SOA and a bit of advice

lh1234 · 26 May 2018 at 10:46AM

Hi, I'm new to this thread and just looking for a bit of help and advice. After struggling with debt for the past few years and trying to avoid Bankruptcy; I have realised that I have very little choice. I can't afford to do an IVA as don't have enough surplus income.

I am recently divorced (thankfully) but most of our debts was in my name only - therefore I need to do something about them. I have been on a reduced payment system for a while but since divorce I am unable to keep this up at the rate I was.
Woul
I have 3 children who stay with me 2/3 nights a week so I have included some allowance for what I spend on them whilst they are in my care - also what the CSA recommend for my income I need to pay to my ex wife

I have a car on HP which I pay £164 a month for. Its nothing special and worth around £4k on the private market but outstanding finance balance is around £6k.
I do however need the car for commuting purposes and also to see my children as much as I do (I dont want them missing out). I usually work shifts and have my children in the week and weekend around these. I will finish work around 4/5pm and head straight to pick them up, then take them to school the following day and straight back into work.
Public transport would take around 2 hours each way and would mean it would either be a case of working or seeing my children. Would the OR be understanding of this and allow the expense? I would be happy to allow that car to be repossessed and buy a cheap run about if needed.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 3 (Live with me 2/3 nights a week)
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1670
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1670

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 164
Rent.................................... 450
Management charge (leasehold property).. 0
Council tax............................. 70
Electricity............................. 40
Gas..................................... 40
Oil..................................... 0
Water rates............................. 13
Telephone (land line)................... 29
Mobile phone............................ 28
TV Licence.............................. 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 270
Clothing................................ 40
Petrol/diesel........................... 120
Road tax................................ 13
Car Insurance........................... 80
Car maintenance (including MOT)......... 15
Car parking............................. 20
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 12
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 7
Life assurance ......................... 10
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 0
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 0
Child Maintenance....................... 230
Total monthly expenses.................. 1663

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 4000
Other assets............................ 0
Total Assets............................ 4000

Secured & HP Debts
Description....................Debt......Monthly...APR
Mortgage...................... 0........(0)........0
Hire Purchase (HP) debt ...... 6000.....(164)......0
Total secured & HP debts...... 6000......-.........-

Unsecured Debts
Description....................Debt......Monthly...APR
Credit Card....................794.......0.........0
Credit Card....................3722......0.........0
Catalogue......................889.......0.........0
Loan...........................181.......0.........0
Old Electric Account...........472.......0.........0
Credit Card....................4851......0.........0
Credit Card....................1291......0.........0
Old Insurance Balance..........100.......0.........0
Loan...........................8313......0.........0
Overdraft......................3038......0.........0
Overdraft......................486.......0.........0
Total unsecured debts..........24137.....0.........-

Monthly Budget Summary
Total monthly income.................... 1,670
Expenses (including HP & secured debts). 1,663
Available for debt repayments........... 7
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 7

Personal Balance Sheet Summary
Total assets (things you own)........... 4,000
Total HP & Secured debt................. -6,000
Total Unsecured debt.................... -24,137
Net Assets.............................. -26,137

TheGardener · 27 May 2018 at 8:39AM

Your SOA look perfectly reasonable. I think with HP debts which are technically secured debts, the company will normally cancel the agreement but any outstanding balance will be included in the BR. Is it definitely an HP agreement? Most cars these days are lease agreements. If a lease agreements then the same would happen, the company would normally cancel the agreement and any balance will fall in to the BR.

If you are definitely going to go BR then probably best to just stop paying the car agreement and save up for the BR fees, it ill take several weeks before the company start making a real fuss about the payments.

Getting a cheap runaround for £1000 or less is the best idea if you need a car.

lh1234 · 27 May 2018 at 1:08PM

Thank you for your reply

It is definitely a HP agreement with around 3 years left to run.

I have already spoken to the finance company who have told me that providing the payments are being met they are happy to let me keep the car and that they wouldn't repossess it.

Bankruptcy unfortunately is the way forward. I did try an IVA last year but due to the low return to creditors around 8-10p (trying to remember off the top of my head) it didn't get enough votes. Since then I have been making reduced payments to all but now one creditor is refusing to stop charges/interest and the balance is increasing by around £300 a month.

TheGardener · 27 May 2018 at 1:54PM

I would check your HP agreement small print about the car - many of us on here have learned the hard way that 'staff' at any company - (and that includes the banks who you would have hoped would know better) rarely understand the consequences of BR on anything. Your HP agreement will say what will happen if you become BR. Find the agreement and read it top to bottom. The HP company won't want you to stop making payments so may tell you "everything will be fine" just to keep you paying up to the last minute.

Although travel and transport are fixed costs for most people, the risk is that the OR may decide that paying over £400 p/m for a vehicle is too much. However, if your work is high mileage but work don't allow you to claim that as a work expense (??) then you may be able to persuade them to allow you to keep the car. I would still stress that you need to read the HP agreement before you make any decision.

debt_doctor · 27 May 2018 at 4:09PM

Hi,

The HP company contract will almost certainly have a clause where they may terminate the contract upon Insolvency.
Whilst they may indeed do just that, I have seen plenty who are happy to carry on receiving the payments (this is commonplace in DROs), but it's a gamble for you.
The OR will have no interest in the agreement and should disclaim it, but can decide whether it is an allowable expense or not.

Your SOA would show a surplus without the HP payment - maybe you should add that payment to groceries instead (plenty of room for it in the housekeeping category) and explain to the OR that you pay for the HP out of that (flexible) budget. (if you keep the car).

You should not be asked to pay in to an IPA on that SOA.

DD

lh1234 · 27 May 2018 at 9:32PM

My HP agreement does have a clause where it says they would repossess it in the event of insolvency but after a lengthy phone call with them about the situation they did state they would only take it in the event of non payment. It is with a specialist finance company for people with poor credit therefore they said they are more understanding in these situations.

With the arrangement between me and the ex wife, not having a car would make it very difficult for me to have the kids in the week. Public Transport is around 2 hours each way whereas its a 30-40 journey by car. I have an hour between dropping them off at school and having to be in work.

I would quite happily let that car go back to the finance company, but would rather hold onto it if I can as its very reliable, suits the needs of the children and fairly economical. When we purchased the car the actual cost of the finance was virtually offset by savings in fuel, insurance and road tax and potential repairs over the old car we previously had.

lh1234 · 27 May 2018 at 9:35PM

I have amended my SOA to include the value for the HP payment around the Grocery section as it was fairly scarce. I thought though that having my expenses being greater then my income would be a bad thing for the OR to see

debt_doctor · 28 May 2018 at 9:23PM

Negative financial statements are fine - with an explanation.
Your explanation is that you are reducing your housekeeping still further to make the HP payment to support contact with your family - but if the car goes, your housekeeping budget is still reasonable.
DD

TimeToRebuild · 29 May 2018 at 10:45AM

I would try and get it in writing that they will allow you to keep the car and remove the clause from your contract, i was told i could keep the car when going bankrupt

Sure enough i get a letter through for repossession, i didn't mind as i kind of expected it.

Hope it all goes will for you

lh1234 · 30 May 2018 at 9:21PM

Thank you. I will ring them again tomorrow and ask them to put that in writing. I am contemplating though stopping payments and letting the car be repossed. Using the money to purchase a cheap run about for a bit.

How long after stopping payments/being made bankrupt did it take for that letter to come through?

SOA and a bit of advice

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