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

Moderators: TalbotWoods, JaneClack

Bymamaden
#472499 Hi,
I have finally sat down and worked out all my debts & they are a lot worse than I thought. I currently owe approx £37,000 :shock:
I have considered an IVA and have almost completed & signed the forms, however I really think Bankruptcy is my best option but while I save up the money to go bankrupt I have some questions.

1. I went bankrupt in 2005 so am I likely going to be allowed to do it again?
2. I have a friend that has just moved into my spare room as a lodger, if I go bankrupt will it affect him? We have no financial associations whatsoever but I don't want to mess up his good credit rating.
3. I believe bankruptcy has changed since I last done it in 2005 so what can I include, what can't I include & how much each month will I need to pay the OR?

My current debts are almost everything from rent arrears, council tax arrears, gas, electric, water rates, overdrafts (Unauthorised), HMRC (Not my fault but I have to pay), pay day loans, catalogues.

I also have an old R reg car (worth around £600 that has a payday loan against it of £500 so far I have paid off £500 of this, will I have to give the car to the log book loan company or will I be allowed to continue to pay the £25 a week to them. (I need the car for work).
Also do I need to let anyone know in my personal life (partner, kids, friends) that I have gone bankrupt?
I hope someone can help me with this.

Thank you.
Bysally1
#472502 Hi Mamaden,
I would really need more information before advising you as to whether bankruptcy would be a better option. A key question is whether you own your own house as if you do, you would be likely to lose it if you go bankrupt unless there is negative equity. You also don't say if you have enough disposable income to pay into an IVA. Whoever you are dealing with re an IVA should have gone through all the pros and cons of each option with you depending on your circumstances. If you feel that you still have questions either about the proposed IVA or bankruptcy, do go back to them and ask the questions.
I can answer some of your questions though:
1. I went bankrupt in 2005 so am I likely going to be allowed to do it again?

You went bankrupt 10 years ago so there should be no problem in going bankrupt again although you could be subject to a bankruptcy restrictions order if there have been any 'irregularities'
2. I have a friend that has just moved into my spare room as a lodger, if I go bankrupt will it affect him? We have no financial associations whatsoever but I don't want to mess up his good credit rating.

Your bankruptcy will not affect your lodger at all unless you own your own home in which case when it becomes vested in the OR on the making of the bankruptcy order the OR could require you to terminate the licence to occupy if the property is to be sold. However, I see that one of your debts are rent arrears so I assume you are renting and you should be aware that bankruptcy will not stop your landlord from being able to take possession proceedings if you don't pay them back.
3. I believe bankruptcy has changed since I last done it in 2005 so what can I include, what can't I include & how much each month will I need to pay the OR?

There have been several changes to Insolvency Law since 2005. Have a look at our factsheet on bankruptcy and you can also read a very comprehensive guide here: https://www.gov.uk/government/uploads/s ... arch15.doc This will tell you everything you need to know and the rules about Income Payment Arrangements and Orders (what (if anything) you will have to pay to the OR whilst an undischarged bankrupt)
You say you have a payday loan for your car and then you say you have a log book loan for the car. They are two very different things and if you have a log book loan, it is likely that there is a clause that says the agreement will be terminated if you become bankrupt.
I really think you need full advice about your situation and suggest you contact one of the free advice providers.
Click on this link to get a list of organisations that can help you..
http://www.debtquestions.co.uk/debt_for ... =7&t=44583
Lastly, bankruptcy is in the public domain so anyone can look up on the Insolvency register and see that you have been made bankrupt and it will show on your credit reference file.
Hope this helps. Good Luck
User avatar
ByJaneClack
#472503 Sally has given you excellent advice.

I know you have been in difficulties since 2009 when you first contacted us and am concerned how you would be financing an IVA - do you now have a disposable income to do this or are you able to make a lump sum payment? I do think you need to be very careful as entering into an IVA is making a legal commitment and you need to be sure you can maintain the payments.
Bymamaden1
#472510 Hi, For some reason I wasn't recognised so I have had to re register as mamaden1 :cry:
I am actually in the process of an IVA with payplan & to be fair I do not think that I am going to be able to keep it up. I have worked out that when I get paid in September I can pay my rent and use the balance of my money to go bankrupt by not paying anyone else. I did get advice on going bankrupt but the only reason I had to go down the IVA route was I did not, and still don't have the money to go bankrupt. But as I say above I think I could manager this by just not paying anyone in September (apart from my rent & arrears). My landlord is aware that I am going bankrupt and they have said (it's a housing association) as long as I continue to pay my rent plus the agreed arrears (total of £800 per month) then my home is safe.
I think I have to go down this route as I am having sleepless nights and I am scared to open my door, and yes this has been going on for a while & I will hold my hand up and admit I have buried my head in the sand and tried to ignore it. :oops:
The loan against my car is a log book loan so would that be written off or would they have the right to take my car (I do courier work, so need my car). Or would I be allowed to keep the car and continue to pay the loan company? (Its an old R reg as I said before).
Is it worth me talking to my Payplan advisor again as I really do think I will default on an IVA.
Thanks for your replies.
Bymamaden1
#472511 Also, what is classed as an asset? I have a TV nothing special, be lucky if I got £200 for it, my daughter has a TV that her Dad bought her last Christmas, again not worth more than £100 I have a desk top computer thats approx 4 years old and my daughter has a £300 laptop that she uses for school (She's just about to start her A Levels in Sept). Are these assets that I have to declare or are they looking for Big surround sound smart TVs that cost £5,000 the odd ferrari and porsche etc?
Thank you, I just want to get this right.
User avatar
ByJaneClack
#472512 Hello again

We need to know whether you are actually in an IVA or not.

If you are in an IVA with Payplan then please speak to your supervisor.

If you are considering an IVA with Payplan then the advice you have already been given will stand you in good stead and they will have gone through a financial statement with you and assets are one of the things that figure. Your car must be stated but your children/step children's goods are theirs not yours so do not form part of the bankruptcy estate.

Rent arrears have to go into bankruptcy as it is a class action so you need to work out how the arrears can be paid if the landlord says they must.

Do give Payplan a call as they are obliged to give you advice on bankruptcy if you are considering an IVA anyway and they should be able to look at it from both sides. No company wants to put somebody into an IVA that is likely to fail so be upfront with them re your concerns.

Good luck whatever you decide.
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