Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Rachael · 13 April 2017 at 8:54AM

Hi

Glad we were able to help with your previous queries.

In regards to council tax previous arrears should be included in bankruptcy and written off after discharge.

Any arrears you had previous to your bankruptcy should now be written off as you’ve been discharged.

If these arrears were in you and your partners name then they council may still ask for a monthly payment from your partner as he’s not discharged from bankruptcy yet.

If council tax has gone to a liability order before bankruptcy then the council can use enforcement agents to collect for the debt up until discharge.

In this case you yourself shouldn’t have any obligation to make payments.

So in summary all council tax will be written off after you’re discharged from bankruptcy but council tax with a liability order in place can be collected before discharge using enforcement agents.

Hope this helps.

Thanks
Rachael

FixitM wrote: »

Hello. Thank you for your responses to my last question. I wonder if you could help with another one please?

Last year we were on very low income (I'm a full time mum) and I had an arrangement of £60 per month for my council tax (I was discharged in February but hubby is still in his 1st year, but owed for the previous April and the full amount should have been £106 per month), Now we're in a new tax year we've received a bill for £175 per month, but obviously they still want me to also pay the £60 as well per month. I've been told the OR doesn't allow payment for any arrears, is this true? If so, what will I do about last year's council tax I owe?

Thanks.

FixitM · 13 April 2017 at 10:48PM

Thank you for your reply. The Council Tax for the tax year I went bankrupt was written off, but I had to start paying again in the new tax year which was April 2016. Similarly my husband needs to start paying now it's a new tax year. So I am liable for the Council Tax I owe (as was paying at a reduced arrangement with them) for last tax year. So what I'm looking to find out is will the OR allow me to budget for the arrears I owe from last tax year, as well as the new amount of £175 joint council tax we now need to pay, as I was told the OR doesn't allow you to budget for any arrears of anything?

Thank you.

StepChange_Allen · 18 April 2017 at 9:51AM

FixitM wrote: »

Thank you for your reply. The Council Tax for the tax year I went bankrupt was written off, but I had to start paying again in the new tax year which was April 2016. Similarly my husband needs to start paying now it's a new tax year. So I am liable for the Council Tax I owe (as was paying at a reduced arrangement with them) for last tax year. So what I'm looking to find out is will the OR allow me to budget for the arrears I owe from last tax year, as well as the new amount of £175 joint council tax we now need to pay, as I was told the OR doesn't allow you to budget for any arrears of anything?

Thank you.

Hello

Thanks for getting back in touch.

Your new council tax bill certainly needs to be factored in against any payments into your bankruptcy, so I'd let the OR know straight away. At the same time I'd explain what happened with last year's bill and that there are now arrears and ask them what happens with this.

I'll be honest, I haven't come across that scenario before because when we speak to people that have arrears at the time and plan to go bankrupt, the arrears are written off. But if you discuss it with the OR they'll know how it works and how to deal with it.

I hope it works out okay for you.

Allen

xgreenjacket · 23 April 2017 at 4:42PM

HI, I went bankrupt in January this year. I'm out of work and being supported by family, I am thinking about going back to work but I would like to see if I can clear up a few questions here. firstly once entering an iPa, I am aware the amount can be adjusted but if you fall below the threshold for having excess income will the ipa be cancelled or just suspended? The reason I ask is that there are no laws stating I have to work or go back to work full time I don't want an iPa put into place as they can run for three years even when discharged but can only be actioned whilst undischarged as you may well know!
so I'm thinking about working part time until discharged and then maybe going back full time once everything is done. The problem is, I don't know where I can find an average expenditure forecast for a single person, to see where I would fall in the bracket. If I do get asked to make an iPa it will ruin that idea of going back to work full time in January and life carrying on as normal bar the restraints and credit history issues. as far as I know the limit can be raised so I'm trying to work out whether I will be ok or if I'm better off staying away from work until I'm discharged which is my second question... does anybody know where I can find this information to get a rough idea of amounts allowed for food, clothing etc, etc? at the end of the day I went bankrupt to clear the debt I will have enough problems with banks and credit, getting mortgages etc so if I can avoid paying back I will, because why go to work 5 days a week for nothing when I can stay at home for nothing. maybe that sounds bad but that is my attitude :eek:

Former_StepChange_Richard · 24 April 2017 at 8:55AM

xgreenjacket wrote: »

HI, I went bankrupt in January this year. I'm out of work and being supported by family, I am thinking about going back to work but I would like to see if I can clear up a few questions here. firstly once entering an iPa, I am aware the amount can be adjusted but if you fall below the threshold for having excess income will the ipa be cancelled or just suspended? The reason I ask is that there are no laws stating I have to work or go back to work full time I don't want an iPa put into place as they can run for three years even when discharged but can only be actioned whilst undischarged as you may well know!
so I'm thinking about working part time until discharged and then maybe going back full time once everything is done. The problem is, I don't know where I can find an average expenditure forecast for a single person, to see where I would fall in the bracket. If I do get asked to make an iPa it will ruin that idea of going back to work full time in January and life carrying on as normal bar the restraints and credit history issues. as far as I know the limit can be raised so I'm trying to work out whether I will be ok or if I'm better off staying away from work until I'm discharged which is my second question... does anybody know where I can find this information to get a rough idea of amounts allowed for food, clothing etc, etc? at the end of the day I went bankrupt to clear the debt I will have enough problems with banks and credit, getting mortgages etc so if I can avoid paying back I will, because why go to work 5 days a week for nothing when I can stay at home for nothing. maybe that sounds bad but that is my attitude :eek:

Hi there

Thanks for your message and welcome to the forum.

If an IPA (Income Payment Agreement) is set for you the official receiver will compare your spending to their own guidelines which are based on average household costs. They’ll take into account your individual circumstances, so if you have any unusually high expenses you’ll need to explain these. If there’s more than £20 left over each month after your essential living costs, you’ll be instructed to pay this to the IPA.

If your income or living costs change during an IPA you should contact your official receiver as soon as possible and let them know. Your IPA payments can be adjusted to ensure you can still afford them.

If you stop or reduce the payments without first contacting the official receiver there’s a risk that further court action could be taken to collect the payments you’ve missed.

The calculations for the aveages allowed during an IPA are not available to the public.

I hope this is useful. Let us know if you need anything else.

Richard

Casey246 · 24 April 2017 at 9:05PM

Hi, I am new to posting on this site but seen all the help and support offered to others recently and could really do with some advise on starting a new chapter for myself. Where do I start, well, I am 37 years old and get married in June to my wonderful fiance who I have been with for 5 years. I mortgaged my house in 2004 so only have approx 12 years remaining. It is nothing special but it suits me and husband to be perfect. Anyway, it is worth approx £110,000 and I only have approx £28,000 outstanding on the mortgage. This is where it all goes bad now. I have in the past been really silly with money and irresponsible, easily led by my ex partner (lesson learned). I pay into a debt management plan which owes approx £20,000 (unsecured), £50 a month and I also pay £305 a month against a loan which is against my property. My ex-partner also pays towards this as it was in his name also and used to set up his business, remaining balance of approx £11,000. I don't know what to do and I am completely out of my depth. I barely survive each month as I don't want to get my fiance involved with all this. Anyway, I thought if I could get £25,000 equity from my house I could pay the debt management off approx £15,000 cash and have the money ready to pay the £305 each month for my share against the £11,000. I called my mortgage lender today just to enquire and they said I would need to apply to borrow and carry out a decision in principle over the phone and that the loan though cannot be used to pay unsecured debt. Bearing in mind I also pay into a plan which I believe means I am IVA I don't think they will agree to release the £25,000 ? My point is that I could afford to pay off the additional borrowing and together with husband to be we will be fine to make the additional payments for the remaining 12 years on the mortgage but I don't know what to do as I feel it will be rejected. Thanks in advance and appreciate your time reading this. My future husband is on a generous salary with no financial commitments except his car finance so will putting him on the mortgage help or I am open to suggestions.

Former_StepChange_Richard · 25 April 2017 at 5:37PM

Casey246 wrote: »

Hi, I am new to posting on this site but seen all the help and support offered to others recently and could really do with some advise on starting a new chapter for myself. Where do I start, well, I am 37 years old and get married in June to my wonderful fiance who I have been with for 5 years. I mortgaged my house in 2004 so only have approx 12 years remaining. It is nothing special but it suits me and husband to be perfect. Anyway, it is worth approx £110,000 and I only have approx £28,000 outstanding on the mortgage. This is where it all goes bad now. I have in the past been really silly with money and irresponsible, easily led by my ex partner (lesson learned). I pay into a debt management plan which owes approx £20,000 (unsecured), £50 a month and I also pay £305 a month against a loan which is against my property. My ex-partner also pays towards this as it was in his name also and used to set up his business, remaining balance of approx £11,000. I don't know what to do and I am completely out of my depth. I barely survive each month as I don't want to get my fiance involved with all this. Anyway, I thought if I could get £25,000 equity from my house I could pay the debt management off approx £15,000 cash and have the money ready to pay the £305 each month for my share against the £11,000. I called my mortgage lender today just to enquire and they said I would need to apply to borrow and carry out a decision in principle over the phone and that the loan though cannot be used to pay unsecured debt. Bearing in mind I also pay into a plan which I believe means I am IVA I don't think they will agree to release the £25,000 ? My point is that I could afford to pay off the additional borrowing and together with husband to be we will be fine to make the additional payments for the remaining 12 years on the mortgage but I don't know what to do as I feel it will be rejected. Thanks in advance and appreciate your time reading this. My future husband is on a generous salary with no financial commitments except his car finance so will putting him on the mortgage help or I am open to suggestions.

Hi there

Thanks for getting in touch.

I would strongly advise against taking further loans to try to clear the debt you have, especially one that would be secured against your property. With so much to look forward to in your future, you don't want that to be hampered by your home being affected if for some reason you couldn't pay a new loan back.

It's much better to look at your finances as a whole and to work out what you can afford to pay to your debts currently. I would suggest using our Debt Remedy tool on our website to help you build a budget. This will show what's happening with your finances and allow us to give you the best advice to help you deal with your debts.

Once you have created your budget you can call and speak with an advisor if you need to. They can discuss your situation and answer any questions you have.

I hope this helps and we look forward to hearing from you.

Richard

FixitM · 12 May 2017 at 2:20PM

StepChange_Linsi wrote: »

You also can check the Individual Insolvency Register for confirmation and this is free as well. The register will show when you went bankrupt and what the status is now. Your details with be removed from the register three months after you’ve been discharged, unless you have a bankruptcy restriction undertaking or order.

Linsi

Thank you for this information. Upon checking, it says 'bankrupt' still (I should have been discharged on 18 February 2017). Is this correct or should it now say discharged on there?

TIA

StepChange_Allen · 12 May 2017 at 2:52PM

FixitM wrote: »

Thank you for this information. Upon checking, it says 'bankrupt' still (I should have been discharged on 18 February 2017). Is this correct or should it now say discharged on there?

TIA

Hi there

Thanks for posting.

Bankruptcy normally shows on the Insolvency Register for 15 months, so all being well it will be removed soon assuming you've been discharged after the standard 12 months. So it may disappear from there sometime next week.

I hope this helps.

Allen

Eliza_2 · 13 May 2017 at 8:57PM

FixitM wrote: »

Thank you for this information. Upon checking, it says 'bankrupt' still (I should have been discharged on 18 February 2017). Is this correct or should it now say discharged on there?

TIA

You need to click through your details (no it isn't obvious) and then you'll see it says date of discharge.

Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

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