Bankruptcy - Statement of Affairs

monkeysmith · 28 July 2006 at 11:38PM

Hi, am new to the forums and have had a good look round, thought I post my position, and hopefully get some advice.

Basically, I'm 25, and am 42k in debt, 17 of that is a student loan, and 5k is owed to my parents. Last November my folks stopped bailing me out as enough was enough, i contacted debt free direct after hearing an advert on the radio, and finally had an IVA setup which started 2 months ago. I havent had a good experience at all with DFD. During the telephone interview, they changed my outgoings in order to raise the disposible income, stupidly I accepted and genuinly made an effort to cut back on everything. It was unrealistic, and have had to cancel the standing order this month to DFD as I couldnt afford to pay my rent. I have contacted them, 22days ago by recorded delivery explaining and asking for help, and have had nothing from them.

The only way out I can see is bankruptcy. I cant see any advantages of the IVA over bankruptcy.

The debt was spent on student stuff, working on america, paying rent when didnt have a job, moving houses for different jobs, and just general living. Would this be seen as irrisponsible?

My finances:

Outgoings:

Rent 215
Council Tax 33.5
Electric 25
Gas 15
Water 12.5

BT Phone 25
Mobile Phone 20
Broadband 25

House Insurance 10
TV License 6.5

Car Insurance 15
Car Loan 60
Road Tax 7
Car maintenance 20
Travel (Petrol) 80
Other Travel 20
Food, Clothes, Household Goods 180
Hygiene, Hair cut 15

Contingency 50

TOTAL: 834.5

PAY: 895

Extra: 60.5

My IVA payments were £226 a month, which as you can see is way way over what I can afford. Is my budget ok, or should any part be lower? My work isnt very high paid, but I enjoy my job and hopefully will lead to better money as the company grows. The Car is my partners, she has the car and I pay her half her HP payments a month in exchange for use of the car, is this acceptable? My job also is internet based, so broadband is needed.

Is bankruptcy right for me? If you can offer me any advice, thank you.

jessicamb · 28 July 2006 at 11:46PM

Can you get a second job to earn any extra income?

£180 for food and clothing seems quite high for one person - how does this break down?

At present it looks quite tight to me apart from that. Do you have any assets?

Are Debt Free Direct one of the free agencies? If not you should call Payplan or CCCS as they will not charge you.

monkeysmith · 29 July 2006 at 12:01AM

I have thought about a 2nd job, but I work 45 hours / week, and also cover support over weekends when I can. I don't get anything extra, but I enjoy the job and want to stay keen. At the moment, the only free day both myself and partner get is Sunday, so kinda want to keep that clear. Would this look bad if/when I file for bankruptcy?

DFD is free, well their charges were added into the IVA.

£180 - DFD allowance for food was £130/month, £15 clothing, then £35 for dog insurance and dog food. Would this be bad you think? I added it as one hoping it would be ok.

Do you know if I'm able to budget to pay my parents £50/month to try and clear some of that debt in bankruptcy? Or will their debt have to be cleared, obviously causing some family problems. Thanks for your help.

jessicamb · 29 July 2006 at 12:12AM

Hi Monkeysmith

I'm not an expert on bankruptcy or IVAs/DMPs etc. There are loads of people who have been through them though on here and they will be able to post more specific advice.

I dont think student loans are wiped out with bankruptcy so they could not be counted as part of the settlement. I dont think you earn enough to be paying this back yet do you (or just about - the threshold is £15k at present).

I really dont know how bankruptcy would treat the loan to your parents. I believe that you cannot be seen to treat any creditor as favourable to others.
Obviously this would cause family problems if it were the case.

Splitting out the £180 makes it a lot clearer thanks.

Others will be able to give you some more specific advice soon.

sanfrancisco · 29 July 2006 at 12:12AM

I think that the Student Loans will not be covered by the bankruptcy.

monkeysmith · 29 July 2006 at 12:23AM

Thats ok, I know student loans wont be. Not too worried about this, even though its a loan, doesnt really effect me at moment, not ment to till I'm earning mega bucks!!

monkeysmith · 29 July 2006 at 10:04AM

Does a bankruptcy IPO allow for a contingency? or should I remove this? Going on the above figues, would the OR accept my budget, and what would my IPO payments be roughly?

Thanks for any help.

Richard

Addicted2Chocolate · 29 July 2006 at 10:26AM

no the IPA cacluclation cannot allow for contigency and you cannot repay your family debts whilst writing off everyone else by going bankrupt. you have to include all debts in bankruptcy, including friends and family. if you can affiord to pay anything back it will be to the trustee under the IPA and not to just one creditor. I am not sure on allowing you to pay half the HP payment, after all agreement is not in your name and you will not become owner at end of agreement, you will be allowed to pay your shrare of petrol insurance and servicing though.
Your other outgoings seem ok and i think your IPA wil be in region of £85 to £100 pcm. for more info on what is allowable, how IPA's are calculated, go to https://www.insolvency.gov.uk, freedom of information act, scroll down to Technical and Policy section, click on technical manual, then chapter 31.7

Bloke_with_a_simple_life · 29 July 2006 at 10:34AM

NOt much to offer other than these costs seem excessive:

BT Phone 25
Mobile Phone 20
Broadband 25
Food, Clothes, Household Goods 180

For Combined phone & broadband, check the section at http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1095003038,99872,

For food & clothes, please break this down in to the component parts - seems a bit high if you are "sharing" a place with someone.

Good luck.

monkeysmith · 29 July 2006 at 11:07AM

Hi, thanks for your responces. I pay half of the HP on the car to allow me to use the car for work. I can't afford my own car, so this is my only alternative. If I can't use the car then my job will be a problem, so not sure what to do here.

I spend alot of the time working from home office too, and broadband is crucial. Talktalks broadband, although a good offer, is not suitable due to traffic shaping etc. BT Phone breaks down to £11 line rental and £14 calls. Mobile of £20 a month is excessive?
Food, clothes, household goods, when I setup my IVA, I was told by DFD that this is set as £130. I have added on my £15 clothing a month and dog food / insurance. I hope they allow dog insurance, otherwise if something bad was to happen, how would I afford it?

I can't see how food costs will drop if I'm sharing a house. I still eat the same!

If I lose the contingency, then I have £110 / month spare, which is good. If I have an IPA and something happened, say an emergency and I needed the contingency, what could I do?

im1dful · 29 July 2006 at 11:29AM

monkeysmith wrote:

Hi, thanks for your responces. I pay half of the HP on the car to allow me to use the car for work. I can't afford my own car, so this is my only alternative. If I can't use the car then my job will be a problem, so not sure what to do here.

I spend alot of the time working from home office too, and broadband is crucial. Talktalks broadband, although a good offer, is not suitable due to traffic shaping etc. BT Phone breaks down to £11 line rental and £14 calls. Mobile of £20 a month is excessive?
Food, clothes, household goods, when I setup my IVA, I was told by DFD that this is set as £130. I have added on my £15 clothing a month and dog food / insurance. I hope they allow dog insurance, otherwise if something bad was to happen, how would I afford it?

I can't see how food costs will drop if I'm sharing a house. I still eat the same!

If I lose the contingency, then I have £110 / month spare, which is good. If I have an IPA and something happened, say an emergency and I needed the contingency, what could I do?

If your surplus was £110 a month, then the IPA payment would be £55 a month. Therefore you have a £55 contingency.

Bankruptcy - Statement of Affairs

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