Questions you have before making a decision to go Bankrupt and the Bankruptcy process

Moderators: TalbotWoods, JaneClack

By mjl7972
#471344 Hi, I am looking to start at Uni in September and to go bankrupt at around the same time. Will my student loan count as income and be taken by the OR?

Thanks in advance for your help.
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By JaneClack
#471345 It is a loan and you are living on it so you will be counting it as income yourself when you fill in the statement of means ie the income and expenditure. You may well be working as well but you won't be working full time. The insolvency examiner will look at your disposable income rather than where it is coming from.

You cannot include a student loan in a bankruptcy in the future as I am sure you are aware.

Why are you waiting until September until you go bankrupt? - have you sought other advice on this?
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By TalbotWoods
#471346 Just to expand a wee bit on what Sarah has said, it Sarah has said it is counted as income, but the whole amount is received as a lump sum.

What you need to do is show how many weeks it is for (i.e 38 weeks) and then divide the lump by 38 to get you weekly income. The loan is not for a full year, please do not attempt to make out it is, as most ORs have been to Uni and know that it is for part of the year only

You MUST also show this calculation in section 13, and be prepared to provide the OR with a copy of you letter confirming how much and for how many weeks.

Something else to be aware of is that you must declare to Student Finance that you are bankrupt, especially if you are applying for continuation funding. As the loan for will be for over £500!

Do not overly worry I know of a few people who are bankrupt who obtained the loan, but ONLY after they had declared it, and they may contact the OR to make sure your bankruptcy didn't contain an element of fraud (which it wont), so get the application in earlier and be prepared to hassled SFC a wee bit!

Also you need to be aware that the bankruptcy may well effect other sources of income that as students you may be able to get.

Tim
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By JaneClack
#471347 Being a bankrupt does not stop you getting a student loan - this is because everyone is entitled to further education and it has to be repaid from source (ie deducted from income) if someone is earning at the level to pay it.

I have not heard of anyone who has been turned down for a student loan after declaring themselves bankrupt. This was the reason I asked why you were waiting until September to do the deed? - especially as it costs £725 now!!

You may be earning now but again you have expenses and if you are an undischarged bankrupt you have an obligation to let the Official Rceiver/Trustee know of any change in circumstances within 21 days.
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By TalbotWoods
#471348 Sitting here have a bite of supper, and a thought just wandered through my mind.

If I remember rightly you are based in Scotland, and I think you had applied for sequestration before had you not?

And if you did, per chance is this a 2nd Bankruptcy you are looking at?

Tim