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

Moderators: TalbotWoods, JaneClack

#472638 My word I have not been on the site for a while it seems a lot quieter than it used to be - Sara has gone :oops: but TW still present and a new moderator Jane.

First a bit of background for those that don't know / remember me.

Currently I am single , live in a rented flat and have no dependents I have been in a DMP with Payplan for over 9 years which started out as a joint one with ex- wife but solo since 2008.

I owe well north of 100K and obviously my £50 payments to payplan are just a token gesture. I do work but not in a very highly paid position (unlike when I ran up the debts !!!).

Why you may ask have I not "walked the plank" earlier with no realistic prospect of repayment.

Simple four years ago I voluntarily signed over my half of the marital home to my ex-wife for no monetary consideration. As I understand it five years is the limit for deprivation of assets, so in a years time that time period will have elapsed and thus this disposal not be taken into account for any sequestration proceedings. Hopefully it should mean all systems are go. Am I correct in this assumption ?

I also have a Car which although in my name on the DVLA log book was actually purchased by my son nearly six years ago. I still have the bill of sale. For the last four years I have used it but no money changed hands so technically it still belongs to him. I have been thinking of returning it and amending the DVLA records. It is only worth about £2K now. Would this be wise or can I hang onto it for another year and just return it before I go belly up next year as I don't own it ?

Much to my sins I have a Vanquis Credit Card with a 4K limit that I intend to run up to the limit prior to next September. Don't feel guilty as despite a perfect payment record on time they have never reduced the astronomical interest rate in the five years plus I have had it. Will this automatically be included in the process as long as I tell Payplan about it ( ie even if it is not in default) ?

Rather than go through all the hassle of an IPA which can be 4 years up here I intend to stop working prior to my Sequestration so my income will be to low for any payment order. I will either tough it out up here on benefits for a year or just move in with my Son down south for a year. The latter seems more attractive as I will not have the hassle of Job Seekers , Housing Benefit . With no IPA will I be discharged automatically after a year in either of the above scenarios?
I'd rather take the hit for a year and let it all be over than it drag on for years.

In order to support myself I will allow my son to do that along with a bit of "Sanjay Slumberland Assistance" - older posters may remember him and his methods :mrgreen: I take it there is no compulsion to work while awaiting discharge?

As I am with Payplan I take it they will sort out the Sequestration when I give them the green light - £200 Fee to be paid - Why is it so much cheaper in Scotland ? It's treble that in England even with the new online system. I suspect I easily meet the criteria .

Some people may think I am being a little premature in seeking advice a year before the event , but I want to be prepared and have everything planned so I can swiftly expedite the action required to "gain my financial freedom"

Many Thanks !!!

ps put it on here rather than Scottish one as more traffic and a lot of the questions generic regardless of jurisdiction.
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#472639 No Sarah hasn't, Butts!! That was my name de toile (webname). With the FCA regulation and its encouragement of complete transparency I have come out of the shadows and it is I, Jane Clack, that now answers in my own name!!

Tim has left unfortunately but we now have Sally, an experienced money adviser with speciality also in housing issues, who is the other moderator of the site. I am answering this question because it is you and also because I have a special interest in things north of border - mainly tablet!

It is lovely to see you again and interesting to see you are coming round to the realisation that a debt management plan is not going to clear your debts unless you win the lottery. As you are in Payplan I did not hear that you are still using credit as really you should include all your debts in any debt management plan but yes of course even if payments are up to date they can go into sequestration.

If you drive the car for another year it's valuation will go down and if no money changed hands it is not yours anyway - registered keepers are not necessarily owners and you have the bill of your son's. You may need a car for the job seeking you will be asked to undertake even if you move in with your son as you will need some benefits to live on and they are quite tough about applying for work. It all depends on the salary though and your expenses remember.

Transfer of ownership of the property - gratuitious alienation as it is called in Scotland - means the AIB could only claw back if it was done in the last 5 years as you have read so you really do need to be sure it is that amount of time.

You know what I am going to say, don't you? Speak to your case officers as Payplan Scotland can issue certificates of sequestration unless you have other forms of apparent insolvency.

Good luck and let us know what happens.
#472647 Well Hi Jane Clack , I'm glad you are now an expert on Scotland - tablet is nice but watch those hips !!!

Just to clarify I intend to stop working just prior to and until I am discharged from sequestration. I would rather get it over in one foul swoop rather than be burdened with any sort of payment orders for years.

I figured I will be eligible for Housing Benefit and my Son and Ex-Wife will transfer £200 per month each to me so I have a source of income to declare for HB purposes.

With my "Chandjay Supplement" I will be able to survive for a year on the above meager stipend.

Can you see any flaw in this "master-plan" ?
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#472649 Looks to me as if you have everything covered - just remember that in either place you will need to have been resident for 6 months. It is cheaper to go bankrupt in Scotland than in England!!
#472652 Has there been any serious campaign by any of the Debt Advisory Providers to establish why going Bankrupt in Scotland is a third of the cost of England and Wales and what can be done to harmonise the fees ?

After all the last thing prospective bankruptees need is a heavy hit to process their application.

Surely it is the duty of the providers to highlight this glaring anomaly ?
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#472653 You might as well ask why the Citizens Advice Bureaux have not brought it up as a social policy issue. But there again - why has not it been brought up that in England we pay for prescriptions? Another anomaly. Scotland has its own rules and regulations. You don't pay separate water rates either!!!
#472661 Oh dear just when I thought things were going so well I have spotted a potential "spanner in the works" :cry:

If I am unemployed when I go into sequestration my Debt Contribution Order will be set at zero but if I subsequently start working again after a year when discharged my interpretation of the rules are that I would have to inform the AIB and may become liable for payments as the DCO period is four years. So even though you are discharged you still have to make payments unless you are unemployed or on a really low income for three years after discharge.

Is this correct ? - if so my dream of being free after a year would not become reality.

If this is the case I may consider going Bankrupt in England as the way I understand it once you are discharged that's it with no three year "hangover". Assuming I was unemployed until discharge in England is that true ? ie - it is all over after a year regardless of what you earn afterwards.

Following on from this would the residency requirement be six months prior to going bankrupt in England or could I do it there while living in Scotland ?

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#472662 I will need to check on that for you - but of course as you pointed out it is cheaper in the first place to go bankrupt in Scotland. This may be the reverse of the coin...
I thought you were going to be wily and come and live in England for 6 months before doing the deed. I will get back to you I promise!
#472664 Jane the crux of the matter is this:

Assuming you are unemployed and living on benefits at the time of bankruptcy/sequestration no IPA will be made in either Scotland or England. You stay on benefits for the year and are discharged under either regime after one year.

If you start working after discharge my reading of the relative systems is that in Scotland if you go over the "limit" payments may be required for a period of 3 years - ie a post discharge IPA is a possibility whereas in England it appears to me not so-ie if no IPA is made in England at time of bankruptcy it will not be done so after discharge.

What do you mean by "wiley" move to England ?
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#472666 I have checked with a Scottish IP and here is their reply:

Yes, in Scotland even if a client has no surplus when bankruptcy order is made, they will still be asked to sign a nil contribution debtor contribution order – this lasts for four years.

Therefore, if their surplus increases during this period, they will be expected to increase their payments – however the contribution order cannot last longer than 4 years in total – ie if client finds job after year 3, then will only be expected to make payments for 1 year.

However, to go bakrupt in England you will have have to lived here for 6 months in the last three years and so could not do so in England from a base in Scotland.
So it is different for you north of the border.
#472668 Moving to England or Wales would not be a problem for six months prior to next September when I intend to go Bankrupt/Sequestration.

So to decide my destiny all you have to do is clarify whether when going Bankrupt in England if no IPA/IPO is arranged at the outset due to low income / unemployment then that's it and after the year you are discharged there is no further liability.

IE Unlike in Scotland it is not a four year agreement even at nil payment it ends after a year.
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#472669 If you go bankrupt in England or Wales and no IPA is set up by the time you are discharged you could come into money after discharge and no IPA would be set up. The situation at present is not like it is in Scotland - that is not to say it could not happen in the future.
#472670 Thanks Jane, that's what I suspected from my reading of the relevant documentation.

I think I'd rather bite the bullet and pay the higher English fee which enables you to be "really free" after a year rather than the initially cheaper Scottish solution which carries with it the "four year sentence"

In England and Wales you can make a fresh start after a year with no hangover, hmmm I wonder how it works in Northern Ireland !!!
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