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

Moderators: TalbotWoods, JaneClack

By Dan Small
#212378 I've posted a few times on this site, done some searching and spoken to CAB etc. I've decided that bankruptcy is probably my best bet. But just before I do, I thought I'd put a brief summary about my situation so you can see if you agree or not. Any comments welcome, thanks:

I personally owe £40k of unsecured debt (personal loans and credit cards).

At the moment, I have not defaulted on any payments to anyone. When my work situation changes in the next couple of months, I will no longer be able to pay the unsecured debt repayments each month.

I jointly own a home with my wife (50/50), with a joint mortgage, with £120k outstanding. At the absolute most, the house is now worth £140k.

So, if I go bankrupt, I understand the following is the most likely scenario:

1) My house (which I really want to keep if possible) will be looked at by the OR and they will ask my wife to buy my share of the equity, which, based on the above figures, should be a max of £10k. That is all the OR can do as my wife is NOT going bankrupt. They cannot reposses the house and they can only force me to sell it if my wife cannot raise the money to buy my share of the equity.

2) I do not have to inform my employer I'm bankrupt as I work as an engineer for BT, not handling any money etc and it isn't written into my contract that I have to disclose it.

3) I have no other assets other than a car which is worth approx £300. The OR will probably not ask me to sell this as it is necessary for me to get to work and back, and it isn't really worth any money.

4) I currently have a joint bank account with my wife, from which all the bills including the mortgage are paid from. I understand this account will be frozen and my wife will need to open a new account and I can transfer all the bills and direct debits to that account. The bills cannot remain in my name (electric, gas, water, mortgage, insurance etc.) and they will need to be put into my wife's name and the account they are taken from will need to be in my wife's name.

I realise there's a lot of questions there but I'd appreciate anybody's comments.

Thanks again for your time and help, Dan
By gardener
#212379 Hello Dan

My comments are directed to no. 4. If you don't have any overdraft owing on this account you could just take your name off it and leave it with your wife. You can keep the utility bills in your name if you wish (I don't know about the mortgage) since you indicate they won't be included in the bankruptcy.
By Dan Small
#212381 Thanks gardener. There's no overdraught owed on the account, so do I take my name off it now, or wait til I go bankrupt? I don't want it to look to the OR like I was trying to fiddle something before I went BR. Similary, I don't want to leave something until I go BR and then find I should have done it now to save myself a load of hassle.
By Crunchynut
#212383 Dan
My understanding ( and my experience ) of the house issue is correct.
your wide will have 12 months to negotiate this anyway so in practicality you will probably be discharged when it's dealt with. If you have friends or family ( or someone with an excellent credit rating ) who can borrow the money for you then it's probably better than the cost of increasing your existing mortgage, which your wife might find difficult.
However try to get the lowest valuations you can get initially as a starting point for negotiation with the OR.
As long as the mortgage isn't in arrears and you can manage the payments you should be fine though.
By Dan Small
#212389 Yes thanks all, I've just phoned the Insolvency Service helpline and they confirmed the house situation is as above, and that the OR definitely will offer it to my wife first.

In light of this I've thought of another question but I've posted that as a separate thread.