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  • FIRST POST
    • Cazntia
    • By Cazntia 18th May 19, 11:56 AM
    • 1Posts
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    Cazntia
    Bankruptcy and loan from parent
    • #1
    • 18th May 19, 11:56 AM
    Bankruptcy and loan from parent 18th May 19 at 11:56 AM
    Hello, I live in a house owned by my mother and pay her rent. About 6/7 years ago she remortgaged the house I live in to help me with debt. The lump sum was paid to my creditors and I have paid the remortgage amount every month into by mums account which is then taken out by the remortgage company. My partner and I have split up and Iím left with over 30k in debt in my name along with this remortgage payment. I canít see anywhere out but bankruptcy. Iím aware that I may not be allowed to continue this payment to my mum - and My mum has offered to pay half of the remortgage but is unable to pay anymore as she is retired and lives off her state pension so I will still have to pay the other half otherwise she would sell the house.

    When Iíve done the SOA (including the half mortgage repayment) with all the expenses you are allowed it actually pushes me £100 over what I earn however with savings on food, clothes, hairdressers etc I can just about balance it. Should I put the £100 payment to my mam on the expenses form or should I up an expense and not write it on i.e. I have my groceries as £125 for a month should I up that to £225 and not write on about the repayment? Would the OR receiver question why the £200 Iíve paid to my mum each month has suddenly stopped?

    Another question is thatís worrying the hell out of me, I have been unable to pay my creditors for a good few months but have continued with the remortgage payment, I am now aware that this could be considered a preferential payment, would they try and claim the money from my mum even though she hasnít Ďcreditedí from it, she doesnít have any savings so wouldnít be able to pay it.
Page 1
    • Sea Shell
    • By Sea Shell 18th May 19, 12:06 PM
    • 2,636 Posts
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    Sea Shell
    • #2
    • 18th May 19, 12:06 PM
    • #2
    • 18th May 19, 12:06 PM
    Sorry to hear of your situation.

    If your mum remortgaged, in her name, then she and only she, is responsible for the repayments to the lender. If the payments can't be maintained, then the house may have to be sold.

    It's separate to your personal financial circumstances.
    " That pound I saved yesterday, is a pound I don't have to earn tomorrow " JOB DONE!!
    This should now read "It's time to start digging up those Squirrelled Nuts"!!!
    • TheGardener
    • By TheGardener 18th May 19, 1:40 PM
    • 2,919 Posts
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    TheGardener
    • #3
    • 18th May 19, 1:40 PM
    • #3
    • 18th May 19, 1:40 PM
    As you will be aware - your Mum will become a creditor same as everyone else so you wont officially be able to pay her. However, if you post an SoA on here so we can help make sure you make best use of the income available to you. There is a good template here http://www.stoozing.com/calculator/soa.php.

    Once the SoA is agreed with the OR - you could make economies within your budget and that gives you a little flexibility.
    We can't tell you how to pay your Mum because that is against the rules and not permitted in BR - it will be up to you to decide what you do with any savings/economies you are able to make.
    • silvercar
    • By silvercar 18th May 19, 1:58 PM
    • 39,469 Posts
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    silvercar
    • #4
    • 18th May 19, 1:58 PM
    • #4
    • 18th May 19, 1:58 PM
    Do you pay your Mum rent and remortgage?

    If the amount you pay is consistent with rentals in your area, the OR shouldn't have a problem with it. Whether you class it as paying the loan or paying rent isn't material.
    • silvercar
    • By silvercar 18th May 19, 3:39 PM
    • 39,469 Posts
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    silvercar
    • #5
    • 18th May 19, 3:39 PM
    • #5
    • 18th May 19, 3:39 PM
    Yes I pay both, rent £420 and remortgage £200. The house next door to me is rented out for around £525-550 I think
    Originally posted by Cazntia
    The loan to parent will fall into your bankruptcy.

    Parent could charge you a reasonable rent (I'm assuming this isn't a property massively larger than your needs), backed up by a tenancy agreement. So £520 would look reasonable.

    You shouldn't need building insurance if you don't own the property, so I would take that out but have some content insurance.

    I don't know much about the other stuff; hopefully someone who knows more will be along soon.
    • Annie35
    • By Annie35 18th May 19, 4:26 PM
    • 363 Posts
    • 294 Thanks
    Annie35
    • #6
    • 18th May 19, 4:26 PM
    • #6
    • 18th May 19, 4:26 PM
    You absolutely cant put loan to parent as an expense.

    £620 is just how much it costs to live there ie: rent, the single payment you pay every month.
    • Minkym00
    • By Minkym00 18th May 19, 5:21 PM
    • 202 Posts
    • 80 Thanks
    Minkym00
    • #7
    • 18th May 19, 5:21 PM
    • #7
    • 18th May 19, 5:21 PM
    Beware that the OR can look at your bank statements so if you try and add the £100 in to other expenses you may be questioned on it as it won’t match your previous outgoings.

    Is there no way you could take in a lodger? If they rent direct from you mum then the money doesn’t have to pass through your hands.
    • Hardly Quim
    • By Hardly Quim 18th May 19, 7:32 PM
    • 10 Posts
    • 3 Thanks
    Hardly Quim
    • #8
    • 18th May 19, 7:32 PM
    • #8
    • 18th May 19, 7:32 PM
    The secured loan will still have to be paid. The upside is you will clear all your unsecured debt.
    You will be able to keep your car. You will probably have to make a contribution from your wages to your creditors.
    • silvercar
    • By silvercar 18th May 19, 7:50 PM
    • 39,469 Posts
    • 163,562 Thanks
    silvercar
    • #9
    • 18th May 19, 7:50 PM
    • #9
    • 18th May 19, 7:50 PM
    The secured loan will still have to be paid. The upside is you will clear all your unsecured debt.
    You will be able to keep your car. You will probably have to make a contribution from your wages to your creditors.
    Originally posted by Hardly Quim
    The secured loan is the motherís. as a bankrupt the op wonít be able to pay it. They also wonít be able to continue paying the mother a repayment of the loan, as that would make the mother a preferential creditor.

    What they can do is pay a reasonable rent. As the landlady is a relative it would be better to be able to show a proper written tenancy agreement.
    • Kentish Dave
    • By Kentish Dave 19th May 19, 5:11 PM
    • 806 Posts
    • 1,492 Thanks
    Kentish Dave
    You absolutely cant put loan to parent as an expense.

    £620 is just how much it costs to live there ie: rent, the single payment you pay every month.
    Originally posted by Annie35
    Thatís not correct though. As the OP says, part of this is a loan which they will need to include in the bankruptcy.

    You canít give priority to certain creditors and you canít pretend a debt repayment is rent.
    • debt doctor
    • By debt doctor 19th May 19, 5:39 PM
    • 4,528 Posts
    • 6,214 Thanks
    debt doctor
    Hi,

    You could double your groceries to £300+

    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
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