Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

woodformoretrees · 19 May 2014 at 1:18PM

StepChange_James wrote: »

Hello,

Thanks for posting. If your husband needs advice about dealing with the joint debts that he's having to repay then we can help him draw up a budget and offer advice about how to deal with the debts.

It sounds like the biggest issue is to do with how the house is being dealt with following your bankruptcy, which is something we wouldn't be in a position to give advice about.

If you feel that the Official Receiver isn't dealing with your case fairly then you could make a complaint by filling out the form on this page: http://www.insolvencydirect.bis.gov.uk/complaintform.htm (if it was a private Involvency Practitioner dealing with your case then there's a link on the above page that will take you to the place to complain about them). They'll investigate and give a written response to complaints they receive, usually within 10 days.

You mentioned some issues around where to live after leaving the house. The best people to talk to for advice about housing issues are Shelter. They've got a housing advice helpline which you might find useful: http://england.shelter.org.uk/get_advice/how_we_can_help/housing_advice_helpline.

Kind regards

James

Thank you James, will give Shelter a call and ask. With regards to being treated fairly - I think the question we have is: how would we know of there's no one to advise. I presume we are but who do we turn to to make sure?

longtermplanner · 19 May 2014 at 1:42PM

woodformoretrees wrote: »

If there is no doubt that he will be treated fairly then I guess we don't need any advice (?) and just sit back and let them get on with it.

I was start from the expectation that he will be treated fairly. one of the reasons I suspect you are having trouble getting advice is that no-one can actually see why you need it.

Are you paying the mortgage at present? If you are, you could consider stopping paying this to save up so you have 6 months deposit.

Have you asked the OR why you cannot sell the house yourself?

StepChange_Private_Messages · 20 May 2014 at 11:56AM

woodformoretrees wrote: »

We are still paying mortgage. We have asked to go interest only so we may save a deposit but they say that would be irresponsible lending (?!). We have though about stopping but:

1)What if they start repossession before we can sell? (Thus ensuring it is undersold by the mortgage company to cover costs)

2)Won't that adversely effect my husband's credit rating/rental chances?

3) Is rental deposit of 6 months held and returned at end of rental period, or is rental deposit used as rent for first six months?

It may be obvious that I don't need advice to people who understand all this process but it really doesn't feel that way. I though that interest only was the way to go so it shows I know nothing

Re selling house ourselves: we can or we can use their agents. I am also unable to get advice on which is best (sorry, I know I'm like a stuck record)--- It seems easier to sell through them with regards the legalities but is it better to go it alone? I think husband's costs are going to be less if we go through them and we don't have upfront costs to pay. How do people find out which is best or even the implications of each option.

We've been here 20 years so I'm not at all familiar with house selling/moving.

Hi there,

I've spoke to our bankruptcy-specialising debt advisors here regarding your questions. They recommend that because you have a lot of equity in your property, the wisest option would be to consult your lender and ask to be put on an assisted sales scheme rather than go to a third party.

The benefit of selling the house via the assisted sales scheme is that there's complete transparency- the lender will know step by step of the actions you're taking to get the house sold and should not feel the need to contact you for continuous updates. You will be required to help with marketing the house and looking for prospective buyers, and you may lose a percentage of the asking price, but doing things this way really does involve much less risk than via a third party who may not update you or the lender as much as preferred.

In regards to your credit rating, as your mortgage is already listed on your credit file, it will have already been adversely affected by any late or missed payments.

When it comes to rental deposits, these are usually held for a period of 6 months and are not classed as the rent payments for that period. They're used as an assurance that the landlord will still get paid should you leave the property before the 6 month time period is up. Once you've exceeded the contracted timeframe for renting the property, you will get that deposit back upon leaving.

Hope this helps and wishing you best of luck moving forward.

Kind regards

Rachel

Piedpiper1 · 21 May 2014 at 9:17PM

Hi, I have been in a DMP for a couple of years and currently have around £7k still outstanding making payments of £51 a month. However I have been hit with a Tax Credit overpayment of over £7k which I am unable to include in my DMP. The tax office will only accept £70 per month which I can't find so I am wanting to try for an IVA. My DMP company have suggested this on a number of occasions anyway. What is holding me back is there are 3 debts which were missed from my original DMP. All are up to date and have a combined balance of £400. I have also had to take out a Provident loan and payday loan in recent months which are against the rules of my DMP. Do I come clean to my DMP company about all this and if I do will they still help me with an IVA or should I just approach a new Debt company so I can start afresh and hopefully get an IVA through them. Sorry for rambling but this is seriously stressing me out.

longtermplanner · 22 May 2014 at 4:07PM

Piedpiper it sounds as though you have been struggling with the £51 DMP payments if you have had to take out other loans. That suggests to me that you can't afford £51 a month, which means that an IVA is simply not realistic. And HMRC may veto it anyway, as they would have over 50% of your debt.

Are you renting or buying? And what is your total debt, including everything, as accurate as you can make it?

System · 22 May 2014 at 4:12PM

Piedpiper1 wrote: »

Hi, I have been in a DMP for a couple of years and currently have around £7k still outstanding making payments of £51 a month. However I have been hit with a Tax Credit overpayment of over £7k which I am unable to include in my DMP. The tax office will only accept £70 per month which I can't find so I am wanting to try for an IVA. My DMP company have suggested this on a number of occasions anyway. What is holding me back is there are 3 debts which were missed from my original DMP. All are up to date and have a combined balance of £400. I have also had to take out a Provident loan and payday loan in recent months which are against the rules of my DMP. Do I come clean to my DMP company about all this and if I do will they still help me with an IVA or should I just approach a new Debt company so I can start afresh and hopefully get an IVA through them. Sorry for rambling but this is seriously stressing me out.

Hi,

It is expected that you don’t get out any new debt when you are on a DMP. I don’t know which DMP company you are using but in any case they may be charging a fee or be trying to ‘sell you’ an IVA because it’s profitable for them.

To be sure you’re getting the help you need you should get free, impartial debt advice. We can offer that. We can look at your situation and recommend the best solution. If it’s a DMP we can offer a fee-free plan including all your debts, you can switch over to us. We can also offer an IVA if that’s the way to go although we would only offer an IVA if it's appropriate. You’re under no obligation to stay with your current DMP provider – you can leave at any time.

You should include all of your debts – the best debt solution can then be worked out based on what you can afford. The tax debt is a priority – we can budget that this is paid off as quickly as possible.

To get the advice you need enter your budget details into our online Debt Remedy tool – it’s free, confidential and easy to use. You can also call 0800 138 1111 to speak to a debt advisor in confidence.

I hope this helps.

Thanks,
Jess

longtermplanner · 22 May 2014 at 4:16PM

woodformoretrees if you are selling the house, you don't need to stop paying the mortgage as you will end up with your husband's half of the equity.

puddlepuss · 27 May 2014 at 5:53PM

Hi. I was declared bankrupt in 1997 & went through all the required procedure with the official receiver, producing a 'statement of affairs' & handing over my personal pension policy as required under bankruptcy law as it applied then. Due to a 'mix-up' by the official receiver, I was not discharged from bankruptcy until 2002. Five years later in 2008, I received a letter when I reached the age of 55 stating that as the official receiver was the 'trustee' of my private pension they intended to realize the 'non-protected rights' lump-sum portion of my pension fund. (Luckily, I had stopped paying into the pension when I became bankrupt so the amount the official receiver intended to claim was only about £9000). They also offered me the chance to 'buy back' their interest in my pension if I paid them the sum of £4500. Unfortunately, at the time I had no funds available to do this so I had no option but to leave things as they were, so to speak.

In light of this, I wrote back & asked the official receiver if I could have a list of the original creditors in my bankruptcy so I could see how the monies from my bankruptcy estate would be distributed. I did not receive a reply to my letter for some time so I wrote to them again. At last, I received a letter containing the creditor list I had asked for...unfortunately it was not mine but someone else's creditor file entirely! When I wrote back & complained, I was then sent another creditor list that WAS mine, but with my then current banking & credit providers on it, not those from my original bankruptcy of 1997!
Being disgusted & frustrated with all this 'messing about', I wrote an official letter of complaint accusing the official receiver of 'gross maladministration' in the handling of my bankruptcy. I duly received a reply from them apologising for the delays & 'mix-ups' but denying 'maladministration' on their part. Totally disheartened, I decided not to pursue the matter any further as I had other more important things happening in my life at the time & had to move on from this debacle.

Six years later in January of this year (having turned 60 last October) I decided to contact my private pension provider Scottish Widows and enquire as to how much of my pension 'pot' was left after the official receiver had taken their 'cut'. I received a reply from them to say that the official receiver had not yet contacted them but that when they did, they would only be allowed to take the 'non-protected rights' portion of my pension pot. Because of this they were unable to tell me what my final pension fund would be. I wrote back to Scottish Widows to ask why the official receiver had not realised their interest in my pension when I had turned 55 yrs old? They replied to say that it was nothing to do with them & that I should contact the official receiver directly.

This worried me greatly as I have a type of 'builder' pension fund that increases in value each year even though I no longer pay into it. Because the official receiver had not taken the NPR portion of my pension in 2008 when I turned 55 (As was their intention then) the fund value has increased significantly over the last five years & as such, has the percentage they can take has also increased? Is the OR allowed to do this or should they have taken the funds when I reached 55?

I wrote to the OR to demand an explanation but they just replied to say that all 'pensions in bankruptcy' cases are now dealt with by an appointed 'contractor' & I should contact them. I duly did this & received the following reply:

"Dear Sir,

We refer to your recent email and have noted the contents.

We apologise for the delay in responding to you but we have received communication from Scottish Widows stating that there is a forfeiture clause that applies to policy *******************, we have requested further documentation and therefore are not in a position to confirm when the policy will be realised.

We will update you accordingly.

Yours faithfully

Wragge & Co LLP"

On reading this reply, I was totally shocked & dismayed to say the least! Why had Scottish Widows not informed me in our recent correspondence that my pension is in fact 'forfeit' in the event of bankruptcy? Surely the official receiver would have informed them years ago in 1997 when they confiscated my pension policy? It seems inexplicable that Scottish Widows have only just discovered that I was declared bankrupt back in 1997. If my pension is indeed 'forfeit' then why has it still been increasing in value all these years? Does this mean that Scottish Widows are allowed to carry on adding profits to my pension fund knowing full well that I would eventually have no claim on it, thereby confiscating the built-up funds for themselves? I have lots of questions but no answers unfortunately.

Since January I have had no correspondence whatsoever from Scottish Widows or Wragge & Co LLP.

We are now at the end of May & I am considering whether I should contact a solicitor for advice or write to the relevant ombudsman to raise a complaint about the handling of my bankruptcy affairs by the official receiver & the administration of my pension by Scottish Widows. :mad:

Any advice would be greatly appreciated!

longtermplanner · 27 May 2014 at 8:41PM

I suggest that you should write a formal letter of complaint to both Scottish Widows and whoever the appointed contractor is, requesting that you are informed of the current situation.

I see no need to go to the expense of a solicitor. They may be being a useless bunch of idiots, but you have paid nothing into this pension since you went bankrupt and it is hard to see how you can be losing by their delays.

StepChange_Pavan · 28 May 2014 at 12:32PM

puddlepuss wrote: »

Hi. I was declared bankrupt in 1997 & went through all the required procedure with the official receiver, producing a 'statement of affairs' & handing over my personal pension policy as required under bankruptcy law as it applied then. Due to a 'mix-up' by the official receiver, I was not discharged from bankruptcy until 2002. Five years later in 2008, I received a letter when I reached the age of 55 stating that as the official receiver was the 'trustee' of my private pension they intended to realize the 'non-protected rights' lump-sum portion of my pension fund. (Luckily, I had stopped paying into the pension when I became bankrupt so the amount the official receiver intended to claim was only about £9000). They also offered me the chance to 'buy back' their interest in my pension if I paid them the sum of £4500. Unfortunately, at the time I had no funds available to do this so I had no option but to leave things as they were, so to speak.

In light of this, I wrote back & asked the official receiver if I could have a list of the original creditors in my bankruptcy so I could see how the monies from my bankruptcy estate would be distributed. I did not receive a reply to my letter for some time so I wrote to them again. At last, I received a letter containing the creditor list I had asked for...unfortunately it was not mine but someone else's creditor file entirely! When I wrote back & complained, I was then sent another creditor list that WAS mine, but with my then current banking & credit providers on it, not those from my original bankruptcy of 1997!
Being disgusted & frustrated with all this 'messing about', I wrote an official letter of complaint accusing the official receiver of 'gross maladministration' in the handling of my bankruptcy. I duly received a reply from them apologising for the delays & 'mix-ups' but denying 'maladministration' on their part. Totally disheartened, I decided not to pursue the matter any further as I had other more important things happening in my life at the time & had to move on from this debacle.

Six years later in January of this year (having turned 60 last October) I decided to contact my private pension provider Scottish Widows and enquire as to how much of my pension 'pot' was left after the official receiver had taken their 'cut'. I received a reply from them to say that the official receiver had not yet contacted them but that when they did, they would only be allowed to take the 'non-protected rights' portion of my pension pot. Because of this they were unable to tell me what my final pension fund would be. I wrote back to Scottish Widows to ask why the official receiver had not realised their interest in my pension when I had turned 55 yrs old? They replied to say that it was nothing to do with them & that I should contact the official receiver directly.

This worried me greatly as I have a type of 'builder' pension fund that increases in value each year even though I no longer pay into it. Because the official receiver had not taken the NPR portion of my pension in 2008 when I turned 55 (As was their intention then) the fund value has increased significantly over the last five years & as such, has the percentage they can take has also increased? Is the OR allowed to do this or should they have taken the funds when I reached 55?

I wrote to the OR to demand an explanation but they just replied to say that all 'pensions in bankruptcy' cases are now dealt with by an appointed 'contractor' & I should contact them. I duly did this & received the following reply:

"Dear Sir,

We refer to your recent email and have noted the contents.

We apologise for the delay in responding to you but we have received communication from Scottish Widows stating that there is a forfeiture clause that applies to policy *******************, we have requested further documentation and therefore are not in a position to confirm when the policy will be realised.

We will update you accordingly.

Yours faithfully

Wragge & Co LLP"

On reading this reply, I was totally shocked & dismayed to say the least! Why had Scottish Widows not informed me in our recent correspondence that my pension is in fact 'forfeit' in the event of bankruptcy? Surely the official receiver would have informed them years ago in 1997 when they confiscated my pension policy? It seems inexplicable that Scottish Widows have only just discovered that I was declared bankrupt back in 1997. If my pension is indeed 'forfeit' then why has it still been increasing in value all these years? Does this mean that Scottish Widows are allowed to carry on adding profits to my pension fund knowing full well that I would eventually have no claim on it, thereby confiscating the built-up funds for themselves? I have lots of questions but no answers unfortunately.

Since January I have had no correspondence whatsoever from Scottish Widows or Wragge & Co LLP.

We are now at the end of May & I am considering whether I should contact a solicitor for advice or write to the relevant ombudsman to raise a complaint about the handling of my bankruptcy affairs by the official receiver & the administration of my pension by Scottish Widows. :mad:

Any advice would be greatly appreciated!

Hi there,

I’d recommend that you contact the Ombudsman and they will investigate your situation further:

• Pensions Ombudsman http://www.pensions-ombudsman.org.uk/
• Adjudicator’s Office (for complaints about ORs) http://www.adjudicatorsoffice.gov.uk/

I hope this helps,
Pavan

Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

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