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

Moderators: TalbotWoods, JaneClack

By AlisonW
#3199 My ex-husband and I divorced nearly two years ago. We have both since remarried and I am living in the US. At the end of last March I returned to the UK to file for bankruptcy as I found I just could not keep up credit card payments and my debt was spiralling out of control. I had no income. The bankruptcy went smoothly and was done the same day with the Official Receiver (I am released from bankruptcy on 1 April 2005). However, my ex-husband and I had a joint bank loan (overdraft account) which we were both paying money into (we had an amicable divorce - no kids, house or anything else). He has terrible money problems too and since March last year neither of us has paid anything into this account. They have finally caught up with him and the total of this is £8,800 which they say they want repaid by 2 February. He has credit card debts also totally many thousand. He is also a company director of his own company (no employees, just him). As far as I know he is up to date on VAT for this company. He was out of work for some time previously and since starting this company has not paid any tax (for about 4 years).

He is being held responsible for our joint debt. He has no money and I can't afford (nor should I as I am bankrupt) to give him any money - not that it would make any difference anyway as he can't afford his half.

He has said that he may well have to go bankrupt too but it's more complicated in his situation with his business. What should he do? His wife is solvent and has money in her own name (they do not have a joint account). Could he sell his company to her now for a minimal amount and then she could employ him after bankruptcy? I still worry about him and want the best advice please.

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By JaneClack
#3201 Get him to contact a free debt advice agency and/or visit his local CAB.

If he were to sell his company to his wife for a minimal amount this would be regarded as a transfer under value and the OR would overturn this in a bankruptcy! Not a clever idea. Unless his company is a limited one there is nothing to stop him working whilst a bankrupt unless he changes the company name i.e. he must let people know what he was formerly trading as. If he owns a property that might cause a problem in bankruptcy depending on how much equity is in it as the OR would want his share.

He really does need some advice as there are several other things you mention - other credit debts and nothing being paid to the Inland Revenue. They are not the people to mess around with and he would do better to start dealing with them before they find him. If he doesn't come to some agreement with them and he has been earning, they themselves could make him bankrupt.

These are all generalizations and he really does need to go through a financial assessment. NDL, Payplan or CCCS could do this for him free of charge. They all give free, confidential and no obligation advice and based on his specific circumstances. That will at least give him a starting point to work from. Sometimes bankruptcy is the answer but an IVA may be a possibility or a reduced payment scheme (the debt management we talk about here).

There are solutions to debt problems - sometimes the answer may not be palatable but in the long term getting rid of a burden of debt is what anyone wants and all these agencies will give him the best advice for his circumstances.
By AlisonW
#3290 Thank you very much for your reply. I will let him know.