Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

StepChange_Allen · 21 November 2017 at 10:24AM

JenP85 wrote: »

Hello,
My friends about to go bankrupt (she is submitting the form tomorrow) but she has a liability order issued against her by Birmingham Council for Council Tax from a number of years ago.

As long as she doesn't let the enforcement officer in and sign anything from them about assets will this fall in with all her other debts? I've just read on the CAB that this is NOT the case and that she'll still have to pay the enforcement officer OR have her assets sold (Not that she has any)

This is what CAB says on their website

"When creditors can still chase you...

Creditors are allowed to carry on chasing you for payment of certains kinds of debts, including:
council tax arrears for which your local authority has obtained a council tax liability order before bankruptcy - your local authority has the right to use bailiffs to recover payment after a bankruptcy order is made. They can't make you pay in any other way, for example by taking money from your wages."

Yet I can't find it anywhere else. Does anybody know for sure?

Hi there

Thanks for your message.

Yes, the only way that council tax arrears can still be collected after bankruptcy is if a liability order was in place before the date of the bankruptcy order. A warrant of control (the use of enforcement agents) is indeed the only way that the debt can be collected, but whilst it is allowed, my understanding is that it isn't very common when someone is bankrupt. Once your friend is discharged from bankruptcy (usually one year after if no restrictions are put in place) the collection of the debt would then have to stop.

It's also useful to know that enforcement agents that collect council tax are not able to force entry into a property unless they've been in the property before.

I hope this is clear and helps your friend.

Best wishes

Allen

menageamoi · 22 November 2017 at 1:14PM

Hi there

I posted this on the main BR forum but didn't hear anything - can you help please?

I've been filling in the online form and have put down the amount I owe on my mortgage and a secured loan on the property in the "Assets " section. I've also put the monthly mortgage and loan payments down as an outgoing in Section 6 ( Income and Expenditure)

Should I also put the amounts I owe on my mortgage and the secured loan on the "Money You Owe" section alongside the other creditors or is that double-counting seeing as I mentioned it in the Assets section already?

Thanks

Former_StepChange_Linsi · 23 November 2017 at 9:36AM

Hello and thanks for posting,

I’m sorry no one was able to answer your question on the main forum.

If the ‘Money You Owe’ section asks you to list your unsecured debts then you won’t need to include your remaining mortgage and secured loan. If you’re asked to list all of your debts then you’ll need to include these debts as well.

Should you need further clarification on this or if you have any other questions about the form, its best to call the Insolvency Service Helpline on 0300 678 0015. They're open 9am to 5pm weekdays.

I don’t think they can fill the form out for you, but they can definitely provide guidance and give you a definitive answer about where to include information on the online form.

All the best,

Linsi

menageamoi wrote: »

Hi there

I posted this on the main BR forum but didn't hear anything - can you help please?

I've been filling in the online form and have put down the amount I owe on my mortgage and a secured loan on the property in the "Assets " section. I've also put the monthly mortgage and loan payments down as an outgoing in Section 6 ( Income and Expenditure)

Should I also put the amounts I owe on my mortgage and the secured loan on the "Money You Owe" section alongside the other creditors or is that double-counting seeing as I mentioned it in the Assets section already?

Thanks

menageamoi · 23 November 2017 at 10:18AM

Thanks very much

Dan_the_man · 10 December 2017 at 12:16PM

Hi. I have just started the application to go bankrupt, I'm working through my creditors but I'm totally lost as to who owe money to, how do I find this out? A lot of it will now be with debt collection agency.

Cider_girl · 10 December 2017 at 8:14PM

Is it worth applying to see if you have PPI if you have been bankrupt or have an IVA?

Former_StepChange_Linsi · 11 December 2017 at 10:07AM

Hi Dan,

Thanks for posting and welcome to the forum.

To find out who you owe money to you can use any of the following three websites to access your credit report for free:

• Noddle
• Clear Score
• Money Saving Expert Credit Club

I’d recommend checking all three as creditors don’t have to update each credit reference agency.

You need to be as accurate as possible when completing the bankruptcy application form. Having said this, any qualifying debt taken out before the bankruptcy order is approved will still be written off, even if it isn’t listed in your application.

I know that you’ve started the bankruptcy application but have you previously sought any debt advice to make sure this is the right debt solution for you? If you haven’t, I’d recommend using out online Debt Remedy tool to make sure bankruptcy is the right option before you submit the application. Here’s the link.

I hope this helps,

Linsi

Dan_the_man wrote: »

Hi. I have just started the application to go bankrupt, I'm working through my creditors but I'm totally lost as to who owe money to, how do I find this out? A lot of it will now be with debt collection agency.

Former_StepChange_Linsi · 11 December 2017 at 10:49AM

[FONT=&quot]Good morning,

[/FONT][FONT=&quot]Welcome to the forum and thank you for your post.

[/FONT][FONT=&quot]PPI refunds are treated a bit differently in bankruptcy and IVAs.

[/FONT][FONT=&quot]IVA [/FONT]

[FONT=&quot]I[/FONT][FONT=&quot]f a PPI refund is received while in an IVA, you must tell the insolvency practitioner. Normally you’d be expected to pay the refund into the IVA but you may be able to keep the interest.[/FONT]

[FONT=&quot]An insolvency practitioner will usually check for mis-sold PPI as part of the IVA. So if you have an IVA you can ask your provider if they’ve checked this. If they haven’t, you can make a claim but you’d need to tell the insolvency practitioner if you’re entitled to a refund. [/FONT]

[FONT=&quot]Bankruptcy [/FONT]

[FONT=&quot]If a PPI policy was taken out before you went bankrupt, the refund plus any interest permanently vest in the official receiver (OR) from the date of the bankruptcy order. This means the refund must be paid in full to the OR, even if you’ve been discharged. Failing to declare a refund to the OR is also an offence.[/FONT]

[FONT=&quot]The [/FONT][FONT=&quot]OR may also claim back any mis-sold PPI to raise extra funds for the bankruptcy estate. If you’ve declared bankruptcy, it’s not really worth reclaiming PPI which was taken out before a bankruptcy order because any refund you may be entitled to will belong to the OR. [/FONT]

[FONT=&quot]I hope this helps. [/FONT]

[FONT=&quot]Linsi [/FONT]

Cider_girl wrote: »

Is it worth applying to see if you have PPI if you have been bankrupt or have an IVA?

GMK66 · 12 December 2017 at 9:30PM

Hi,
I went bankrupt in 2014, i was able to keep my house on an intrest only mortgage which was 30 000 in negative equity. I have recently split from my partner and im struggling to pay the mortgage on my own, the house is still 20-25 000 in negative equity. I would be greatful for advice on my options.
Thanks

StepChange_Rachael · 13 December 2017 at 3:12PM

Hi

Thanks for your post and welcome to the forum.

Any included debt taken out before a bankruptcy petition is included in bankruptcy. As a mortgage is an included debt, if you decided to sell the property or hand back the keys and there is a shortfall because of the negative equity, then this debt would be included in your bankruptcy and they wouldn’t be able to chase you for it.

However, I’d suggest seeking advice based on your full financial situation before taking any drastic action with the property. I’d suggest making sure you’ve looked down every avenue. For example, checking your benefit entitlement, you might be eligible for support now your living situation has changed. I'd suggest checking if there's any expenditure that can be reduced realistically or thinking about options such as having a tenant to help with houshold bills. Anything that can increase the income or reduce the expenditure will help make the mortgage payments more managemable.

You can check with Turn2us for financial advice and help including checking benefit entitlement. If ultimately the mortgage payment is too high after exhausting all other options then I’d suggest contacting the Insolvency Service to check that the shortfall would be included in the bankruptcy, however based on what you’ve mentioned it's my understanding that it would be.

I hope this helps.

Thanks
Rachael

GMK66 wrote: »

Hi,
I went bankrupt in 2014, i was able to keep my house on an intrest only mortgage which was 30 000 in negative equity. I have recently split from my partner and im struggling to pay the mortgage on my own, the house is still 20-25 000 in negative equity. I would be greatful for advice on my options.
Thanks

Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

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