Bankruptcy and car !

bacchuscook

Sorry if this was asked on this forum before, but I couldn't find something recent.
I am asking for a friend who is considering bankruptcy and has a full paid car worth 10K he says !
In Jan he took a loan to pay off the car finance, loan had less interest, March covid-19 and suddenly lost his work and likely to be the case until next Jan !
He has about 60K outstanding, overdrafts, loans (used to pay for car), credit cards and store cards. He kept on paying during covid but in June he asked for a 3 month suspension of payment expecting he will return to work or something, so now he ran out of savings and his payments are causing him huge stress/depression and he has teenage kids and doesn't want to get calls at home and having to discuss the finances infant of them etc etc etc.

The question is, will his car be considered part of the assets, or is he better off selling it and having the money to pay for some house work and school stuff before he declares bankruptcy.

I advised him to check with CAB, but some of his mates are saying that he sells his car or register it in his wife's name and then she can take the kids to school ( 1 young kid) etc etc and if the car is gone then he can't even work as an Uber or anything ....

Suggestions ?

bradders1983

He cant just transfer the car and then declare bankrupcy, they take a very very dim view of this.

They probably wont look too kindly to him selling the car and then using the money to pay things off either, but probably slightly worse than the above.

I would tell him to ignore his mates.

If his car is worth over a grand they are likely to take it.

sourcrates

You may be allowed to keep your vehicle or car under the following circumstances:

• The vehicle is worth less than a reasonable replacement value.
• The sale of the vehicle will produce less than £500 for your Creditors. This can be the case when the car is owned by more than one person.
• The vehicle is essential for work or your vocation. This means the car is used for work, for example a Taxi, or when there is no reasonable alternative for transport to and from a place of work. If you are the full time carer of a disabled person, this may be classed as your vocation and an exemption can be granted on these grounds.
• A car is deemed necessary to ‘meet basic domestic needs’ where there is no realistic alternative.

bradders1983

Ah I missed the taxi bit. Well there you go then, its a work essential and he can easily prove this.

MalMonroe

Your friend needs to contact StepChange, which is the best debt help agency in my opinion. They are just so good. They know everything. Well, not everything but everything anyone needs to know about debt and bankruptcy. 

Here's the link    https://www.stepchange.org/

I agree with bradders1983, tell him to ignore his 'mates'. They don't know!

Minkym00

He will need to prove that he is an actual Uber driver for the vehicle to be exempted. Just saying that he’s ‘going to be / could be’ may very well not fly with the OR. If it is seized he won’t be left without a car, he will be given £1000 from the sale of his car to get a replacement.

MinuteNoodles

bradders1983 said:

Ah I missed the taxi bit. Well there you go then, its a work essential and he can easily prove this.

Unless the car is a registered private hire vehicle with a plate from the local council licencing authority the car is going. You can't "just decide to do Uber", you have to apply for a taxi driver's badge and a Private Hire plate from the local authority. The application process for that is normally weeks, I'd expect months at this point and an OR is going to look at someone who has just decided to go through the process when declaring with a great deal of amount of suspicion. 

bradders1983

Hmm. I was giving the OP the benefit of the doubt tbh and assumed his mate was already working as a taxi driver. 

Grumpy_chap

The OP listed a fully paid car as an asset, but also then stated "about 60K outstanding, overdrafts, loans (used to pay for car), credit cards and store cards".

Is the car security for the car loan?

Minkym00

The OP states that the friend paid off the car HP with a loan. So the loan is not secured debt.

Grumpy_chap

Minkym00 said:

The OP states that the friend paid off the car HP with a loan. So the loan is not secured debt.

Thank you - I missed that.