wife might have to go bankrupt -implications for family?

unsecured_loan

hello,

i first want to say what a great web site this is! I have read all the brochures from the government about bankruptcy and they just got me more confused as they are so poorly written. I have learned so much already just reading this site!

i'm a husband of a woman who is self employed (ltd co.) and who has been ill for the last few months. she couldn't work and we have fallen behind in her personal loan (12,000 quid) and 2 credit cards ( ~16 grand)

i am a stay at home dad taking care of twin babies. i work freelance from home but have really just focused on the babies as it just took so much of my time.

everyone says that we don't make enough money for an IVA so we need to go bankrupt

here are the questions:

1. i understand one can't go bankrupt as a couple, but the assets thing seems a bit blurry... will they want to take my computer that i use for my freelance work? Will my own bank account be frozen?

2. we are renting our house, it is not clear that the bankruptcy administrator people will tell our landlord that we are bankrupt. If they do i am pretty sure the landlord will want us out! i understand that if we don't pay our rent that they will tell the landlord we are bankrupt but i see no need for them to do this if we are paying our rent...

3. my wife is working again but at a lower paying job, she is self employed and has a 3rd party/agency handle her limitied company... we understand that there are problems in her being a company director if we go bankrupt... can i be the director of a new company that simply pays her wage into my/our/her bank account so we can pay the rent etc? it appears that it is possible for her to remain as director of a new company or current company if the court allows it? I think she loses about 400 quid a month if she has to go PAYE...

bear in mind that the company is really just her, there are no employees, office or assets per se...

4. can we still take a family holiday to america to see family? i understand that any extra money goes to creditors but are things like family trips accounted for/allowed?

5. how long does bankruptcy last? the literature we have says no more than 12 months... is this true? After a year, you just have to declare that you have been bankrupt when you apply for credit?

i think that is most of our questions... thanks in advance if you can aswer any of these questions...


here are some more details about the finances:

i'm typing this in from the budget the Consumer Credit Counselling service has made for my wife...

as things are now with all debt/bills included we are 874 quid short...

with repayments to creditors taken out we are 125 quid in surplus.

that makes for about 1000 quid a month in debt payments.

joint account overdraft of 1,450

2 credit cards of 16,000

unsecured personal loan of 11,300

the bulk of this debt she made before we met. she moved her personal loan into a new loan from same bank after we were married...

i think all the debt is hers except for the 1,450 joint bank account overdraft... this debt occured when she was sick...

RENT is 1,250 quid

no car, no house, no assets really except 2 computers... one of which is my work computer...

idiot_3

first thing to say is that you could comfortably cut that rent figure at least in half. you are currently paying over £300 a week rent!

unsecured_loan

thanks for your reply...

we have thought of that, but we don't have any money to move...

had no jobs for quite a while too... how do you rent a house with no job and bad credit?

i suppose rent cost vary from location to location... where we live and where my wife works has sort of left us with no option in this regard...

<sigh>

idiot_3

i am sure from reading bankruptcy threads that there are landlords that do offer places to bankrupts, so if you are not that far down the line then something must be available to you. these landlords will expect the odd hiccup, due to the nature of their business. if you have been on time with your rent at your current place, then perhaps a reference from your current landlord might count for a lot?

missimaxo

OK, answers to your questions:

1 - the computer - if just your wife goes bankrupt and it is your computer no, the OR will not take it. They also won't take it if it is of no realiseable value or you can have it exempted as tools of the trade if you need it for your work.

It is up to the bank whether they freeze accounts, not the OR, the bank should not touch your account if it is in your sole name and you are not bankrupt.

2 - The Or does have a standard letter that goes to your landlord, whether the OR takes action depends on your renatl agreement. If it is a short hold assured tennancy and you can prove this to the OR, they "may" not write to your landlord, but some offices will still do this as standard. The reason for them writing to your landlord is they need to confirm the type of tennancy you have, sometimes the OR may become personally liable for the rental agreement so he must disclaim it (state he has no interest in it). It's a legal thing.

3 - If the ltd company is just your wife, I would really recommend you do not become a director. If the ltd company was to go into liquidation then it would be really obvious that your wife was the real director not you, she is counted as being a "shadow director" and the law still applies. Instead, apply to court for leave for her to be a director, I have been told in most cases the OR/ court does allow it. Your wife could be in trouble if she either "acts in the formation, promotion or management of a limited company" under section 11 of the company director's disqualification act and then "could" be prosecuted under that.

4 - The OR can allow a certain allowance towards a family holiday when calculating whether you would have to pay an Income Payments Agreement (where you make payments to your creditors for 3 years). It would not be excessive though, so it depends how much your holiday costs and how much the OR would allow.

5 - The bankruptcy order does last 1 year. The OR can apply for it to be made shorter (around 10 months) this happens when all his investigations are complete. If you have committed any offences prior to the bankruptcy order but after 1st April 2004 then he can apply for a bankruptcy restriction order for up to 15 years (ie. you would be bankrupt for up to 15 years). Most cases a bankruptcy is 1 year or shorter.

The joint overdraft you would become liable for as it is "joint and several", the only way to get out of that is for you to become bankrupt as well.

Hope that helps

T

Xbigman

Who's name is your lease in? If its yours the landlord won't be informed, if its your wifes he will be.

You will find you would need to put all your utility bills in your name.

Any joint debts or liabilities now fall to you.
Regards



X

mummytofour

I think the first thing you need to do is cut down the amount of rent that you are paying.

My advise would be to get down to your local housing office and get yourself some advise.

From what you have said you cant afford to be paying £1250 pcm, thats a hell of a wack and must be such a worry for you trying to find that amount of money each month.

I think once you have managed to get a clearer picture with regard to the housing situation then you will have more of an idea of where you can go with regard to the rest of the problems thas you are currently faceing.

Good luck

Vxx