Bankruptcy Planning

Beakie

Hi Guys…… I’m new here hoping someone can help me out. I have looked at many helpful and informative posts on here, but still need assistance.

I’m considering Bankruptcy with £35,000 of debt but have a few issues that I’m confused about.

I have about £100/200 of Disposable Income and my partner and myself are on State Pensions, Higher Rate PIP and I also get Industrial Injuries Benefit. It’s the disposable Income that confuses me, as I believe they wouldn’t enforce a IPA/IPO because of our benefits situation, but we do have income that we could use to make a contribution with….

The other matter that I’m unclear on, is at which point do I open a New Bank Acc? I have a Virgin M Account (Basic/No credit history req) which they may allow me to keep as I don’t have Debts with them, but this my take some time to finalise. I am assuming that they allow you to withdraw some cash beforehand to live on. Do they take any balance in the Account once you press the button and will the benefits still come into the account, or this down to me to change payments. I guess it’s the dilemma if you hope to keep the same account (it’s where the cutoff point would be, between what was in the Account and what has come into the Account since date of application).

I’m sorry if this is all a bit confusing, it’s my state of mind.🙃

I would be grateful if someone could advise, as this is a very dauting proposition.

David

sourcrates

Always pre-prepare beforehand, if you think your bank account may be frozen, withdraw cash before you press the button, enough to see you through a good couple of weeks.

No one takes your balance, your bank may freeze the account or it may not, if you don`t have any debts with that bank, the OR would probably declare no interest in it, and that would be that.

In bankruptcy, benefits are considered income if they are derived from a pension or state benefits.

If your income is solely from benefits, you will not have to make further payments towards your debts after going bankrupt, but you must show this as income in your application, then add an equivalent amount in your expenditure entitled "disability expenses".

This gives an overall effect on your budget of zero, and you won`t have to justify how you spend your benefits.

Beakie

Hiya Sourcrates

Many thx for your reply which proved very helpful and enlightening requarding Money in the Account and "disability expenses", which I was not aware off..

I guess if you did open an New Bank Acc you would open it after being made Bankrupt?

Many thx for your attention

David

RAS

Have you checked that you are not eligible for a Debt Relief Order? Do you own a car or house, lots of savings, or have over £75 per month after all expenses.

Bear in mind you've probably been skimping on some things for which higher spends would be acceptable?

Beakie

Hi Ras

I have a Motability Car which is up for renewal and I'm a Council Tenant, without any savings.

I contacted MoneyWellness Charity and after a assessment, my disposal income was to high for a Dro at £200/100.

Many thx for your advice.

Grumpelstiltskin

https://forums.moneysavingexpert.com/discussion/comment/81940894#Comment_81940894

Did you include your disabity income in that calculation when it would be disregarded?

Beakie

https://forums.moneysavingexpert.com/discussion/comment/81940909#Comment_81940909

They did a full assessment of my income/expenditure, all my and my partners is Pip(Higher Rate) Industrial injuries and State pension, they didnt take the Pip out of the equation.

Thx for thoughts

Grumpelstiltskin

They should have done, what you do us include it but then add disability expenses same amount.

luvchocolate

It's interesting as state pension is called a benefit. ...but subject to tax.

Not sure what it's classed as in bankruptcy?

ManyWays

I suggest you talk to your local Citizens Advice about a DRO. Some of MW's assessments seem questionable.

Beakie

Thx guys….for all your comments. I will check out CA