclays have refunded some of the overdraft charges and the only fly in the ointment is Capital One, who refuse to default in the belief they are 'helping' in not doing so.

    Anyway, he is now in his second period of being furloughed.  He had gone back to work for a few weeks and then the 2nd lockdown arrived and he works in an industry that provides to the hospitality trade, so his work is non-existent when pubs shut! His employer is rubbish at getting the furlough pay right as well and he's still paying back for some overpayment they claim they made back in 2019 (during a longer bout of sickness absence) and they've never provided the actual proof!   I've tried to get. him to chase this up, but it's difficult. 

    I'm now trying to encourage him to revisit the whole going BR topic  - but one of the questions he keeps asking is how much his IPA might be (which I cannot answer) and what he should say regarding his income.  It's so fluid given the overpayment he has to repay and ongoing furlough situation.  I'm not sure if the OR would look at past payslips and determine that for themselves, but then I don't know what he would have to put down on the application.  If he puts down what he would normally take home, assuming no sickness absence (when he only gets paid SSP) or furlough (80% of pay) - then if the IPA was based on that, it could be outdated quite quickly if one or the other happens again.

    This is a sticking point and I need to be able to explain the 'what ifs' and of course I know I also need to get him to speak to a debt adviser, which I will do as soon as I can see him again.  We live quite a distance away.

    I should add that he lives with his girlfriend and she pays into an IVA (has done for little over a year now) and she's included certain contributions from him in that calculation.  There was no 'scientific' apportionment - her IVA just took the figures she provided, so I'm not sure how he should reflect that on the application.  Of course I've said all of this can be talked through with a debt adviser and the OR in time.  Again makes the 'what would the IPA be' question more complicated and beyond my ability to advise.  


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