Ask a StepChange debt advisor a bankruptcy question

StepChange_Patience

Shadow2512 said:

I have an additional question, I currently work alot of overtime but once my bankruptcy fee is paid I intend to stop this. I am a single parent and luterally spend no time with my child due to my overtime and it is really affecting my mental health. On my income do I put my basic salary with no overtime then explain to the OR about overtime once I'm in contact with them? Thank you

Hi there

Thank you for getting in touch.

I'm sorry to hear the overtime is impacting you being able to see your child and is also affecting your mental health. 

It's great to hear you've applied for breathing space, that is going to help put a pause on any interest and charges, requests for payment and any further action for 60 days so you can get your application put in for your bankruptcy.

If the application asking for the date the debt occurred it may be asking for the date the debt was taken out and for your income you could put your basic salary, if the overtime isn't regular you may have to explain to the Official Receiver why your salary may look different if they ask for proof of income.

You can find out more about the Bankruptcy application here.

I hope this helps. 

Patience

Czeskyy

Hello  and welcome everyone, 
Thank You for accepting my at this forum.

Probably as most people who end up posting questions here I'm in big ( for me ) debt , about 23k with my loan and credit cards.  It's all started going downhill during COVID where i have to top up every day expenses with credit cards. Same time my girlfriend got pregnant and we had second child forcing one of us to stay home and claim Universal credit.

Currently we are not able to pay anymore to any creditors and our budget is really tight basically no penny left from month to month.
We have asset of car on hire purchase where we pay around 200/month , we happy to give up on car ( although we need for kids and work trips ) car is not worth much around 3.5k ( 1800 still on hp ). However even if we give up on car we would have to pay for traveling it will end up pretty much same around 200/month for two adults bus/tube pass.

We contacted few debt help centers where all of them almost forcing us for IVA, offering only 100/month payment over 5-6 years, however our budget don't really allow is for even 10 pounds extra, we already reduced everything to minimum and keeping only things we need for work or school etc. 

Same time as we are on Universal credit we don't really get any extra money even if we start earning more unless our wages actually will double.

All debts are on my name and I'm currently looking for our kids and manage to work from home as self employed sealing whatever I can to make in free time ( arts crafts) I'm very restricted by my kids ( my daughter 2, years and son 12 ) if comes to time I got for work.
My girlfriend she is working full time but not making much.

Mine , our main question is Bancrapcy good option for us ?? For me ?? 

I'm aware about initial fee, and potentially loosing car ( like mentioned it won't change our budget) and a restriction, only what we worry is how whole process will look like , what can be taken from us , how it will affect my girlfriend and kids ??? Bancrapcy sounds very serious but is this really like that.

When offered IVA our budget look very poor like having 350 pounds for food a month for family of 4  just to squeeze this 100 extra for IVA and perspective of 5 years like that is bit depressing.

Please advise on bancrapcy.

We currently thinking of sealing car to we buy any car to settle finance and have money for bancrapcy fee. 

Thank You all for help.
We would appreciate honest opinions and possible experience share.

Thank You 

Martin. 

StepChange_Allen

Czeskyy said:

Hello  and welcome everyone, 
Thank You for accepting my at this forum.

Probably as most people who end up posting questions here I'm in big ( for me ) debt , about 23k with my loan and credit cards.  It's all started going downhill during COVID where i have to top up every day expenses with credit cards. Same time my girlfriend got pregnant and we had second child forcing one of us to stay home and claim Universal credit.

Currently we are not able to pay anymore to any creditors and our budget is really tight basically no penny left from month to month.
We have asset of car on hire purchase where we pay around 200/month , we happy to give up on car ( although we need for kids and work trips ) car is not worth much around 3.5k ( 1800 still on hp ). However even if we give up on car we would have to pay for traveling it will end up pretty much same around 200/month for two adults bus/tube pass.

We contacted few debt help centers where all of them almost forcing us for IVA, offering only 100/month payment over 5-6 years, however our budget don't really allow is for even 10 pounds extra, we already reduced everything to minimum and keeping only things we need for work or school etc. 

Same time as we are on Universal credit we don't really get any extra money even if we start earning more unless our wages actually will double.

All debts are on my name and I'm currently looking for our kids and manage to work from home as self employed sealing whatever I can to make in free time ( arts crafts) I'm very restricted by my kids ( my daughter 2, years and son 12 ) if comes to time I got for work.
My girlfriend she is working full time but not making much.

Mine , our main question is Bancrapcy good option for us ?? For me ?? 

I'm aware about initial fee, and potentially loosing car ( like mentioned it won't change our budget) and a restriction, only what we worry is how whole process will look like , what can be taken from us , how it will affect my girlfriend and kids ??? Bancrapcy sounds very serious but is this really like that.

When offered IVA our budget look very poor like having 350 pounds for food a month for family of 4  just to squeeze this 100 extra for IVA and perspective of 5 years like that is bit depressing.

Please advise on bancrapcy.

We currently thinking of sealing car to we buy any car to settle finance and have money for bancrapcy fee. 

Thank You all for help.
We would appreciate honest opinions and possible experience share.

Thank You 

Martin. 

Hi Martin

Welcome to the forum and thank you for posting.

I'm sorry to hear that things are a really tough at the moment. I can appreciate everything you've said; often multiple changes in situation, such as having a child and the pandemic hitting, can force people into difficulty.

In terms of what you should do, and whether bankruptcy is sensible, it all depends on the exact situation from a financial perspective, but also what you ultimately feel is right for you and your family.

The best place to start is to come and have an advice session with us at StepChange. We'll take down details of your debts, income and spending, assess things, and then give advice, options and recommendations of the best steps to take. 

You can either call our Helpline or do things online if you're comfortable with that. Please see www.stepchange.org for details of how to get started with us via either method.

If say bankruptcy is the right option, we'd explain all the benefits, risks and consequences of it so that you're fully informed before committing to anything.

We look forward to helping you soon.

Allen

mottley2022

Hi all,

I need some advice about my credit report. In December 2016 I was declared bankrupt and in addition was given a 1 year bru so ended December 2018. Looking through various credit reports it appears my bankruptcy is about to drop off in the next month as it’s been 6 years. The only one that seems off is Experian as it’s showing the bru starting in 2017. 

My question is does the 6 years before it drops off start from date of bankruptcy or date of bru?

Any advice much appreciated

StepChange_Aidan

mottley2022 said:

Hi all,

I need some advice about my credit report. In December 2016 I was declared bankrupt and in addition was given a 1 year bru so ended December 2018. Looking through various credit reports it appears my bankruptcy is about to drop off in the next month as it’s been 6 years. The only one that seems off is Experian as it’s showing the bru starting in 2017. 

My question is does the 6 years before it drops off start from date of bankruptcy or date of bru?

Any advice much appreciated

Hi,

Thanks for posting.

The record of the bankruptcy should drop off your credit file six years from the date that the bankruptcy order was made. If your BRU (Bankruptcy Restriction Undertaking) ended after one year, this won’t affect the amount of time the bankruptcy is recorded.

The exception would be if a BRU or BRO (Bankruptcy Restriction Order) is set for longer than the six years, in which case the bankruptcy would remain on the credit file until the end of the BRU/BRO.

I hope this helps,

Aidan

Mike1006

Hi, I’ve been with stepchange for a couple of years now, everything’s going ok. Some of my debts are low enough where I might be able to pay the outstanding balance which would free up more money for the bigger debts. Is this a good idea or is it “frowned upon”. If this is ok then do I do this myself or contact stepchange and they do it ? 

thanks

StepChange_Aidan

Mike1006 said:

Hi, I’ve been with stepchange for a couple of years now, everything’s going ok. Some of my debts are low enough where I might be able to pay the outstanding balance which would free up more money for the bigger debts. Is this a good idea or is it “frowned upon”. If this is ok then do I do this myself or contact stepchange and they do it ? 

thanks

Hi Mike,

Thanks for your post.

Clearing some of your smaller debts isn’t ‘frowned upon’ when you’re in a Debt Management Plan, but we don’t advise doing it as your other creditors could view this as preferential treatment. We would normally recommend offering each one a fair share of the amount you can afford through your normal DMP payments.

If you choose to clear the smaller debts you would need to make direct arrangements with the creditors, but you could then contact us to have them removed from your DMP. Before you decide, I’d recommend giving us a call so we can review the debts and discuss your options.

I hope this helps,

Aidan

trialanderror2020

I currently owe a local authority about £17,000 as a result of three costs orders they obtained against me, in three separate proceedings.

The first was in respect of a claim for £4,000, which should have been allocated to the small claims track where costs aren't awarded but they persuaded a judge at a case management hearing to strike it out and award costs of nearly £6,000 before it was ever allocated. I've applied for permission to appeal this decision.

The second was in respect of an application for permission to seek judicial review from the Upper Tribunal, where costs shouldn't have been awarded because the underlying proceedings started in the FTT where costs aren't awarded, but it awarded them costs of nearly £6,000 anyway. I've applied for permission to appeal this decision.

The third was in respect of an application to seek judicial review of an unlawful decision they made, which they've admitted was unlawful, but they persuaded the court to refuse permission on the papers and award them costs of nearly £5,000, on the grounds that because they've admitted that they broke the law, the claim is academic. I've renewed this application to an oral permission hearing.

So, potentially all three orders could be overturned but at the moment they're insisting that I have to pay them. I have no savings, assets, or car. My only income is disability benefits, plus a small civil service pension but that's deducted from my disability benefits, so I have the same income as if I didn't get that pension.

They know that this is my only income and that I have no savings, because they administer my housing benefit and council tax reduction based on the information the obtain directly from the DWP and my pension provider. Despite which, they've applied for and been granted an N39 order requiring me to attend court to provide information about my means.

Would I qualify for a DRO? Is that better than applying for bankruptcy, or waiting for them to apply to have me declared bankrupt?

StepChange_Aidan

trialanderror2020 said:

I currently owe a local authority about £17,000 as a result of three costs orders they obtained against me, in three separate proceedings.

The first was in respect of a claim for £4,000, which should have been allocated to the small claims track where costs aren't awarded but they persuaded a judge at a case management hearing to strike it out and award costs of nearly £6,000 before it was ever allocated. I've applied for permission to appeal this decision.

The second was in respect of an application for permission to seek judicial review from the Upper Tribunal, where costs shouldn't have been awarded because the underlying proceedings started in the FTT where costs aren't awarded, but it awarded them costs of nearly £6,000 anyway. I've applied for permission to appeal this decision.

The third was in respect of an application to seek judicial review of an unlawful decision they made, which they've admitted was unlawful, but they persuaded the court to refuse permission on the papers and award them costs of nearly £5,000, on the grounds that because they've admitted that they broke the law, the claim is academic. I've renewed this application to an oral permission hearing.

So, potentially all three orders could be overturned but at the moment they're insisting that I have to pay them. I have no savings, assets, or car. My only income is disability benefits, plus a small civil service pension but that's deducted from my disability benefits, so I have the same income as if I didn't get that pension.

They know that this is my only income and that I have no savings, because they administer my housing benefit and council tax reduction based on the information the obtain directly from the DWP and my pension provider. Despite which, they've applied for and been granted an N39 order requiring me to attend court to provide information about my means.

Would I qualify for a DRO? Is that better than applying for bankruptcy, or waiting for them to apply to have me declared bankrupt?

Hi,

Thanks for posting.

Based on the details you’ve provided it looks like you would qualify for a Debt Relief Order (DRO). You should be eligible to apply as long as:

• You live in England, Wales or Northern Ireland

• Your total debts are less than £30,000 (£20,000 in NI)

• You have less than £75 left over each month after paying your priority bills and living costs (£50 in NI)

• Your vehicle is worth less than £2,000 (£1,000 in NI)

• Your other assets are less than £2,000 (£1,000 in NI)

DRO is usually a preferable option to bankruptcy, as it’s cheaper and can give you a fresh start after 12 months. However, you’d need to get full debt advice before you decide. If you’d like to get help from StepChange you can use our online tool or give us a call to speak with an advisor.

Please be aware that any costs orders relating to family proceedings are not written off in DRO or Bankruptcy and would still have to be paid. Costs relating to other cases can be written off.

The N39 (Order to attend court for questioning) is to help the creditor to gather more information about your situation and decide on the best way to enforce a debt.

There are some more details on the Order to Obtain Information process here.

Creditors are unlikely to apply to make you bankrupt as they would have to pay for the administration and legal costs. They usually only consider this if they believe that you have enough income or assets for them to get their money back.

I hope this helps,

Aidan

trialanderror2020

StepChange_Aidan said:

Hi,

Thanks for posting.

Based on the details you’ve provided it looks like you would qualify for a Debt Relief Order (DRO). You should be eligible to apply as long as:

• You live in England, Wales or Northern Ireland

• Your total debts are less than £30,000 (£20,000 in NI)

• You have less than £75 left over each month after paying your priority bills and living costs (£50 in NI)

• Your vehicle is worth less than £2,000 (£1,000 in NI)

• Your other assets are less than £2,000 (£1,000 in NI)

DRO is usually a preferable option to bankruptcy, as it’s cheaper and can give you a fresh start after 12 months. However, you’d need to get full debt advice before you decide. If you’d like to get help from StepChange you can use our online tool or give us a call to speak with an advisor.

Please be aware that any costs orders relating to family proceedings are not written off in DRO or Bankruptcy and would still have to be paid. Costs relating to other cases can be written off.

The N39 (Order to attend court for questioning) is to help the creditor to gather more information about your situation and decide on the best way to enforce a debt.

There are some more details on the Order to Obtain Information process here.

Creditors are unlikely to apply to make you bankrupt as they would have to pay for the administration and legal costs. They usually only consider this if they believe that you have enough income or assets for them to get their money back.

I hope this helps,

Aidan

Thanks, it sounds like a DRO is my best option then.

The local authority's solicitors have just told me that they would recommend to their client that they stay the enforcement proceedings if I agree to pay them £75/month from my means-tested income, otherwise they are instructed "to pursue all enforcement measures, which might include enforcement against the capital value of any pension, attachment of monthly pension payments or ultimately a bankruptcy petition."

Can they make the civil service pension provider cash-in my pension and pay them whatever it's worth (not much I imagine, as it's only £600/year and I've already been receiving it for 30 years since I was medically retired)? If they can attach my £50 monthly pension payments, the DWP will still deduct that amount from my means-tested disability benefits even though I'm not receiving it, so my income will be £50/month less than what the Government says I need to live with my disabilities.

The local authority gave me a £300 grant to buy a new fridge last week because my current fridge is 20 years old and knackered and I'm on a low income and have no savings, and now they're asking me to pay them £900/year!