Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

OHmeOHmy · 25 May 2017 at 4:00PM

Could anyone advise me on if you can lose your council house tenancy in Scotland if you go bankrupt for council tax arrears?

portofcall · 25 May 2017 at 8:10PM

I am looking for advice on seeking a DRO.
I am currently in debt with rent arrears, ex landlord court fees, thousands owed utilities etc. All of them snapping at my heels! I am finding it incredibly stressful having just suffered an illness.
Now my situation is that I am receiving PIP and ESA. Do both count as 'income' and how strict if the £50 disposable limit regarding obtaining an DRO? Is there an more lenient restriction to those who have a disability claiming PIP and ESA than those who are not? I have no real prospect at all of paying back my creditors and it's stressing me out no end!
Please help

Former_StepChange_Linsi · 26 May 2017 at 2:47PM

Good afternoon,

Thank you for your message.

Having council tax arrears wouldn’t normally but your tenancy at risk, but there are some occasions where going bankrupt can affect a tenancy, regardless of the debts included in the bankruptcy.

Before applying to go bankrupt you should always check your tenancy agreement. Some agreements contain a clause that ends the tenancy if you go bankrupt. We tend to see this more with private tenancies rather than council houses but it’s still worth checking. If you need help to check this I’d recommend speaking to Shelter or Citizens Advice.

If there isn’t a clause in your agreement and you decide to go bankrupt, the trustee wouldn’t normally have an interest in the property. The only time it may be an issue is if the trustee thinks you’re paying too much rent or the standard of accommodation is too high.

Before you make a decision about bankruptcy I’d recommend you contact a charity like ours to create a budget and get impartial advice. Here’s the link to our online Debt Remedy tool where you can get tailored advice for free. You can also contact Money Advice Scotland for further advice and support.

I hope this helps.

Linsi

OHmeOHmy wrote: »

Could anyone advise me on if you can lose your council house tenancy in Scotland if you go bankrupt for council tax arrears?

Former_StepChange_Linsi · 26 May 2017 at 2:56PM

Good afternoon,

Thanks for your message.

I’m sorry to hear you’ve been unwell; I hope you’re feeling better now. Dealing with debts can be really stressful, but you’re not alone and you’ve come to the right place for help.

Benefits such as PIP and DLA are excluded from DROs and other insolvency solutions but there are strict qualifying criteria you must meet in order to apply.

If you have more than £50 left over at the end of the month after covering all your living costs, care costs and essential bills then you wouldn’t qualify for a DRO. Don’t worry, if this is the case there are always other debt solutions we can look at instead.

So we can find the best solution to help you with your debts we’ll need to create a budget to show your income, living costs and debts. When we’re creating a budget we’ll need to include all of your income including your PIP and ESA. However, we’d never expect you to use your income from disability benefits to pay your debts, so we’ll also include all of your care costs in the budget as well.

If a DRO is the best solution for you we can then guide you through the application process to set this up as quickly as possible.

I think it would be best to create a budget and get advice over the phone, to make sure we fully understand your situation. When you have time to talk you can call our Helpline using our free phone number, here are our contact details.

We look forward to talking with you soon.

All the best,

Linsi

portofcall wrote: »

I am looking for advice on seeking a DRO.
I am currently in debt with rent arrears, ex landlord court fees, thousands owed utilities etc. All of them snapping at my heels! I am finding it incredibly stressful having just suffered an illness.
Now my situation is that I am receiving PIP and ESA. Do both count as 'income' and how strict if the £50 disposable limit regarding obtaining an DRO? Is there an more lenient restriction to those who have a disability claiming PIP and ESA than those who are not? I have no real prospect at all of paying back my creditors and it's stressing me out no end!
Please help

portofcall · 26 May 2017 at 5:37PM

So my PIP is not used to calculate my income - is that correct?
Do you need to know precise figures regards creditors to obtain a DRO - as some of my creditors are not able to supply accurate figures.
With my ESA only taken into account then I am certain I have less than £50 disposable income per month.
So how do I get this started?

portofcall · 28 May 2017 at 8:31AM

I am in the process of now applying for a DRO - I meet all of the criteria.
However, I am concerned about one thing. My local council run rent deposit scheme guarantee for the landlord. In effect they guarantee to meet any claims for damages beyond wear and tear at the end of a tenancy directly to the landlord. One of the criteria they set out is that I set up a savings account with a referred to Credit Union Scheme of a sum of £20 to put by for when I move onto another flat.
It is not a loan repayment but I have been informed that it is mandatory, however I have not signed anything and have moved into the property - I am due to see the Credit Union person next and 'sign' some documents. I am hesitant whether this will affect my DRO application and also whether this is an agreement I have to sign.
Please help.

Former_StepChange_Richard · 30 May 2017 at 3:55PM

Hi there,

Thanks for your reply.

PIP and DLA are excluded from insolvency solutions. Just to clarify though, if you were to seek advice from StepChange on the best way to deal with your debts, we would build a budget based on all of your income and your expenses.

If one of the incomes you mentioned was PIP or DLA then we would ask what expenses you had relating to these incomes. If you then met the criteria for a DRO and wanted to proceed with this, the application that we would submit to the insolvency service would not include the details of the income for the PIP or DLA and the associated expenses.

In the advice stage we would not need precise figures for your debts (although the more accurate you can be, the better advice we can give), but if you are dealing with an intermidiary who is creating your applicaiton for the DRO they will want as precise figures as possible.

Organisations that offer advice on how to deal with your debts need to look at your finances as a whole before they can offer advice on the best way to deal with your debts (this is best practice and also a requirement of the industry). So, to get started you'll need to have an advice session with us. You can do this in two ways:

You can use the Debt Remedy tool on our website. This is a self-help tool that helps you to build your budget and then shows the best way to deal with your debts.

Alternatively you can call our Helpline where an advisor will make the budget for you and then explains your options. All our contact details are here.

I hope this helps.

Richard

portofcall wrote: »

So my PIP is not used to calculate my income - is that correct?
Do you need to know precise figures regards creditors to obtain a DRO - as some of my creditors are not able to supply accurate figures.
With my ESA only taken into account then I am certain I have less than £50 disposable income per month.
So how do I get this started?

Former_StepChange_Richard · 30 May 2017 at 4:06PM

Hi,

I'm not familiar with this scheme so I can't say for certain if it would affect a DRO application (although I very much doubt that it would). I would suggest contacting the Insolvency Service for a definitive answer.

It's more likely that a DRO could affect the Credit Union arrangement however. I would suggest checking this with your council. As a DRO is a method of insolvency it may affect anything which has a clause about insolvency.

Let us know if you need anything else.

Richard.

portofcall wrote: »

I am in the process of now applying for a DRO - I meet all of the criteria.
However, I am concerned about one thing. My local council run rent deposit scheme guarantee for the landlord. In effect they guarantee to meet any claims for damages beyond wear and tear at the end of a tenancy directly to the landlord. One of the criteria they set out is that I set up a savings account with a referred to Credit Union Scheme of a sum of £20 to put by for when I move onto another flat.
It is not a loan repayment but I have been informed that it is mandatory, however I have not signed anything and have moved into the property - I am due to see the Credit Union person next and 'sign' some documents. I am hesitant whether this will affect my DRO application and also whether this is an agreement I have to sign.
Please help.

PJCBEL · 1 June 2017 at 11:32AM

I have lived at address with my wife for 8 years and have moved out 6 months ago, my name is not on the mortgage but I've been reading that as I had an interest in the property there is a chance it might be included in bankruptcy, is this correct. Currently there is £4000 equity in house?
Thanks

dmcw · 1 June 2017 at 1:06PM

Hi

I don't know if I can answer your questions but I can tell you what happened to myself. My husband moved out of our jointly owned property (mortgage and deeds joint) 12 months before his bankruptcy. As I had the children I was in possession of the jointly owned car. They go back five years on assets so wrote and asked me for half the value to put towards his bankruptcy.They put a restriction on the title deeds of the house until they were ready to deal with the property. At 2 years and 3 months they wrote and asked for a valuation of the property. From this figure they minused 3% for fees and the remaining figure was split into two (half mine and half husbands) and from husbands was the amount owed. As the amount totalled £900 they decided not to apply for a statutory charge on the property. I also filed for bankruptcy and went through the same process. If you ring the insolvency service enquiry line 0207 737 1110 they can give advice. Hope this helps.

Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

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