Bankruptcy and wife’s car

Hi.

After many sleepless nights and a lot of stress I’m now considering declaring myself bankrupt.

Through very poor credit choices and misguidedly thinking I could shuffle things around and secure better deals, it’s all caught up. 

Unsecured debt of £53k, loans and credit cards. Now too much going out an not enough in. 

I’m still looking into the various aspects of bankruptcy and getting there with understanding most of it .

One concern is my wife’s car.  £23 k on hp, in her name as I don’t drive due too poor sight. Thing is with fuel , up payment and insurance it’s costing her around £900 a month. I know this sounds diabolical and honestly is crippling us. However she’s only a few months in to a 60 month agreement so can’t hand the car back. Selling it now would leave negative equity. She needs a car for her work.

Really unsure how to proceed in regards to that. 

I’d fully expect to have to pay an IPA and although it’s me going bankrupt I know her income will be considered. Problem is my wages are higher than hers, so I’m not sure she could contribute an equal portion to outgoings after paying her own legitimate commitments.

Can anyone advise in any way how an OR / IP will view this situation ir what they may expect.

This whole situation has me tied in knots as my actions are inevitably going to affect my wife !

Any insight appreciated 
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Comments

  • Not sure but £900 pounds  a month ouch Whilst they cannot claim this from the non-bankrupt spouse, they can take account of a spouse’s income and the household running costs to work out what a bankrupt individual  can afford to pay.
  • JCS1
    JCS1 Posts: 5,275
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    You need to put her contribution to household costs, not her total salary
  • alextheg
    alextheg Posts: 11
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    stanger66 said:
    Not sure but £900 pounds  a month ouch Whilst they cannot claim this from the non-bankrupt spouse, they can take account of a spouse’s income and the household running costs to work out what a bankrupt individual  can afford to pay.
    £480 is the hp payment, £85 for insurance and fuel for the car is £400 a month with current pump prices !
  • alextheg
    alextheg Posts: 11
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    JCS1 said:
    You need to put her contribution to household costs, not her total salary
    The OR would be able to see her salary from joint accounts. Those will be closed if I do proceed with going bankrupt.

    I was under the impression she would be expected to pay equally to household costs ? 

    Maybe I’m being naive or daft but although I expect an IPA which will put some pressure on the household i would like to avoid her ending up in a worse situation because an OR / IP made her contribute to a point that left her in difficulty to keep up her own finances.

    Am I misunderstanding , being unrealistic ?
  • Brie
    Brie Posts: 9,187
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    alextheg said:
    £480 is the hp payment, £85 for insurance and fuel for the car is £400 a month with current pump prices !
    ouch indeed!! i know you've said returning it wont help but have you actually run the numbers?  something with a smaller engine, more fuel efficient may also come in lower for insurance.  
    "Never retract, never explain, never apologise; get things done and let them howl.”
  • alextheg
    alextheg Posts: 11
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    Brie said:
    alextheg said:
    £480 is the hp payment, £85 for insurance and fuel for the car is £400 a month with current pump prices !
    ouch indeed!! i know you've said returning it wont help but have you actually run the numbers?  something with a smaller engine, more fuel efficient may also come in lower for insurance.  
    She can’t voluntarily hand the car back as she’s nowhere near the 50% mark in the agreement. Part exchange seems difficult as the HP company would need to be paid directly and there would be negative equity. So the new HP company would be funding a newer cheaper car plus the negative equity.

    Maybe not an impossible situation but potentially tricky to sort out .

    Any advice welcome on this though ….
  • alextheg
    alextheg Posts: 11
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    JCS1 said:
    You need to put her contribution to household costs, not her total salary
    Think the penny may have dropped. Am I understanding you correctly in assuming that my wife’s contribution to expenses is offset against mine to determine what surplus income I have in order to reach a figure for an IPA ?  As opposed to her total income being used ?
  • JCS1
    JCS1 Posts: 5,275
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    alextheg said:
    JCS1 said:
    You need to put her contribution to household costs, not her total salary
    The OR would be able to see her salary from joint accounts. Those will be closed if I do proceed with going bankrupt.

    I was under the impression she would be expected to pay equally to household costs ? 

    Maybe I’m being naive or daft but although I expect an IPA which will put some pressure on the household i would like to avoid her ending up in a worse situation because an OR / IP made her contribute to a point that left her in difficulty to keep up her own finances.

    Am I misunderstanding , being unrealistic ?
    I think the form asks for their contribution, though it is a few years since I worked there and the wording may have changed slightly.  I think it states contribution so they can take into account their own debt repayments.
  • JCS1
    JCS1 Posts: 5,275
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    alextheg said:
    JCS1 said:
    You need to put her contribution to household costs, not her total salary
    Think the penny may have dropped. Am I understanding you correctly in assuming that my wife’s contribution to expenses is offset against mine to determine what surplus income I have in order to reach a figure for an IPA ?  As opposed to her total income being used ?
    Yes.  put up your SOA on here and we can advise
  • sourcrates
    sourcrates Posts: 28,490
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    Your spouse is not the bankrupt person.

    As such, they are not legally obliged to tell the OR what their income is, or when their circumstances change. Only you are under an obligation to do this.

    So, what she spends her money on is irrelevant to a great extent, if she pays £900 a month for a car in her sole name, that`s her prerogative. If you live together as man and wife, and share the bills, then you should complete a joint budget statement.

    If your household finances are separate, then just your single income/expenses are required.

    You don`t own property do you, as assets are nearly always sold in bankruptcy.
    I’m a Forum Ambassador and I support the Forum Team on the Debt free wannabe, Credit file and ratings, and Bankruptcy and living with it boards. If you need any help on these boards, do let me know. Please note that Ambassadors are not moderators. Any posts you spot in breach of the Forum Rules should be reported via the report button, or by emailing [email protected]. All views are my own and not the official line of MoneySavingExpert.For free non-judgemental debt advice, contact either Stepchange, National Debtline, or CitizensAdviceBureaux.Link to SOA Calculator- https://www.stoozing.com/soa.php The "provit letter" is here-https://forums.moneysavingexpert.com/discussion/2607247/letter-when-you-know-nothing-about-about-the-debt-aka-prove-it-letter
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