Bankruptcy agreed Feb. O.R assessment query

Balderdashandpiffle · 7 March 2018 at 2:04PM

Hi All,

I wonder if anyone may be able to help with this.

I recently applied for bankruptcy which has been agreed, I am waiting for assessment to be completed by the official receiver.

I have had an initial telephone conversation with the O.R who queried whether my wife had any outgoings of her own separate from the household budget (i.e credit card etc). I presume this is related to proportional income/expenditure and may impact whether an IPA is put in place.

The information in my bankruptcy application is as follows:

Net income 1948.94
Income Tax 214.06
Other 150.00

I included child benefit as income however this is solely in my wife's name on checking which O.R asked for clarification on.

Benefits

Child benefit - £149.07

Additional Household income:

Stat Maternity pay - £610

Total income - £2858.01

Total expenditure £2857.88

Home and utilities total - 931.56

Rent - £600
Insurance - £6.12
Tv licence - £12.12
Council Tax - £179
Gas - £75.67
Electricity £26.65
Water - £32

Pension insurance and Health Care £30

Dentist £20 (underestimated this to be honest as need at least 3 fillings currently)
Opticians £10

Food and Housekeeping £590
Groceries £500
Toiletries £25
Meals at Work £15

Transport and Travel £497.32
car insurance £41.51
car tax £25.81
mot etc £30
Fuel etc £400

Childcare and Maintenance £270
Childcare costs 140
Nappies and baby items £130

Personal and Leisure £340
Clothing etc £50
Hairdressing £30
Home phone, net, tv £50
Mobile £80
Hobbies/leisure £45
Newspapers, mags etc £20
Smoking £65

Savings fines etc £199
Student Loan £169 (will be completed before bankruptcy discharged).
Emergencies/sundries £30.

Household expenses are for a family of 4, 2 adults and 2 children under 3.

My wife does have her own credit card and we do have an additional expense of fuel for a second car which is used by my wife solely (taking child to childcare wife has a slipped disc requiring surgery so public transport not a real option).

My query really is with these figures would an IPA be made? I have not included wifes credit card cost as in her name but this has been requested by O.R to complete assessment, not sure what impact of this would be on figures --- as can see from budget/application figures no spare money.

The O.R was discussing proportional payments which went over my head a bit.

Secondary query - currently cant afford to pay into workplace pension - would that be possible when student loan paid off although bankruptcy would not be discharged at that point?

Thanks in advance for any help/advice.

LincsPaul · 11 March 2018 at 2:49PM

The proportion thing is simply, if your wife's income is £10k a year and yours £30k a year then all household bills will be split 25/75%. Both income and expenditure will need to be divided up. You might get lucky and find that the child benefit in your wife's name is taken off your income and added to hers, but remember that her share of the bills will increase, and yours decrease, as a result.

I think the OR may query a couple of things in your SOA: fuel (that's a lot per month); mobile (is this for 2 people?!), hobbies/leisure/newspapers (may be cut), smoking (kiss that bye bye - not allowable).

At the same time, try and increase the dentist and split the emergencies and sundries - remember you occasionally need to buy domestic items like new kettles etc. Try at least £20 each. Add a holiday fund of £20 too.

The pension thing is tricky. I thought they would allow a minimum contribution to a workplace pension.. however the official manual suggests it's at their discretion:

31.7.109 Contributions to a pension or SAYE scheme

The official receiver should examine closely any deductions at source from earnings and consider whether payments or over payments into a pension scheme should be disallowed, as this is not an essential outgoing required to meet the reasonable needs of the bankrupt. In most cases an individual can elect to stop or reduce their contributions to a personal pension for a period of time. Whilst the bankrupt may argue this will have the effect of reducing future income, the official receiver should explain that the cost of maintaining his/her future income should not be made at the expense of his/her creditors. In the same way where the employer operates a SAYE saving scheme (where a proportion of the bankrupt!!!8217;s income is deducted at source to purchase shares in the employing company), this expenditure should be investigated and disallowed, to ensure that the full amount of income available is included in an income payments calculation.

Personally I doubt they'd allow you to use up your spare student loan cash to start a workplace pension before the end of BR. But you never know!

TheGardener · 11 March 2018 at 7:05PM

The pension - most administrative public sector employees have to pay 6 to 8% of their salary for example so anything in that range is fine. The OR will not accept anything that looks like 'stuffing money down the back of a pension sofa' but some higher risk professions (eg fire fighters) pay in around 16%. Its about what's 'reasonable'. If this is not actually a pension and is basically private healthcare the OR might find it less acceptable.

No-one can afford NOT to pay into a pension unless they have significant realisable assets and reasonable pension contributions are completely acceptable to the OR (maybe think about not smoking and paying a pension instead...

Your car fuel is extremely high - is that work related and therefore refunded by your employer? It would be very hard to convince an OR that £400 of fuel a month was essential use unless you live in a very remote part of the country...

Your personal and leisure is a bit high TBH - I would look to increase the dental and a contact lenses are at least £20 a month and reduce the mags and fags - essential trade papers etc for work might be acceptable

There is nothing there for parking - even 1 trip to town a month costs me £10 a mth...

Technically, your leisure spend could in theory include smoking but it won't look good on an SOA...

What are 'savings fines' ?

National_Debtline · 12 March 2018 at 12:09PM

Hi Gardener

TheGardener wrote: »

What are 'savings fines' ?

I'm assuming this was meant by the OP to read "savings/fines etc." as a general catch-all category for any miscellaneous outgoings.

Dennis
@natdebtline

National_Debtline · 12 March 2018 at 12:15PM

Hi Balderdashandpiffle

I'd anticipate the OR wanting to put the squeeze on what you have collectively budgeted for leisure/smoking/newspapers and magazines - in fact most of the items under your "Personal and Leisure" section - although of course it would be up to you how any redetermined figure was actually used.

My gut feeling is that the OR would be looking for some sort of IPA, but ultimately as others have observed it is at their discretion. Do bear in mind that you reserve the right to query and challenge it.

Dennis
@natdebtline

Bankruptcy agreed Feb. O.R assessment query

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