Ask a StepChange debt advisor a bankruptcy question

johnjaffer

If you're considering bankruptcy, you must speak with a StepChange debt advisor to discuss your options. Our advisors can help you understand the process and what to expect.

Qubec77

Good evening, 

I am considering some debt management solutions as I have debts of £36,000 in unsecured loans and credit card and I am currently paying over £1000 per month in debt repayments.  I caught covid 2 years ago and it hit me badly , I am now suffering with long covid. This has reduced my ability to work overtime and as a result  my income has dropped by 25k each year over the past 2 years. ( 50k total so far ) 

I rent a council property and I have no savings , no shares , no pension and my only asset is a 13 year old car with 85,000 miles on the clock , market value is £2000 and I have 4 children living at home who are all under 18

My question is , as I have no assets or savings and I’m not a home owner , would bankruptcy be a better option over an IVA ? 

Thank you in advance 

StepChange_Allen

Qubec77 said:

Good evening, 

I am considering some debt management solutions as I have debts of £36,000 in unsecured loans and credit card and I am currently paying over £1000 per month in debt repayments.  I caught covid 2 years ago and it hit me badly , I am now suffering with long covid. This has reduced my ability to work overtime and as a result  my income has dropped by 25k each year over the past 2 years. ( 50k total so far ) 

I rent a council property and I have no savings , no shares , no pension and my only asset is a 13 year old car with 85,000 miles on the clock , market value is £2000 and I have 4 children living at home who are all under 18

My question is , as I have no assets or savings and I’m not a home owner , would bankruptcy be a better option over an IVA ? 

Thank you in advance 

Hi there

Welcome to the forum and thanks for posting.

I'm sorry to hear that you're suffering from long Covid, and can appreciate how that's impacted your finances.

In terms of the best solution for you, it will depend on a number of different factors. We can assess your financial situation, present all available options to you, explain what they are and how they work, and make a firm recommendation of what we think is best for you. You can either complete a budget on our website at www.stepchange.org (you can still call up at any point if you wish) or ring our Helpline on 0800 138 1111 and go through everything with an advisor.

I hope this is helpful.

Allen

fatbelly

Qubec77 said:

Good evening, 

I am considering some debt management solutions as I have debts of £36,000 in unsecured loans and credit card and I am currently paying over £1000 per month in debt repayments.  I caught covid 2 years ago and it hit me badly , I am now suffering with long covid. This has reduced my ability to work overtime and as a result  my income has dropped by 25k each year over the past 2 years. ( 50k total so far ) 

I rent a council property and I have no savings , no shares , no pension and my only asset is a 13 year old car with 85,000 miles on the clock , market value is £2000 and I have 4 children living at home who are all under 18

My question is , as I have no assets or savings and I’m not a home owner , would bankruptcy be a better option over an IVA ? 

Thank you in advance 

Quite possibly.

In bankruptcy you pay your surplus income over 3 years, in an IVA it's 5 years. If your income drops an IVA might fail, a bankruptcy wouldn't

Give stepchange a ring and talk though your individual circumstances before you take the plunge.


There's also support available on this forum if you want to start your own thread.

Harry401

Hi

I’m looking for some advice please, I have debt from unsecured loans of 50k. I have a mortgage with 75k remaining on a house worth 95k. Can I sell the house to a family member for 95k, pay the 20k equity off the debt then go bankrupt? 

StepChange_Allen

Harry401 said:

Hi

I’m looking for some advice please, I have debt from unsecured loans of 50k. I have a mortgage with 75k remaining on a house worth 95k. Can I sell the house to a family member for 95k, pay the 20k equity off the debt then go bankrupt? 

Hi Harry

Thanks for posting.

I'm not 100% certain of the OR process with something like this, but I would think that as long as you can evidence that you have sold the property at a fair market price, it should be fine. Just be careful of selling under value as this is something that is likely be picked up on and could bring some consequences. To avoid this, if you haven't already, perhaps get some estate agents to provide you written valuations.

I hope this is helpful.

Allen

Harry401

Thanks for the reply, is it actually worth paying off the 20k equity. For instance if I spent it on a foreign holiday or spent it in a casino does this matter when it comes to bankruptcy?

StepChange_Patience

Harry401 said:

Thanks for the reply, is it actually worth paying off the 20k equity. For instance if I spent it on a foreign holiday or spent it in a casino does this matter when it comes to bankruptcy?

Hi there

Thanks for getting back in touch. 

If the Official Receiver (OR) finds evidence that someone has behaved irresponsibly before they were made bankrupt they could potentially look at extending restrictions, this is called a bankruptcy restriction undertaking (BRU). Spending any equity left in the property on a holiday or in a casino may be viewed as this behaviour. 

The OR would look at it on a case by case basis. 

I hope this helps. 

Patience

beth3735

I have been approved on Monday for my bankruptcy, am I allowed to withdraw cash from my bank for day to day spending please within the next year?

JCS1

Harry401 said:

Thanks for the reply, is it actually worth paying off the 20k equity. For instance if I spent it on a foreign holiday or spent it in a casino does this matter when it comes to bankruptcy?

The OR would expect you to account for the £20k, and you also also need to pay the creditors on a pro-rata basis.  The other option is to keep the £20k in your bank account, and then remit to the OR in due course as an asset.

one other possible solution, would be to use the £20k to use as full and final offers to settle the loans?