Advice on bankruptcy and car please

james6969 · 22 June 2019 at 11:14AM

Hi all

Just wondered if I could get a little advice please.
I'm seriously considering bankruptcy.

I'm currently getting ESA, Housing Benefit and full PIP (care and mobility) I have my own car that is valued around £2500-3000 (according to Parkers, although I think its closer to £3500 from used prices in the area.

I understand any car over £1000 is likely to be sold off, however I need my car. I have pretty severe anxiety and suffer panic attacks when I'm out quite a lot. I also don't like enclosed spaces. Before this car I bought a megane and had panic attacks when I got in it and sold it less than 2 weeks later (for a £800 loss) and bought a 3008 MPV as it has more space and I don't feel trapped in it. Theres no way I could get a reliable MPV for under £1000, which is another problem as I can't be breaking down every day in one, and I go for long drives a couple of times a week to the countryside to help keep me calm. I also have a letter from my CPN stating my car is my lifeline as I would be pretty much housebound without it, although that is from last year.

Is there any chance I would be allowed to keep the car? Or has it got to go? Do they actually check what car you have or anything? I'm a couple of months away from filing so could sell it to my daughter for a nominal fee or gift it to her but keep me as the keeper if that makes a difference, although I'm thinking that could be fraud or something?

The other option is, I could get a mobility car, but it seems overkill to get a £20k car just to replace one I am completely happy with worth a few grand. Presumably they couldn't touch a car provided under the mobility scheme? Other problem is, I only have around 14 months left on my PIP award and obviously no guarantee I will get it again, so in a year I could be in a position where I have no car at all if it gets taken back from me.

Also, with me being on benefits solely, would that be classed as income and I what sort of payments if any would I need to make from them

Thank you so much for anyone's help, I didn't read about 20 pages of posts before posting but struggled to find anything similar to this

sourcrates · 22 June 2019 at 3:21PM

Hi,

This is something you would have to dicuss with your OR.

It may be possible for you to keep the car, but it would be at the OR`s discretion, its covered by the following legislation :

30.135 Bankrupt claims he/she needs vehicle due to his/her own disability and/or for domestic use A bankrupt may inform the official receiver that he/she has a disability and that his/her motor vehicle is necessary for mobility, or that the vehicle is necessary for domestic use (to take children to school, for example). The official receiver should treat such cases considerately, but where the bankrupt is unable to satisfy the official receiver that use of the vehicle is necessary (see paragraph 30.127) for his/her use personally (see paragraphs 30.128 and 30.137), he/she should nevertheless treat the vehicle as an asset of the estate (see paragraph 30.139).

fatbelly · 22 June 2019 at 4:02PM

If you need a car then it can be declared as exempt. However if it is of 'excess value' then the OR can take it, sell it and give you £1000 for a replacement, and at a value of £2500 that would be worth doing. Guidance is here:

30.141 Exempt vehicles of excess value

(Amended May 2013)

Where an exempt vehicle appears to have a significant value (see Chapter 31.2 paragraph 31.2.44), it is open to the official receiver to claim it for the estate if he/she considers the realisable value of the vehicle exceeds the cost of a reasonable replacement (see paragraph 30.145) [note 6]. The vehicle must be claimed by notice in writing no later than 42 days after it came to the notice of the official receiver as trustee (in most cases, this will be the day that the official receiver becomes trustee) [note 7]. Any notice after that time can only be served with leave of the court [note 8]. Any subsequent sale of the vehicle should be conducted in line with the guidance in Chapter 31.2 part 3.

30.142 Vehicle should have a net value to the estate to be worth claiming

The official receiver should not take any steps to claim an exempt vehicle unless he/she can be reasonably satisfied that there will be a net benefit to the estate in doing so, after taking into account any costs of sale and of a replacement vehicle (see paragraph 30.145).

When valuing the vehicle, the official receiver should take into account the value of any personalised registration mark attached to the vehicle (see Chapter 31.2, paragraph 31.2.74) and any outstanding (accrued) tax and insurance on the vehicle (see Chapter 31.2 paragraphs 31.2.70 and 31.2.71).

Having said that, it is perfectly possible to get a spacious car for £1000.

However, the fact that you are considering a transaction at undervalue does indicate that you have not understood the bankruptcy process - perhaps you should post some more detail about your situation - maybe a statement of affairs.

And no, you do not get an IPA on benefits-only income.

Minkym00 · 23 June 2019 at 4:39PM

£3.5k is quite a lot over the £1000 limit though. I agree with Fatbelly that it should be easy enough to get an MPV for under a grand.

Do not gift it or sell it for less than market value as that would be a bankruptcy offence.

I don’t know anything about motability cars but if they’re provided via secured loans then you could keep it as long as there isn’t a clause in their terms that says you the contract is forfeit if you declare bankruptcy (as some car finance contracts do).

fatbelly · 23 June 2019 at 5:07PM

Minkym00 wrote: »

I don’t know anything about motability cars but if they’re provided via secured loans then you could keep it as long as there isn’t a clause in their terms that says you the contract is forfeit if you declare bankruptcy (as some car finance contracts do).

It's a lease arrangement. You hand over your mobility component of PIP or DLA. Works fine with bankruptcy.

james6969 · 28 June 2019 at 9:45PM

Thanks for the replies everyone.
I've already been looking for MPV's for around the £1000 mark and not getting very far tbh. They are there, but we are talking about 15 year old C-Max's with 150000 on the clock and similar. I shall keep looking though

fatbelly · 28 June 2019 at 10:56PM

Try a Xsara Picasso or Renault Scenic or Vauxhall Zafira.

Maybe a Kia Carens

Advice on bankruptcy and car please

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