Ask a StepChange debt advisor a bankruptcy question

trialanderror2020

StepChange_Patience said:

Hi there

Thanks for getting in touch, it sounds like it's a very difficult time for you.

Council debts aren't typically reported on a credit file, it's usually consumer regulated debts such as credit cards or some utilities such as water and electricity and gas. 

If you were to go ahead with a DRO and the application be successful, it would be this which would show on your credit file for six years and impact your ability to obtain credit.

If the appeal wasn't successful and if this was to increase the amount of debt you have, there is a risk your DRO may be revoked (cancelled) and any interest or charges would reapplied on the debt. 

The main differences between the two debt solutions would be the cost of applying for it and how it's applied for, but as my colleague Aiden advised, it sounds like you need to speak to a debt advisor to discuss your options and next steps.

I hope this helps.

Patience

Hi

Thank you for explaining that the DRO may be revoked if my appeals aren't successful and my debt increases.

If the Council applies for a CCJ in respect of the costs orders, wouldn't that be reported on my credit file, the same as any other debt which anyone applies for a CCJ in respect of?

I did complete the StepChange form and it said I should phone to speak to someone because I have mental health problems and disabilities, so I did that and answered some more questions.

I also asked the person I spoke with what would happen if I obtained a DRO and my appeals were subsequently successful and the court agreed that the costs orders should not have been made and quashed them, and whether there was any process for cancelling the DRO or whether I'd be stuck with that on my record for six years despite the court's decision. She said she would look to see if she could find anything about that and put me on hold whilst she looked, but after 5 minutes or so I was cut off, so I guess she couldn't find anything, and I don't know who I could speak to who would know the answer.

If I don't apply for a DRO and the Council gets a CCJ, will they be able to do anything other than send bailiffs round, who I don't have to answer the door to, in an attempt to bully me into giving them money which I don't have, or could they get an order to take money out of my bank account?

StepChange_Patience

trialanderror2020 said:

StepChange_Patience said:

Hi there

Thanks for getting in touch, it sounds like it's a very difficult time for you.

Council debts aren't typically reported on a credit file, it's usually consumer regulated debts such as credit cards or some utilities such as water and electricity and gas. 

If you were to go ahead with a DRO and the application be successful, it would be this which would show on your credit file for six years and impact your ability to obtain credit.

If the appeal wasn't successful and if this was to increase the amount of debt you have, there is a risk your DRO may be revoked (cancelled) and any interest or charges would reapplied on the debt. 

The main differences between the two debt solutions would be the cost of applying for it and how it's applied for, but as my colleague Aiden advised, it sounds like you need to speak to a debt advisor to discuss your options and next steps.

I hope this helps.

Patience

Hi

Thank you for explaining that the DRO may be revoked if my appeals aren't successful and my debt increases.

If the Council applies for a CCJ in respect of the costs orders, wouldn't that be reported on my credit file, the same as any other debt which anyone applies for a CCJ in respect of?

I did complete the StepChange form and it said I should phone to speak to someone because I have mental health problems and disabilities, so I did that and answered some more questions.

I also asked the person I spoke with what would happen if I obtained a DRO and my appeals were subsequently successful and the court agreed that the costs orders should not have been made and quashed them, and whether there was any process for cancelling the DRO or whether I'd be stuck with that on my record for six years despite the court's decision. She said she would look to see if she could find anything about that and put me on hold whilst she looked, but after 5 minutes or so I was cut off, so I guess she couldn't find anything, and I don't know who I could speak to who would know the answer.

If I don't apply for a DRO and the Council gets a CCJ, will they be able to do anything other than send bailiffs round, who I don't have to answer the door to, in an attempt to bully me into giving them money which I don't have, or could they get an order to take money out of my bank account?

Hi there

Thanks for getting back in touch.

I'm glad to hear you filled in our online form but I'm sorry to hear the call dropped, we wouldn't end the call if we didn't have an answer for you, it may have been an issue with the call.

When you can, if you could call us back we'll be able to look at options with you.

If the council apply for a county court judgement (CCJ) this would show on your credit file for six years. You can find out more about the steps they can take for a CCJ if there isn't an arrangement in place or it's unpaid here.

If you obtain a DRO but the appeals are successful, the DRO may still show on your credit file. This is because it's when an order is granted that it would show on your credit file for six years regardless of whether it's revoked.

I hope this helps.

Patience

CFlem2022

Hi, I'm currently in a DAS with step change. I have received a letter from santander who are are one of my debtors, they have informed me that they have sold my debt to a debt collection agency and they will be pursuing the outstanding balance. I thought that since they had agreed to the DAS that this couldn't happen? Thanks 

StepChange_Patience

CFlem2022 said:

Hi, I'm currently in a DAS with step change. I have received a letter from santander who are are one of my debtors, they have informed me that they have sold my debt to a debt collection agency and they will be pursuing the outstanding balance. I thought that since they had agreed to the DAS that this couldn't happen? Thanks 

Hi there

Thanks for getting in touch.

I'm sorry to hear what has happened, protection from your creditors would last until the debt is repaid.

If any of your debts have been sold to collection agencies, if you let our Scottish Debt Advice team know, they'll help you with this.

If you feel like you need additional support with this it would be best to contact us directly, you can find more information about this here.

I hope this helps. 

Patience

TomGym

Hello there,
I'm on the cusp of declaring bankruptcy but have some questions about my company's Private Medical Insurance & an overpayment by my employer that I have been paying off for the last 3 years.
I am on long-term sick leave after my partner had an accident and I became his registered carer. & although I don't receive a salary they still, fortunately, pay for my health insurance to this day which includes partner coverage and has been invaluable.
During the SSP phase of my sick leave my company overpaid their own sick leave contributions to the tune of £6000 over the period of 2 years & during an unsuccessful return to work period.
I have been paying this off at £5 every month which I pay doing a bank transfer.  In addition, we agreed that during the annual end-of-year bonus all employees qualify for, the £680 I would have received in April instead goes towards the overpay and is deducted accordingly on my payslip (so my take-home pay is still zero all year).
The only income I receive is from benefits: ESA, PIP, & UC. 
I also receive Carers Credits (though that's a NI top-up for the pension - I don't actually get any money for it now).
I pay £100 excess each year towards the PMI. 
The overpay debt now stands at £4200.
I have accrued £30,000 in credit card debt during this sickness period trying to juggle everything which after interest hikes and failing 0% balance transfers has all fallen apart from December last year.  Bankruptcy is my best option as it is currently completely impossible keeping up with repayments as everything is being swallowed up in interest & my mental health is shattered.
My questions are:  what will happen to my PMI during bankruptcy?
I intend on including my employer as one of the creditors that will be included in the bankruptcy. 
Is there any scope to continue the PMI in that instance?   
Do I not include my employers overpay in the Bankruptcy at all and not mention the PMI in the first place in my bankruptcy application?   
(If this was an option it would bring my total declared debts to just under £30,000 which then raises the question of going for a DRO instead?!).
Do I declare the carer's credits even though I don't actually receive anything for them or know what their monetary value is in the 1st place? 
Does the annual employer bonus count as earnings in my income declaration on my bankruptcy application when I don't get any take-home pay on my payslip which is zero after tax?
I don't think my employer is paying into the company pension but if they are do I need to declare that also?!

This is all so confusing & draining. 
I should also mention I have Generalised Anxiety Disorder, Autism and ADHD & Heart Disease - which don't help to figure all this stuff out.  More than anything I'm most concerned about losing the PMI so advice on the best options to hang onto it would be appreciated.

Thanks for your time.
Sorry for such a long, specific set of questions.
I appreciate all your help & any advice you might be able to offer.
Sincerely
Tom

StepChange_Aidan

TomGym said:

Hello there,
I'm on the cusp of declaring bankruptcy but have some questions about my company's Private Medical Insurance & an overpayment by my employer that I have been paying off for the last 3 years.
I am on long-term sick leave after my partner had an accident and I became his registered carer. & although I don't receive a salary they still, fortunately, pay for my health insurance to this day which includes partner coverage and has been invaluable.
During the SSP phase of my sick leave my company overpaid their own sick leave contributions to the tune of £6000 over the period of 2 years & during an unsuccessful return to work period.
I have been paying this off at £5 every month which I pay doing a bank transfer.  In addition, we agreed that during the annual end-of-year bonus all employees qualify for, the £680 I would have received in April instead goes towards the overpay and is deducted accordingly on my payslip (so my take-home pay is still zero all year).
The only income I receive is from benefits: ESA, PIP, & UC. 
I also receive Carers Credits (though that's a NI top-up for the pension - I don't actually get any money for it now).
I pay £100 excess each year towards the PMI. 
The overpay debt now stands at £4200.
I have accrued £30,000 in credit card debt during this sickness period trying to juggle everything which after interest hikes and failing 0% balance transfers has all fallen apart from December last year.  Bankruptcy is my best option as it is currently completely impossible keeping up with repayments as everything is being swallowed up in interest & my mental health is shattered.
My questions are:  what will happen to my PMI during bankruptcy?
I intend on including my employer as one of the creditors that will be included in the bankruptcy. 
Is there any scope to continue the PMI in that instance?   
Do I not include my employers overpay in the Bankruptcy at all and not mention the PMI in the first place in my bankruptcy application?   
(If this was an option it would bring my total declared debts to just under £30,000 which then raises the question of going for a DRO instead?!).
Do I declare the carer's credits even though I don't actually receive anything for them or know what their monetary value is in the 1st place? 
Does the annual employer bonus count as earnings in my income declaration on my bankruptcy application when I don't get any take-home pay on my payslip which is zero after tax?
I don't think my employer is paying into the company pension but if they are do I need to declare that also?!

This is all so confusing & draining. 
I should also mention I have Generalised Anxiety Disorder, Autism and ADHD & Heart Disease - which don't help to figure all this stuff out.  More than anything I'm most concerned about losing the PMI so advice on the best options to hang onto it would be appreciated.

Thanks for your time.
Sorry for such a long, specific set of questions.
I appreciate all your help & any advice you might be able to offer.
Sincerely
Tom

Hi Tom,

Thanks for your post. I’m sorry to hear about the situation.

Unfortunately, I’m not able to give advice on how your private medical insurance would be affected in bankruptcy. I’d recommend checking your policy or contacting the insurer directly to discuss the implications before going ahead with an application.

If you’re normally paid a fixed annual salary, the wage overpayment can be considered a ‘salary advance’ and not included as a debt in bankruptcy (although it would be discharged if you leave the company before it’s repaid). If you’re paid per hour worked or on a zero-hours basis it would be included as a debt and written off.

You only need to declare income that is being paid directly to you, carer’s credits and your employer’s contribution to your pension don’t need to be included.

Bonus payments will need to be declared if they’re paid regularly. If you receive a bonus payment during bankruptcy you would need to inform the Official Receiver.

Under the circumstances, I’d recommend getting full debt advice (if you haven’t already) to discuss the debts and your options in more detail. If you’d like to get help from StepChange you can use our online tool or call us to speak with an advisor.

I hope this helps,

Aidan

AMSE123

Hello,

I had a bankruptcy petition served by a creditor in July 2019 and was made bankrupt in June 2020. In September 2019, my previous mortgagee (on a prior property) applied a charging order to my current home which otherwise had no mortgage (the amount of the charging order far exceeds the home value). 

Since bankruptcy, I have received nothing indicating what anyone's intentions are with the home. I was discharged after one year. Currently awaiting an annulment hearing as we believe the creditor debt not due and bankruptcy order wrongfully made. Have not been able to get legal advice due to circumstances. 3 years has just now passed and still I have heard nothing as the receiver seems to be waiting for the annulment hearing that is yet to take place; I do not want to ask and alert anyone to potential issue. 

Does the property re-vest or does the prior charging order mean they can still get the property? Do I now have to insure the property or is that still with the Official Receiver? 

Any help would be greatly appreciated; I have not been able to sleep properly since as keep worrying about waking up to something that will leave my family and I homeless.

StepChange_Aidan

AMSE123 said:

Hello,

I had a bankruptcy petition served by a creditor in July 2019 and was made bankrupt in June 2020. In September 2019, my previous mortgagee (on a prior property) applied a charging order to my current home which otherwise had no mortgage (the amount of the charging order far exceeds the home value). 

Since bankruptcy, I have received nothing indicating what anyone's intentions are with the home. I was discharged after one year. Currently awaiting an annulment hearing as we believe the creditor debt not due and bankruptcy order wrongfully made. Have not been able to get legal advice due to circumstances. 3 years has just now passed and still I have heard nothing as the receiver seems to be waiting for the annulment hearing that is yet to take place; I do not want to ask and alert anyone to potential issue. 

Does the property re-vest or does the prior charging order mean they can still get the property? Do I now have to insure the property or is that still with the Official Receiver? 

Any help would be greatly appreciated; I have not been able to sleep properly since as keep worrying about waking up to something that will leave my family and I homeless.

Hi,

Thanks for your message. I’m sorry to hear what you and your family are going through.

If the home is solely owned, legal title would transfer to the Official Receiver (OR) at the point the bankruptcy order is made. The OR then has three years to sell it, or they can decide to transfer ownership back to you if there’s little or no equity in the property.

If the bankruptcy is annulled, this should put you back into the position you were in before the bankruptcy order. If the OR haven’t sold your home, ownership should be returned to you if it hasn’t already, and any remaining debts will still stand (such as the charging order). If the OR have sold any assets before the annulment, then the transaction can’t be reversed.

As this is quite a complex and unique situation, I would recommend contacting the OR to confirm if ownership of your home has returned to you and to get further guidance. You may also need to seek specialist legal advice in the event of any dispute.

Kind regards,

Aidan

ohtoberich123

Hi all, 

I completed my DPP with stepchange in March 2022 and as far as I was aware all debt confirmed by creditors had been paid back. I have since received two letter from TSB rectifications to advise they over charged me and they owed me money back. Instead of paying back direct to me they have credited it to balances outstanding. I was unaware that `i even had a balance left on the OD and loan account so when I queried it they advised although they aren’t chasing me for it I am still liable. When I read the letter that was issued to all creditors at the end of my DPP it states I am no longer liable for any payments towards the debt owed and they cannot pursue me for the money. It also states if debtor continues to attempt to collect a debt then they are acting unlawfully.

My question is, am I entitled to the money owed? From the letter send out I would say I am. When starting the the DPP surely the creditor is responsible to include all debt and if they don’t it’s their choice. They surely can decide one minute to not recover then 4 years later change their mind.

thanks for any help, it’s all so confusing. 

StepChange_Aidan

ohtoberich123 said:

Hi all, 

I completed my DPP with stepchange in March 2022 and as far as I was aware all debt confirmed by creditors had been paid back. I have since received two letter from TSB rectifications to advise they over charged me and they owed me money back. Instead of paying back direct to me they have credited it to balances outstanding. I was unaware that `i even had a balance left on the OD and loan account so when I queried it they advised although they aren’t chasing me for it I am still liable. When I read the letter that was issued to all creditors at the end of my DPP it states I am no longer liable for any payments towards the debt owed and they cannot pursue me for the money. It also states if debtor continues to attempt to collect a debt then they are acting unlawfully.

My question is, am I entitled to the money owed? From the letter send out I would say I am. When starting the the DPP surely the creditor is responsible to include all debt and if they don’t it’s their choice. They surely can decide one minute to not recover then 4 years later change their mind.

thanks for any help, it’s all so confusing. 

Hi,

Thanks for your post.

If the overdraft and loan were not included in the DPP, the debts might still be outstanding, and the bank could decide to offset the refund against the amount owed in some cases. I’d recommend giving our DAS team a call as they will be able to review your DPP and advise you on your options.

Regards,

Aidan