Steps Before Filing for Bankruptcy

EG35891

sourcrates said:

stu12345_2 said:

thanks sourcrates, always thought it was £4 k cos of taxi drivers going bankrupt and saying a £2k car will breakdown and I've got dro on the brain at moment 

Well good luck finding a 2k car these days, something that constantly breaks down is not what you want to be stuck with.

I know. Maybe it might be something I can negotiate on as I can pay a decent monthly amount towards the debt. 

EG35891

stu12345_2 said:

thanks sourcrates, always thought it was £4 k cos of taxi drivers going bankrupt and saying a £2k car will breakdown and I've got dro on the brain at moment 

can you still have your job or rent private if you are bankrupt, 
What's more important debt free faster and  forget about credit file

Yeah I'll be able to keep my job and my rental. 

The most important thing is financial relief. I'm sick to death of worrying about money. 

stu12345_2

if the numbers work out and you can avoid an IPA payments during your bankruptcy if it goes on for 3 years and you are very skint, then go for it.imo

EG35891

stu12345_2 said:

if the numbers work out and you can avoid an IPA payments during your bankruptcy if it goes on for 3 years and you are very skint, then go for it.imo

Thanks for all your help, I appreciate it. 

stu12345_2

as long as your planning on not having to move to another private rental within next 6 yrs, as you will fail a credit check with landlord or letttng agent

and the solution will be to pay a full 6 months rent in advance 

Minkym00

The value of a car in bankruptcy is £3,250 now, the rules changed earlier this year.

This is all academic though as the OP's car is on finance and, with a £4k balloon payment, highly likely to be in negative equity so the OR will disclaim it in any case.

OP, whether or not you lose the car will depend on the finance company. Many HP companies have an insolvency clause and will always terminate the HP agreement when someone goes bankrupt.

ManyWays

lisa_gibson83 said:

Thanks both. So first step is to stop paying the creditors? I have two personal loans and a few credit cards. Or should I contact them first to ask if I can have a couple of months repayment holidays? 

I know the car is a bit of a complication. I work in construction and I travel a lot so I need something roadworthy. The balloon payment if I keep it is £4k which I can't imagine an OR allowing me to pay but then I would be without a vehicle. Although I guess if I wait to file for bankruptcy until next year I can save £2k to buy one and give up the VW when the finance period ends. 

We rent our house from an estate agents and may partner doesn't have any assets either apart from his car. We have a joint account which is only for bills but I will close that down. My current account has an overdraft and the same bank is where my loans and a credit card are with so I will transfer my wages utilities to my Revolut.

It sounds as though the car is the main issue for you. 

It is now not usual for a car on finance to be repossessed by the lender, although it can happen. 

If the car isnt repossessed, there is the question of whether the Official Receiver would allow the monthly payments as expenses. You haven't said how much these are but if a car is essential and the payments are not unreasonable then the OR may well allow it.

When the car finance ends, how could you get the money for the balloon payment? It is unlikely you will be allowed to save up that money by reducing your IPA payments.

And if you could get it like that, or some other way (eg from your partner) then at that point you would have a car worth over £4000 and it would be treated as "after-acquired property" (that is the term for assets you get between going bankrupt and being discharged 12 months later) so the Official Receiver would claim it and give you £3250 back to buy another one. (These numbers are for England and Wales. You need to talk to an adviser in Northern Ireland to find out what applies there as it may not be the same.) 

So if you keep the car going into bankruptcy, you need to focus on how to have a car after the finance ends. Could you drive your partners car? Could they buy a second-hand car and allow you to drive that? You will be bankrupt and will not be able to get a car on finance.

Unless you can solve this problem, your only option may be to stop paying your creditors now so you can save up for a cheap second hand car. In that case you can go bankrupt as soon as you have done that and saved up the bankruptcy fees. No reason to wait until the car finance ends, just hand it back and any remaining debts for the rest of the payments and dings and scratches go into your bankruptcy anyway. 

EG35891

ManyWays said:

lisa_gibson83 said:

Thanks both. So first step is to stop paying the creditors? I have two personal loans and a few credit cards. Or should I contact them first to ask if I can have a couple of months repayment holidays? 

I know the car is a bit of a complication. I work in construction and I travel a lot so I need something roadworthy. The balloon payment if I keep it is £4k which I can't imagine an OR allowing me to pay but then I would be without a vehicle. Although I guess if I wait to file for bankruptcy until next year I can save £2k to buy one and give up the VW when the finance period ends. 

We rent our house from an estate agents and may partner doesn't have any assets either apart from his car. We have a joint account which is only for bills but I will close that down. My current account has an overdraft and the same bank is where my loans and a credit card are with so I will transfer my wages utilities to my Revolut.

It sounds as though the car is the main issue for you. 

It is now not usual for a car on finance to be repossessed by the lender, although it can happen. 

If the car isnt repossessed, there is the question of whether the Official Receiver would allow the monthly payments as expenses. You haven't said how much these are but if a car is essential and the payments are not unreasonable then the OR may well allow it.

When the car finance ends, how could you get the money for the balloon payment? It is unlikely you will be allowed to save up that money by reducing your IPA payments.

And if you could get it like that, or some other way (eg from your partner) then at that point you would have a car worth over £4000 and it would be treated as "after-acquired property" (that is the term for assets you get between going bankrupt and being discharged 12 months later) so the Official Receiver would claim it and give you £3250 back to buy another one. (These numbers are for England and Wales. You need to talk to an adviser in Northern Ireland to find out what applies there as it may not be the same.) 

So if you keep the car going into bankruptcy, you need to focus on how to have a car after the finance ends. Could you drive your partners car? Could they buy a second-hand car and allow you to drive that? You will be bankrupt and will not be able to get a car on finance.

Unless you can solve this problem, your only option may be to stop paying your creditors now so you can save up for a cheap second hand car. In that case you can go bankrupt as soon as you have done that and saved up the bankruptcy fees. No reason to wait until the car finance ends, just hand it back and any remaining debts for the rest of the payments and dings and scratches go into your bankruptcy anyway. 

The car has definitely been a mind bender on this one. I think what you have said makes sense, I'll save enough cash to buy one around the £3k and give mine back. The monthly payments are £154 so not actually that much but makes sense to own one outright. My partner does have a car but it's really old and not reliable enough. I'm currently interviewing for jobs and there is potential I can get a company car which would really solve the problem. 

EG35891

stu12345_2 said:

as long as your planning on not having to move to another private rental within next 6 yrs, as you will fail a credit check with landlord or letttng agent

and the solution will be to pay a full 6 months rent in advance 

We weren't planning on moving at all but our landlady has informed us that she wants to move back into the property when our lease ends in January so I will have to wait until we find somewhere new. It's really thrown a spanner in the works but I'll be doing my best to not miss or default on payments until then.