Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

Flyright · 5 July 2018 at 5:42AM

The OR can obtain bank statements for as far back as they deem necessary. Please be aware that failure to pay tax in itself can be grounds for the OR to seek a BRO.

Former_StepChange_Patience · 5 July 2018 at 5:57PM

Hi there

Thanks for getting in touch, I’ll help as much as I can with this.

When bankruptcy is put forward, either through a Statutory Demand from a creditor or if it was something you were considering applying for yourself, what they would look to do as part of the bankruptcy is check your financial history for things like ‘transactions under value and preferences’.

Whilst the Official Receiver has the power to reverse transactions undervalue in the five years prior to the bankruptcy order and potentially request proof for this, is in very set circumstances.

It may be the case they would look into your financial history in closer detail if there are any ‘offences’ they believe have taken place, you can find out further information about this here: https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy-2/bankruptcy-offences/

I hope this helps, but please get back in touch if you need anything else.

Patience

Kendoddsdog wrote: »

Hi.
If made bankrupt by HMRC how far back can the OR ask to see your bank statements?

chereb · 5 July 2018 at 11:28PM

Hi brief outline of my situation. I have a joint mortgage with ex. I live here with two children 13, 19 and both in education. My house is valued at £63000 with a £31000 balance remaining. Payments are all up to date. Most of the marital debt is in my name and currenyly i am on benefits due to illness. Ex pays mortgage but the total debt in my name is £43000. Before the marriage ended i vould afford all the payments had an excellent credit rating and am ashamed to find myself in this position. The only other thing i own is a 12 year old car worth about £600. I am currently in a dmp and really struggling to live and pay that. I am now considering bankruptcy as my only option going forward. Will i be made to sell the home with me having £16000 equity? I have nowhere to turn, no family, no nothing. Conpletely out of my depth here and dont know what to do.

Cbn2000 · 6 July 2018 at 2:35PM

Hi,

I wonder if you could give me some direction. I am considering Bankruptcy as a means to getting out of the debt I have been in for 6 years as per the following:

- My Debt is approx. £54000
- The debt has been accrued through marital debt, divorce and losing all my assets to my wife.
- All the debt is credit card and overdraft.
- I earn £52K a year but my out-goings, without debt payment match my income - I'm currently pay only a token amount for towards my debts. My high expenditure commitments are Rent, CSA payments for my 17 year old son, then University costs for older daughter University. This will be the case for the next 2 years, then my situation will improve - but I'd rather act now whilst I am in this situation.
- My assets consist of a £1500 car, some household possessions and about £3000 savings.
- I'm 49 years old

I much appreciate any advise you can give me

Former_StepChange_Joe · 6 July 2018 at 4:56PM

Hello

Thanks for posting and welcome to the forum.

First of all, please don’t feel ashamed. You’ve experienced some very big life changes, and these often bring financial changes with them that are beyond your control. Please be assured you’ve done the right thing by getting in touch.

If your house has some equity, then this would be taken into account if you went bankrupt. Only your share of the equity would be passed to the Official Receiver (OR), but the house could still be sold.

However, this wouldn’t necessarily mean the sale of your home right away. Firstly, the OR may do nothing with the house for now and review the situation in 2 years and 3 months. Secondly, even if the OR applied to the court for an ‘order for sale,’ your family’s welfare would be considered, and a court can postpone an order for sale by up to 12 months to allow you time to move.

If you’re on a DMP at the moment, but this isn’t working out for you, I’d recommend getting in touch with StepChange so they can take a closer look at your budget, and recommend some other solutions. They can give you some more tailored and impartial advice based on your financial situation.

A good place to start is their online Debt Remedy self-help tool. This is available 24 hours a day and takes about 20 minutes to complete. The tool will guide you through creating a budget and will then offer the best debt solution for your situation.

I hope you’ve found this helpful.

Take care

Joe

chereb wrote: »

Hi brief outline of my situation. I have a joint mortgage with ex. I live here with two children 13, 19 and both in education. My house is valued at £63000 with a £31000 balance remaining. Payments are all up to date. Most of the marital debt is in my name and currenyly i am on benefits due to illness. Ex pays mortgage but the total debt in my name is £43000. Before the marriage ended i vould afford all the payments had an excellent credit rating and am ashamed to find myself in this position. The only other thing i own is a 12 year old car worth about £600. I am currently in a dmp and really struggling to live and pay that. I am now considering bankruptcy as my only option going forward. Will i be made to sell the home with me having £16000 equity? I have nowhere to turn, no family, no nothing. Conpletely out of my depth here and dont know what to do.

Former_StepChange_Joe · 6 July 2018 at 5:11PM

Hello

Thanks for your message and welcome to the forum.

Bankruptcy can certainly be a good option if you’re unable to pay towards the debts and clear them over a longer period of time.

However, bankruptcy would likely mean losing assets such as savings and non-essential luxury goods, and your vehicle could be affected regardless of its value.

Equally, if you’re situation is likely to improve in the next two years, and if that means you’ll be able to offer more to your debts, then waiting for this to happen could mean avoiding bankruptcy.

I’d recommend getting in touch with StepChange to discuss the options available to you. A good place to start is their online Debt Remedy self-help tool. This is available 24 hours a day and takes about 20 minutes to complete. The tool will guide you through creating a budget and will then offer the best debt solution for your situation.

I hope you’ve found this helpful.

Take care
Joe

Cbn2000 wrote: »

Hi,

I wonder if you could give me some direction. I am considering Bankruptcy as a means to getting out of the debt I have been in for 6 years as per the following:

- My Debt is approx. £54000
- The debt has been accrued through marital debt, divorce and losing all my assets to my wife.
- All the debt is credit card and overdraft.
- I earn £52K a year but my out-goings, without debt payment match my income - I'm currently pay only a token amount for towards my debts. My high expenditure commitments are Rent, CSA payments for my 17 year old son, then University costs for older daughter University. This will be the case for the next 2 years, then my situation will improve - but I'd rather act now whilst I am in this situation.
- My assets consist of a £1500 car, some household possessions and about £3000 savings.
- I'm 49 years old

I much appreciate any advise you can give me

Crowlikethebird · 7 July 2018 at 2:49PM

Hi
Do you know if the bankruptcy process effects the switching service?
I thought I had all my ducks in a row until I realised that my current account would be closed as it has an overdraft (£10, not used).
I applied to switch my Barclays current account to my Metro account, the date for the switch is 16/7/18 but I am planning on submitting the application on Monday as rent is due 19/07. Should I wait until after this date but then risk my salary being frozen as it's paid on last working day of the month?
I am not sure if one option is better than another.
Thanks for any advice (again).

Former_StepChange_Joe · 9 July 2018 at 10:08AM

Hello

Thanks for your message.

It’s unlikely that going bankrupt will affect your ability to use the switching service. There are a few things worth bearing in mind, however.

I’d recommend you switch to your new basic account before you go bankrupt. When you switch, your income and priority payments will be moved over to this new account. This reduces the risk of missing any bill payments. However, the new account will still be frozen for a short time after your bankruptcy.
If you wait until after your bankruptcy to switch, your old account will likely have been frozen or closed already, increasing the risk of missing payments to your household bills and losing a portion of your income.

If you’re still unsure, I’d recommend getting in touch with the Insolvency Service as soon as possible to find out more. You can reach them on 0300 678 0015 Monday to Friday 9am – 5pm.

I hope you’ve found this helpful.

Joe

Crowlikethebird wrote: »

Hi
Do you know if the bankruptcy process effects the switching service?
I thought I had all my ducks in a row until I realised that my current account would be closed as it has an overdraft (£10, not used).
I applied to switch my Barclays current account to my Metro account, the date for the switch is 16/7/18 but I am planning on submitting the application on Monday as rent is due 19/07. Should I wait until after this date but then risk my salary being frozen as it's paid on last working day of the month?
I am not sure if one option is better than another.
Thanks for any advice (again).

Cbn2000 · 9 July 2018 at 1:36PM

Hi - and thank you for your response. My other question relating to my situation is, would in not be better for me to bankrupt myself now, whilst I have high financial demands and no assets? Rather than wait some years until I have some spare income - but then be consumed by debt repayment for the rest of my working life.

Regards

Cbn2000

Former_StepChange_Joe · 10 July 2018 at 12:02PM

Hello

Thanks for your message.

How you decide which is the best way forward is entirely up to you. Each debt solution has its pros and cons, of course.

Making a fair offer of payment towards your debts wouldn’t necessarily protect you from collections action, but it would avoid the impacts that bankruptcy can have. It could however mean paying towards the debts over a much longer period of time.

Bankruptcy, however, would protect you completely from collections action and could mean being debt free in 12 months. Even if an income payment arrangement (IPA; a monthly payment to the Insolvency Service) is set by the Official Receiver (OR), this would last no more than 3 years. Bankruptcy would however mean losing your assets and savings. It would also have wider reaching impacts on your credit file, ability to get onto a future tenancy, mortgage or remortgage, among other things.

It’s also worth bearing in mind that if the IPA is set for 3 years, and your budget surplus increased during that time, you’d need to report this to the OR so your IPA can be increased to take into account the available surplus.

To help you make your decision, StepChange can take a closer look at your financial situation and make recommendations based on that.

I recommend getting in touch with StepChange so they can assess your financial situation more closely, and give you some tailored debt advice. A good place to start is the Debt Remedy self-help tool.

Thanks

Joe

Cbn2000 wrote: »

Hi - and thank you for your response. My other question relating to my situation is, would in not be better for me to bankrupt myself now, whilst I have high financial demands and no assets? Rather than wait some years until I have some spare income - but then be consumed by debt repayment for the rest of my working life.

Regards

Cbn2000

Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

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