Bankruptcy Advice

Sky103

Hi All, 

Unfortunately I have ended up in a bad situation arising from being a personal guarantor to a business. I left the business and directorship in 2018 but the business started to struggle and was liquidated in 2020. I was a guarantor for loans in excess of 300K. 

I have been employed in full time work since I left but have had numerous CCJ's due to the outstanding debt and now a bankruptcy order. My partner does not work at the moment as we had a baby last year so I work 2 jobs to cover our expenses. 

Having struggled with any sort of finance and renting for the past few years I now face possible bankruptcy. I think I have researched all avenues including IVA and I don't think I could realistically agree any monthly figure with creditors or keep up payments without causing us to struggle. 

We had to rent a room from my partners parents as no one would accept my credit. I pay rent of 1200 monthly which includes electric, gas, water, council tax and broadband.

When we had to move I rented a storage container for 108 a month as we had nowhere to put our belongings. There is nothing of real value, mainly a bed and sofa belonging to my partner and general household items. 
I also pay finance of 55 per month for a ring I bought my partner in 2018 - the payments are due to finish soon, would this be an issue or classed as my asset?

I have filled out a SOA below and would appreciate any advice. I am worried I will be placed on an IPO potentially for 3 years. I am at -170 due to container and finance payments but we tighten the food budget every month to cover this or borrow from parents. I have input 500 as cash I might have at the time. Do my expenses look reasonable? or is there anything I could have missed?

Many thanks

Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary	Amount(£)
Total monthly income	2,820
Monthly expenses (incl. HP & secured loans)	2,990
Available for debt repayments	-170
UNsecured debt repayments	0
Amount short for making debt repayments	-170

Personal Balance Sheet Summary	Amount(£)
Total Assets (things you own)	500
Total Secured & HP Debt	-0
Total Unsecured Debt	-0
Net Assets	500

Household Information

Number of adults in household	2
Number of children in household	1
Number of cars owned

Income, Expense, Debt & Asset Details

Income	Amount(£)
Monthly income after tax	2820
Partners monthly income	0
Benefits	0
Other income	0
Total monthly income	2820

Expenses	Amount(£)
Mortgage	0
Secured/HP loan payments	0
Rent	1200
Management charge (leasehold property)	0
Council tax	0
Electricity	0
Gas	0
Oil	0
Water Rates	0
Telephone (land line)	0
Mobile phone	10
TV Licence	0
Satellite/Cable TV	30
Internet services	0
Groceries etc.	500
Clothing	100
Petrol/diesel	250
Road tax	13
Car Insurance	50
Car maintenance (including MOT)	30
Car Parking	10
Other travel	0
Childcare/nursery	0
Other child related expenses	300
Medical (prescriptions, dentists, opticians etc.)	30
Pet Insurance/Vet bills	0
Buildings Insurance	0
Contents Insurance	0
Life Assurance	0
Other Insurance	0
Presents (birthday, christmas etc.)	20
Haircuts	50
Entertainment	0
Holiday	20
Emergency Fund	20
Finance	55
Storage container	108
Car lease	194
Total monthly expenses	2990

Secured & HP Debt Description	Debt(£)	Monthly(£)	APR(%)
Mortgage	0	(0)	0
Secured & HP Debt totals	0	-	-

Unsecured Debt Description	Debt(£)	Monthly(£)	APR(%)
Unsecured Debt totals	0	0	-

Asset Description	Value (£)
Cash	500
House Value (Gross)	0
Shares and bonds	0
Car(s)	0
Other assets (e.g. endowments, jewellery etc)	0
Total Assets	500

emmajones1976

Who has issued a bankruptcy order against you? Are they aware you have no assets?

Sky103

Thanks for your reply.

It's one of the companies I had signed a guarantor agreement with. I assume they know I have no assets, it could be a scare tactic, but I have nothing to offer them. 

Either way, it could be inevitable at some point for me due to the many CCJ's I have and although they should clear after 6 years I have read they could be sold on before this and the cycle repeats. 

ManyWays

£1200 a month to rent one room seems like a lot even including bills. 
why pay £108 a month for storage for stuff that has little or no value?
no child benefit?
£55 a month finance payments on jewelry doesnt sound acceptable. 
What are the £300 in child costs? 
Can your in laws not act as guarantor so you can rent a flat, get the stuff out of storage and have a more normal set of bills to show the OR? 

sourcrates

Sky103 said:

Thanks for your reply.


Either way, it could be inevitable at some point for me due to the many CCJ's I have and although they should clear after 6 years I have read they could be sold on before this and the cycle repeats. 

That is incorrect.

County court judgements stay on your file for 6 years, then are automatically removed, regardless of any other actions taken.

The cycle does not repeat itself, ever.

A bankruptcy would include any CCJ debt you have, your judgements are frozen for 12 months, until discharge, they are then counted as been settled, although there is no way to mark them as such in bankruptcy.

Unless you are HMRC, its very unlikely any company will spend £680 making you bankrupt, and not having anything to show for it, just doesn`t make financial sense does it, I would say its a very hollow sounding last ditch attempt to get money from you.

However if they are serious, it may be of benefit to you, but the ring finance will not be allowed, and should vest in your bankruptcy, the ring itself may be classed as an asset, dependant on value, storage fee`s will be stopped, sell the stuff if its of no value, or dump it.

Minkym00

Small correction, sourcrates. The £680 is the adjudicator fee to apply for your own bankruptcy. For someone else to make you bankrupt the costs are £990 petition deposit and £302 for court costs. Plus, a company is going to use a solicitor to do the whole thing for them so costs are going to ramp up.

So….questions. You say you have been issued with a bankruptcy order, then mention possible bankruptcy. I am going to assume you have been issued with either a statutory demand (the first stage of the bankruptcy process) or a bankruptcy petition? I imagine it’s the stat demand? Have you made it clear that you have no assets and they would be wasting their money by pursuing it to bankruptcy?

The ring payments will vest if you do go bankrupt. Tell the OR its an engagement ring (even if it’s not) and you won’t be expected to surrender it.

luvchocolate

Minky trust your advice always but one poster had to have to give up their engagement ring a while ago 

Sky103

Many thanks for your replies. 

ManyWays said:

£1200 a month to rent one room seems like a lot even including bills. 
why pay £108 a month for storage for stuff that has little or no value?
no child benefit?
£55 a month finance payments on jewelry doesnt sound acceptable. 
What are the £300 in child costs? 
Can your in laws not act as guarantor so you can rent a flat, get the stuff out of storage and have a more normal set of bills to show the OR? 


We moved in with my in laws and did not contribute towards any living costs for several months. Therefore, I began paying a monthly cost of £600 (to cover the back dated rent) plus an additional £600 (to cover the rent for that month), hence the £1200. The rent is due to be returned to the normal £600 within the next couple of months as per my agreement with my father in law. 

I forgot to add in the child benefit, this is being claimed by my partner. However, I will add this in. 

I estimated £300 on other child costs to cover things like nappies, baby milk, baby food, wipes etc. Does this seem excessive? I will reduce this to £200 and should this be added to groceries instead?

After reading the advice, I will pay the outstanding £100 for the ring so that the finance agreement will then be finished.

We tried to rent another property before moving in with my in laws. However, after the agents did their background checks they declined us due to the number of CCJ's I had, even with a guarantor. I guess this would depend on the landlord. 

sourcrates said:

Sky103 said:

Thanks for your reply.


Either way, it could be inevitable at some point for me due to the many CCJ's I have and although they should clear after 6 years I have read they could be sold on before this and the cycle repeats. 

That is incorrect.

County court judgements stay on your file for 6 years, then are automatically removed, regardless of any other actions taken.

The cycle does not repeat itself, ever.

A bankruptcy would include any CCJ debt you have, your judgements are frozen for 12 months, until discharge, they are then counted as been settled, although there is no way to mark them as such in bankruptcy.

Unless you are HMRC, its very unlikely any company will spend £680 making you bankrupt, and not having anything to show for it, just doesn`t make financial sense does it, I would say its a very hollow sounding last ditch attempt to get money from you.

However if they are serious, it may be of benefit to you, but the ring finance will not be allowed, and should vest in your bankruptcy, the ring itself may be classed as an asset, dependant on value, storage fee`s will be stopped, sell the stuff if its of no value, or dump it.

That is somewhat of a relief if they do get removed after 6 years.

I have read elsewhere that they can sell the debt on and the 6 years is then extended. Are they also not able to apply to the court to extend the 6 year deadline? There is no way I could afford to pay the debt so I am worried my credit would never recover. 

I will get rid of the storage container. Either sell the contents or dump them. We kept them as we thought we could find a rental property when my partner returned to work. However, this was not possible due to her personal circumstances.

Minkym00 said:

Small correction, sourcrates. The £680 is the adjudicator fee to apply for your own bankruptcy. For someone else to make you bankrupt the costs are £990 petition deposit and £302 for court costs. Plus, a company is going to use a solicitor to do the whole thing for them so costs are going to ramp up.

So….questions. You say you have been issued with a bankruptcy order, then mention possible bankruptcy. I am going to assume you have been issued with either a statutory demand (the first stage of the bankruptcy process) or a bankruptcy petition? I imagine it’s the stat demand? Have you made it clear that you have no assets and they would be wasting their money by pursuing it to bankruptcy?

The ring payments will vest if you do go bankrupt. Tell the OR its an engagement ring (even if it’s not) and you won’t be expected to surrender it.

They are using a solicitor and yes I have been issued with a bankruptcy petition. They have been chasing for a while and are aware that I have no assets, so it is either out of spite or a scare tactic. 

The ring is actually an engagement ring so I would not want to be forced to surrender it. I will be paying the remaining £100 this month to clear the finance.

If I made the suggested changes and my rent was reduced to £600, the result would be as shown below in the SOA. Therefore, if I am now showing £773 leftover, would it be likely that I would be forced into an IPO?

Further to this, my second job brings a total income of £300 a month, do you think I am better off leaving this job before I am potentially made bankrupt? I would like to remain in my second job. Therefore, is it worth waiting for the outcome of the hearing before I make a decision?

Also, do they look at your income on the day that you are declared bankrupt or are there any specific timescales that they have to adhere to?  

Please could you also advise me if I am missing any costs that I can add into the below SOA? e.g. can we input childcare as this may be a cost in the coming year?

Lastly, I have input £500 for cash assets, would this be taken from me?

Sorry for all the questions, I never thought I would be in this position.

Many thanks for your advice.

Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary	Amount(£)
Total monthly income	2,900
Monthly expenses (incl. HP & secured loans)	2,127
Available for debt repayments	773
UNsecured debt repayments	0
Amount left after debt repayments	773

Personal Balance Sheet Summary	Amount(£)
Total Assets (things you own)	500
Total Secured & HP Debt	-0
Total Unsecured Debt	-0
Net Assets	500

Income, Expense, Debt & Asset Details

Income	Amount(£)
Monthly income after tax	2820
Partners monthly income	0
Benefits	80
Other income	0
Total monthly income	2900

Expenses	Amount(£)
Mortgage	0
Secured/HP loan payments	0
Rent	600
Management charge (leasehold property)	0
Council tax	0
Electricity	0
Gas	0
Oil	0
Water Rates	0
Telephone (land line)	0
Mobile phone	10
TV Licence	0
Satellite/Cable TV	30
Internet services	0
Groceries etc.	500
Clothing	100
Petrol/diesel	250
Road tax	13
Car Insurance	50
Car maintenance (including MOT)	30
Car Parking	10
Other travel	0
Childcare/nursery	0
Other child related expenses	200
Medical (prescriptions, dentists, opticians etc.)	30
Pet Insurance/Vet bills	0
Buildings Insurance	0
Contents Insurance	0
Life Assurance	0
Other Insurance	0
Presents (birthday, christmas etc.)	20
Haircuts	50
Entertainment	0
Holiday	20
Emergency Fund	20
Car lease	194
Total monthly expenses	2127

Secured & HP Debt Description	Debt(£)	Monthly(£)	APR(%)
Mortgage	0	(0)	0
Secured & HP Debt totals	0	-	-

Unsecured Debt Description	Debt(£)	Monthly(£)	APR(%)
Unsecured Debt totals	0	0	-

Asset Description	Value (£)
Cash	500
House Value (Gross)	0
Shares and bonds	0
Car(s)	0
Other assets (e.g. endowments, jewellery etc)	0
Total Assets	500

Many thanks for your time and kind advice. 

Sky103

Many thanks for your replies. I realized after posting my previous post that it was all grey as I typed in the quote area. Please see below which should be easier to read.  

ManyWays said:

£1200 a month to rent one room seems like a lot even including bills. 
why pay £108 a month for storage for stuff that has little or no value?
no child benefit?
£55 a month finance payments on jewelry doesnt sound acceptable. 
What are the £300 in child costs? 
Can your in laws not act as guarantor so you can rent a flat, get the stuff out of storage and have a more normal set of bills to show the OR? 

We moved in with my in laws and did not contribute towards any living costs for several months. Therefore, I began paying a monthly cost of £600 (to cover the back dated rent) plus an additional £600 (to cover the rent for that month), hence the £1200. The rent is due to be returned to the normal £600 within the next couple of months as per my agreement with my father in law. 

I forgot to add in the child benefit, this is being claimed by my partner. However, I will add this in. 

I estimated £300 on other child costs to cover things like nappies, baby milk, baby food, wipes etc. Does this seem excessive? I will reduce this to £200 and should this be added to groceries instead?

After reading the advice, I will pay the outstanding £100 for the ring so that the finance agreement will then be finished.

We tried to rent another property before moving in with my in laws. However, after the agents did their background checks they declined us due to the number of CCJ's I had, even with a guarantor. I guess this would depend on the landlord. 

sourcrates said:

Sky103 said:

Thanks for your reply.


Either way, it could be inevitable at some point for me due to the many CCJ's I have and although they should clear after 6 years I have read they could be sold on before this and the cycle repeats. 

That is incorrect.

County court judgements stay on your file for 6 years, then are automatically removed, regardless of any other actions taken.

The cycle does not repeat itself, ever.

A bankruptcy would include any CCJ debt you have, your judgements are frozen for 12 months, until discharge, they are then counted as been settled, although there is no way to mark them as such in bankruptcy.

Unless you are HMRC, its very unlikely any company will spend £680 making you bankrupt, and not having anything to show for it, just doesn`t make financial sense does it, I would say its a very hollow sounding last ditch attempt to get money from you.

However if they are serious, it may be of benefit to you, but the ring finance will not be allowed, and should vest in your bankruptcy, the ring itself may be classed as an asset, dependant on value, storage fee`s will be stopped, sell the stuff if its of no value, or dump it.

That is somewhat of a relief if they do get removed after 6 years.

I have read elsewhere that they can sell the debt on and the 6 years is then extended. Are they also not able to apply to the court to extend the 6 year deadline? There is no way I could afford to pay the debt so I am worried my credit would never recover. 

I will get rid of the storage container. Either sell the contents or dump them. We kept them as we thought we could find a rental property when my partner returned to work. However, this was not possible due to her personal circumstances.

Minkym00 said:

Small correction, sourcrates. The £680 is the adjudicator fee to apply for your own bankruptcy. For someone else to make you bankrupt the costs are £990 petition deposit and £302 for court costs. Plus, a company is going to use a solicitor to do the whole thing for them so costs are going to ramp up.

So….questions. You say you have been issued with a bankruptcy order, then mention possible bankruptcy. I am going to assume you have been issued with either a statutory demand (the first stage of the bankruptcy process) or a bankruptcy petition? I imagine it’s the stat demand? Have you made it clear that you have no assets and they would be wasting their money by pursuing it to bankruptcy?

The ring payments will vest if you do go bankrupt. Tell the OR its an engagement ring (even if it’s not) and you won’t be expected to surrender it.

They are using a solicitor and yes I have been issued with a bankruptcy petition. They have been chasing for a while and are aware that I have no assets, so it is either out of spite or a scare tactic. 

The ring is actually an engagement ring so I would not want to be forced to surrender it. I will be paying the remaining £100 this month to clear the finance.

If I made the suggested changes and my rent was reduced to £600, the result would be as shown below in the SOA. Therefore, if I am now showing £773 leftover, would it be likely that I would be forced into an IPO?

Further to this, my second job brings a total income of £300 a month, do you think I am better off leaving this job before I am potentially made bankrupt? I would like to remain in my second job. Therefore, is it worth waiting for the outcome of the hearing before I make a decision?

Also, do they look at your income on the day that you are declared bankrupt or are there any specific timescales that they have to adhere to?  

Please could you also advise me if I am missing any costs that I can add into the below SOA? e.g. can we input childcare as this may be a cost in the coming year?

Lastly, I have input £500 for cash assets, would this be taken from me?

Sorry for all the questions, I never thought I would be in this position.

Many thanks for your advice.

Statement of Affairs & Personal Balance Sheet

Summary

Monthly Budget Summary	Amount(£)
Total monthly income	2,900
Monthly expenses (incl. HP & secured loans)	2,127
Available for debt repayments	773
UNsecured debt repayments	0
Amount left after debt repayments	773

Personal Balance Sheet Summary	Amount(£)
Total Assets (things you own)	500
Total Secured & HP Debt	-0
Total Unsecured Debt	-0
Net Assets	500

Income, Expense, Debt & Asset Details

Income	Amount(£)
Monthly income after tax	2820
Partners monthly income	0
Benefits	80
Other income	0
Total monthly income	2900

Expenses	Amount(£)
Mortgage	0
Secured/HP loan payments	0
Rent	600
Management charge (leasehold property)	0
Council tax	0
Electricity	0
Gas	0
Oil	0
Water Rates	0
Telephone (land line)	0
Mobile phone	10
TV Licence	0
Satellite/Cable TV	30
Internet services	0
Groceries etc.	500
Clothing	100
Petrol/diesel	250
Road tax	13
Car Insurance	50
Car maintenance (including MOT)	30
Car Parking	10
Other travel	0
Childcare/nursery	0
Other child related expenses	200
Medical (prescriptions, dentists, opticians etc.)	30
Pet Insurance/Vet bills	0
Buildings Insurance	0
Contents Insurance	0
Life Assurance	0
Other Insurance	0
Presents (birthday, christmas etc.)	20
Haircuts	50
Entertainment	0
Holiday	20
Emergency Fund	20
Car lease	194
Total monthly expenses	2127

Secured & HP Debt Description	Debt(£)	Monthly(£)	APR(%)
Mortgage	0	(0)	0
Secured & HP Debt totals	0	-	-

Unsecured Debt Description	Debt(£)	Monthly(£)	APR(%)
Unsecured Debt totals	0	0	-

Asset Description	Value (£)
Cash	500
House Value (Gross)	0
Shares and bonds	0
Car(s)	0
Other assets (e.g. endowments, jewellery etc)	0
Total Assets	500

Minkym00

With £700 a month, yes you will be forced into an IPA. I would probably be looked into a month or so into your bankruptcy.

You also need to consider your car on HP. HP companies can often terminate a contract when someone is made bankrupt and collect the car. Check the Ts and Cs of the agreement, or give them a call.

It may be a scare tactic but some lenders (I’m thinking of Funding Circle in particular) have a policy of always pursuing to bankruptcy. 

sourcrates

Just to clarify, a CCJ drops off your file after 6 years regardless of what you or anyone else does.

CCJ`s never become statute barred, however, should a creditor choose to pursue a debt with a judgement attached, older than 6 years, they would need permission from the court to do so, this may or may not be granted, it would be circumstance dependant, so for example, if you had been living in open view, and were easily contactable, its likely permission would be refused.

The selling of such an account in no way alters the above scenario one bit, the same rules apply.

But, if you go Bankrupt all the unsecured debts that you owe including any CCJs are included.
Judgments that have been issued against you for unsecured debts are overturned, and are no longer collectable.