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

Moderators: TalbotWoods, JaneClack

By purplekirsty
#320013 Hello.

I posted in general debt queries in November and was advised against IVA and DMP in favour of BR as we have no house and owe over £50k in current debts due to house selling, moving etc - one debt is £30k over another 27 years at £400 a month – with not being a home owner we can't move this high interest Northern Rock loan to anyone else to ease the interest charges. Our income is currently £3500 and we can just about pay everything but we are expecting our second child in April and we will not be able to afford everything with me on maternity leave

The main thing for me is to find out a few things:

1. Should we wait until I get my first maternity leave payment before starting the BR process and are unable to pay all the debts? As my income will go from £1700 to £400 a month. Or should we start early, quoting our income in April will go down to £2200.

2. What restrictions are there for expenses? Can we keep basic sky, £20 a month mobile phone, broadband, 2 cars (one hubby uses for work as he starts at 7am over an hour away and one is mine since we live in the country with the little man, and currently use it for travelling with work, although i will soon be on maternity leave and it will be then that we go BR) They are both old cars, worth not more than £1500 combined - probably not even that

3. What other ‘assets’ may they want to take? We don’t have much of worth since we rent, but do have a laptop, new kindle HD, flat screen tv (although it is 5 years old…) and PS3… Just wondered if there was a list of assets they may want to take, and what you can keep…

4. I presume we do it ourselves as someone we know went to the court and got a pack to complete, although they never followed it through – do we not need to use an agency or anything? Just complete the forms and pay the money? How do we find out which court to go to? As our address is complicated, on royal mail it is Swindon, Oxfordshire, with the council of the Vale of the White Horse (VOTWH) – 3 different places! Swindon is Wiltshire, VOTWH is a district in Oxfordshire…

5. The other thing i need clarifying is how long are you on a BR order thing for? 1 year or less i thought but i have read reference to 3 years... Is it a year, and then all the applicable debts are wrote off and you are left with all your income and existing debts? Or is it 3 years, with your applicable debts wrote off after a year and the rest basically being under a DMP/IVA arrangement?

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By TalbotWoods
#320063 Hi purplekirsty

1. When you do your Income and Expense it MUST be as off now, however there is a section (13) where you can explain that your income is about to significantly drop, and as you are now in the third trimester, the OR will allow additional expenses which could eat up most of the current spare income.

2. Cars are a bit of a nightmare, you are going to have to go some to justify keeping both, but if you can show that without then you will be severely disadvantaged, then he may allow it. More likely he will exempt one and allow you to buy back the cheaper of the two (obviously if it is worth £750, then he would need to take off auction costs, ect, so maybe as cheap as £250!!) Please read this section it explains more: viewtopic.php?f=24&t=14954

As to what is allowable, Sky used not to be but more and more they are allowing basic sky purely as there are no longer any terrestrial services available, as to all the rest, they will allow what is reasonable, something you may need to justify, others the OR will accept without batting an eyelid. Please dont fall into the trap of thinking that there are set amounts, there certainly are not, they are based on individual circumstances, within a reasonable range.

Should you opt for bankruptcy, then we can comment on any I&E and make suggestions, you will be surprised how many people forget items.

3.With regards assets normal daily stuff the Or wont be interested in, you have to remember if they take an item, they have to sell it at auction, so must guarantee sufficient profit to cover, admin fees, sales fees, transportation and insurance fees, remuneration for the collection agent, storage fees, even more admin fees, and still make sufficient to pay into the creditors pot.

So a 5 year old TV will almost definitely make a loss on them, same with the old laptop, what Kindle HD (oh the gift you were given that doesn't have to be declared <coughs>) If you use it daily then it is pretty much safe, but the Van Gough, and the Masseratti car will defiantly have to go!

4. DIY by far the best way, most often it is turn up at the appointed county court, with the forms, pay your money sit done and have a coffee and ...... OMG it's done!!!!

A lot of judge dont even see the debtors now, they are to busy, they just rubber stamp it. But a couple of words of caution:

  • + You may be asked to affirmation state that you have sought profession advice, if you have not then the Judge WILL throw it out until you do, so PLEASE make contact with one of the organisation I have already given you
  • + Please have a look at the forms you will need to fill in and see if there is anything you do not understand, they can be found here: ... -and-wales
    Look for form 6.27 and 6.28 plus guidance notes

With regards which court if you PM me your town I will let you know which court.

5. As to how long, for the bankruptcy up to one year (many get discharged early if it is a simple case), if you get an IPA (Income Payment Agreement), that lasts 3 years maximum, but remember an IPA is not bankruptcy, if you are dishonest or have become bankrupt because of dishonesty, deliberate recklessness or fraud, then the bankruptcy restriction can be extended up to 15 years.

You are now sat there going Whoa, and that is why I have said please please speak to one of the organisations already given to you.

When you have ploughed through that lot, please ask any question you like, as in bankruptcy there is no stupid question, I know I used to ask enough, and trust me it is hell of a lot easy than it seems, it is only self doubt that makes it appear difficult