Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

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  • Hi everyone,
    MSE saved money and life as well in the past 8 years of my UK life.

    My current income £17650 annually with bonus extra £1000
    Partners £13000 annually with overtime (25hrs /week basic)

    I have in UK
    Barclaycard £9200
    HSBC loan £8200
    MBNA (PRA Group) £3107
    Rate setter £2188

    In India ( Mortgage for property where my mum lives in)
    £28000 left. I still pay £400(approx.) a month to this loan.

    In April 2017 I called Stepchange Charity as I was drowning in the debts along with my ill dad. My relationship was getting weaker due to finances. After I read about the SC Charity, I called them got a TPP for a year. That time I was almost screwed with own business I started with my friends which had to close last year. This is the reason I got arrears and I was struggling with my payments. When I left my company I joined a retail place 16hrs and within 1 year I pushed myself to become a 37.5hrs position and a key holder of the shop. I am so grateful for SC & MSE. Also my relationship with my wife got stronger and we came to know we gonna have little one in this August. Right now we are living in a shared room accommodation part of saving. I made a monthly budget for all expenses and managed to keep all outgoings in control. My partner also had a debt about £9k, which is now only £4500 left. As my credit was not in good shape we started clearing her debts first.

    However, today I spoke to SC for my review and they suggested me IVA or Bankruptcy. As I checked the pros and cons with both, I decided to go with IVA. But SC(another dept. who deals with IVA) informed me due to I am sending money India every month for the property my mom lives they IVA wont be the option. The lenders wouldn't like this. This was taken when my dad was there in his and my name. I lost him in last June. Right now my mom lives there alone as she don't want to live here.

    In the mean time we were checking for a property to buy on a shared ownership in my partners name, however this wasn't a good idea as her salary is not enough to get a mortgage on herself. When we were checking to rent a new place its gonna cost us about £900 per month just for a one bed property n bills. If we take one property then after August my partners salary will be only 90% of basic for 6 weeks and then SMP which is about £550 I guess. As current property is a shared accommodation its not suitable for a baby to live there. In this situation with house, mortgage in India, IVA or possible solution & bringing up a baby (expenses) the budgeting doesn't seems to fit in. However low we calculated I am short of £200 a month. I would need a solution if any one have gone through similar situation.

    The above all clearly states my inefficiency in dealing with money in right time. I understand my mistake, however looking forward no options are coming into my head other than few migraine attacks.

    * Is it worth calling the debtors independently and discuss the options?
    * IVA or Bankruptcy? Bankruptcy will it affect my retail job?
    * Any other possible solutions?

    Thanks in advance.
  • Kimberley
    Kimberley Posts: 14,871 Forumite
    edited 4 April 2018 at 12:06PM
    Can I ask a few questions?

    When you go bankrupt, are you forced to go on a key meter for your gas and electric?

    Are you forced to go on a pay and go sim card and have to give up your mobile phone contract? I pay for my sons mobile contract too, what happens with that?

    Regards to my income, i do not get the same amount each week. How do they work that out? I am paid different amounts each week so how do i calculate my income?

    Do they contact your family members to let them know? Work etc?

    How do i access my money if they freeze your bank account?

    I also have a car, not worth then £1k and I also own a bus (only worth scrap value) which I preserve. That is my hobby. I pay £150 a month to store it and have to pay TAX MoT and insurance on it. Will I have to give that up? It is my hobby and all I have.

    I work a rest day every week which is not even covering my debt repayments so need advice
  • StepChange_Rachael
    StepChange_Rachael Posts: 375
    First Anniversary First Post
    Organisation Representative
    Hi

    Thank's for your post.

    It’s nice to read how the MSE forum and StepChange have been able to provide you with help and support at what sounds like a very difficult and stressful time.

    The difficulty with setting up an IVA is that 75% of the creditors have to agree for it to go ahead. Creditors and the Insolvency Service won't see a payment to family or friends as a priority expense in most cases.

    With bankruptcy the Official Receiver will look to obtain as much as possible towards the bankruptcy. They can set an income payment arrangement/order towards the bankruptcy. It’s unlikely the OR will allow for expenses such as payments to family during this time which can last a maximum of 3 years.

    StepChange will look to recommend any solutions that have a good chance of success. We won’t withhold information about any solutions from you. You can read about all the types of Debt Solutions on StepChanges homepage.

    I’m not sure if anyone else on the forum may have any other advice, but if you have questions about the recommendations StepChange has suggested we’d certainly be happy to discuss these queries or concerns further with you.

    You can find the contact details here.

    Take care,
    Rachael

    joseph09 wrote: »
    Hi everyone,
    MSE saved money and life as well in the past 8 years of my UK life.

    My current income £17650 annually with bonus extra £1000
    Partners £13000 annually with overtime (25hrs /week basic)

    I have in UK
    Barclaycard £9200
    HSBC loan £8200
    MBNA (PRA Group) £3107
    Rate setter £2188

    In India ( Mortgage for property where my mum lives in)
    £28000 left. I still pay £400(approx.) a month to this loan.

    In April 2017 I called Stepchange Charity as I was drowning in the debts along with my ill dad. My relationship was getting weaker due to finances. After I read about the SC Charity, I called them got a TPP for a year. That time I was almost screwed with own business I started with my friends which had to close last year. This is the reason I got arrears and I was struggling with my payments. When I left my company I joined a retail place 16hrs and within 1 year I pushed myself to become a 37.5hrs position and a key holder of the shop. I am so grateful for SC & MSE. Also my relationship with my wife got stronger and we came to know we gonna have little one in this August. Right now we are living in a shared room accommodation part of saving. I made a monthly budget for all expenses and managed to keep all outgoings in control. My partner also had a debt about £9k, which is now only £4500 left. As my credit was not in good shape we started clearing her debts first.

    However, today I spoke to SC for my review and they suggested me IVA or Bankruptcy. As I checked the pros and cons with both, I decided to go with IVA. But SC(another dept. who deals with IVA) informed me due to I am sending money India every month for the property my mom lives they IVA wont be the option. The lenders wouldn't like this. This was taken when my dad was there in his and my name. I lost him in last June. Right now my mom lives there alone as she don't want to live here.

    In the mean time we were checking for a property to buy on a shared ownership in my partners name, however this wasn't a good idea as her salary is not enough to get a mortgage on herself. When we were checking to rent a new place its gonna cost us about £900 per month just for a one bed property n bills. If we take one property then after August my partners salary will be only 90% of basic for 6 weeks and then SMP which is about £550 I guess. As current property is a shared accommodation its not suitable for a baby to live there. In this situation with house, mortgage in India, IVA or possible solution & bringing up a baby (expenses) the budgeting doesn't seems to fit in. However low we calculated I am short of £200 a month. I would need a solution if any one have gone through similar situation.

    The above all clearly states my inefficiency in dealing with money in right time. I understand my mistake, however looking forward no options are coming into my head other than few migraine attacks.

    * Is it worth calling the debtors independently and discuss the options?
    * IVA or Bankruptcy? Bankruptcy will it affect my retail job?
    * Any other possible solutions?

    Thanks in advance.
  • StepChange_Rachael
    StepChange_Rachael Posts: 375
    First Anniversary First Post
    Organisation Representative
    Hi

    Thanks for posting.

    I’ll look to answer all the questions to the best of my ability but when it comes to bankruptcy some questions don’t have a definite answer as it’d ultimately be up to the Official Receiver (OR).

    Firstly, if you’ve arrears with gas and electric they’ll be included in bankruptcy and it’s likely that the company will want a pre-payment meter installed until discharge. This is up to the utility company and is something the company could forcibly put in place.

    As for phone contracts, this is ultimately the Official Receivers decision. However, if it is included and the debt written off in bankruptcy it is likely an undischarged bankrupt would need to use a pay as you go option until discharged. If your sons phone is in your name it’s be the same situation.

    The OR as far as I’m aware isn’t going to actively contact your relatives or employer unless you have outstanding debt that would form part of the bankruptcy. Bankruptcy will be registered on the public insolvency register but you’d have to actively search a person on it to find out if they are insolvent.

    It’s relatively unlikely that anyone will search the register unless you’re in employment where you could lose your job if you’re insolvent. Most people would be aware when applying for a job about restrictions and checks that may be made. However, you can check your contract or speak with your HR department in privacy if you’ve any concerns.

    Most accounts will only be closed for around 2 days immediately after filing for bankruptcy. It’s important to move any direct debits so they don’t try and take them around these days and take out money in cash to cover these days.

    Whether the OR allows vehicles/assets to be kept is again ultimately their decision. If a vehicle is necessary for work travel etc and under £1000 it’s usually not taken to form part of the bankruptcy. However, if the OR doesn’t think its essential then they may look to take it.

    As an income payment arrangement/order can be set in place for a maximum of 3 years, again it’s difficult to say if you’d be allowed to maintain the £150 a month towards this cost. There will be an allowed amount for hobbies but if this is over the average they’d expect to see then they may not allow this expense.

    If you’ve not already, I’d suggest speaking with a debt advisory service to discuss the different debt solutions in more detail and so the solutions can be tailored to you.

    If you’d like to can access StepChanges contact details here.

    Hope this helps.
    Rachael



    Kimberley wrote: »
    Can I ask a few questions?

    When you go bankrupt, are you forced to go on a key meter for your gas and electric?

    Are you forced to go on a pay and go sim card and have to give up your mobile phone contract? I pay for my sons mobile contract too, what happens with that?

    Regards to my income, i do not get the same amount each week. How do they work that out? I am paid different amounts each week so how do i calculate my income?

    Do they contact your family members to let them know? Work etc?

    How do i access my money if they freeze your bank account?

    I also have a car, not worth then £1k and I also own a bus (only worth scrap value) which I preserve. That is my hobby. I pay £150 a month to store it and have to pay TAX MoT and insurance on it. Will I have to give that up? It is my hobby and all I have.

    I work a rest day every week which is not even covering my debt repayments so need advice
  • gellerbing
    gellerbing Posts: 349
    First Anniversary Combo Breaker
    Forumite
    I'm really confused right now and starting to worry. After i phoned stepchange they went through the questions, which were just asking about the deductions on my wage slip, my tax code and to confirm my middle name. Anyway they said that was everything they needed and could now complete my application, they then sent me the barcode and i was all ready to pay, but just before i was about to go pay i recieved an email asking me to ring them again. They want to ask me some questions from the insolvency team which will take around 30 mins! That sounds like a lot of questions, should i be worried? Obviously I'm not going to pay until they have everything they need.
    Wins: Cushelle Koala, Mama tea bundle, coconut ice cream recipe book
  • StepChange_Allen
    StepChange_Allen Posts: 352
    First Anniversary First Post
    Organisation Representative
    Gellerbing wrote: »
    I'm really confused right now and starting to worry. After i phoned stepchange they went through the questions, which were just asking about the deductions on my wage slip, my tax code and to confirm my middle name. Anyway they said that was everything they needed and could now complete my application, they then sent me the barcode and i was all ready to pay, but just before i was about to go pay i recieved an email asking me to ring them again. They want to ask me some questions from the insolvency team which will take around 30 mins! That sounds like a lot of questions, should i be worried? Obviously I'm not going to pay until they have everything they need.


    Hi Gellerbing

    Thanks for posting.

    I take it from what you've said that you're about to submit a debt relief order (DRO) application. I can't speculate why our DRO team need to speak with you, it could just be final checks to make sure there's no reason the application wouldn't go through.

    The best thing to do is to give them a call and all will become clear, please don't worry at this stage.

    Best wishes

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • HI,

    I!!!8217;m currently filling in my bankrupcy forms..

    I!!!8217;m self employed and have 38k of personal debt ..

    I have spoken to the business debtline so I know bankrupcy is the best option for me now as I have no assets really (apart from a car 09 reg worth around £1800 - iv had advise on this!

    My main questions are..

    I bought a sofa with DFS in November for 2500 ish including the care plan etc... I!!!8217;m assuming this would go into my bankrupcy so do I need to stop paying for it so it!!!8217;s not a preferential payment and how much would I put it down for as an asset for value I have no idea??

    Also... before I realised I was insolvent I was struggling a bit so paid off some buy now pay it next years on my very catologue off with my credit card as decided that finding £100 ish a month would be easier then finding bigger payments of 300-600 to pay in one month felt impossible. Would this now be seen as preferential payments also?? I!!!8217;m really stressed out about it!!

    Thanks in advance
  • StepChange_Allen
    StepChange_Allen Posts: 352
    First Anniversary First Post
    Organisation Representative
    HI,

    I!!!8217;m currently filling in my bankrupcy forms..

    I!!!8217;m self employed and have 38k of personal debt ..

    I have spoken to the business debtline so I know bankrupcy is the best option for me now as I have no assets really (apart from a car 09 reg worth around £1800 - iv had advise on this!

    My main questions are..

    I bought a sofa with DFS in November for 2500 ish including the care plan etc... I!!!8217;m assuming this would go into my bankrupcy so do I need to stop paying for it so it!!!8217;s not a preferential payment and how much would I put it down for as an asset for value I have no idea??

    Also... before I realised I was insolvent I was struggling a bit so paid off some buy now pay it next years on my very catologue off with my credit card as decided that finding £100 ish a month would be easier then finding bigger payments of 300-600 to pay in one month felt impossible. Would this now be seen as preferential payments also?? I!!!8217;m really stressed out about it!!

    Thanks in advance


    Hi there

    Thanks for posting.

    Yes the DFS debt would be included in bankruptcy; in terms of an asset, I'm not sure standard household furniture has to be listed but you could contact the Insolvency Service to check.

    Regarding the preferential payments, it's a possibility but I can't say for sure either way as there's not a specific rule on where it definitely does and doesn't apply. Again I'd suggest you check with the Insolvency Service before submitting your application. You can find their details here (the contact details are at the bottom): www.gov.uk/government/organisations/insolvency-service

    I hope this is helpful.

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
  • Hi I am currently in the process of being made bankrupt by hmrc and have been given 8 weeks to arrange an IVA. the HMRC are not the ones I owe the most money to though. I had a business with a partner and a liquidator was appointed and they are asking for £750k. I have disputed all of this for the last 2 years and got to the point where their last offer to settle was £50k. but now if I want to do an iva they are wanting £750k again. so I'm back to square 1. so am I able to do a deal with them for the £50k then an iva with other debtors? also will the hmrc take say 25p in the £ at this point instead of me doing the iva? I have spoken with some people and know I can just go bankrupt but then my asset is my home and they will just come for that I believe. I do know that there are c companies out there who will buy the equity in it but once bankrupt its not a guaranteed. please help
  • StepChange_Allen
    StepChange_Allen Posts: 352
    First Anniversary First Post
    Organisation Representative
    ah888 wrote: »
    Hi I am currently in the process of being made bankrupt by hmrc and have been given 8 weeks to arrange an IVA. the HMRC are not the ones I owe the most money to though. I had a business with a partner and a liquidator was appointed and they are asking for £750k. I have disputed all of this for the last 2 years and got to the point where their last offer to settle was £50k. but now if I want to do an iva they are wanting £750k again. so I'm back to square 1. so am I able to do a deal with them for the £50k then an iva with other debtors? also will the hmrc take say 25p in the £ at this point instead of me doing the iva? I have spoken with some people and know I can just go bankrupt but then my asset is my home and they will just come for that I believe. I do know that there are c companies out there who will buy the equity in it but once bankrupt its not a guaranteed. please help

    Hi there

    Thanks for posting.

    I think due to the nature of the type of debt and what's happening with it I'd suggest speaking with Business Debtline. Their website is: www.businessdebtline.org and all their contact details are on there. They'll be able to take more in depth details of your financial situation and explain your options.

    I hope this turns out to be useful.

    Allen
    I work as a debt advisor for StepChange Debt Charity and have specific permission from Martin to post on these boards to try and help those in debt. Read more information on StepChange Debt Charity in the Debt Problems: What to do and where to get help article. If you find you're struggling with debt and you need further help try our online advice facility Debt Remedy.

    Don't be afraid of getting debt advice. We'll help you take one more step towards getting help with your debt.
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