| Author |
 Topic  |
|
carl
Junior Member
115 Posts |
 Posted - 28 June 2010 : 05:22:45
|
Hello I’m hoping someone on here can help me before I decide what to do.
Basically I owe approximately 18k on five credit cards and one overdraft (5 different banks). The debts started following divorce approx 4yrs ago and slowly go bigger and bigger due to me not getting any professional financial advice. Over the last few years I have swapped credit cards around onto 0% balances and slowly chipped away at the debt. I am now struggling to keep this up because banks are not offering the same deals as they have done in the past on 0% balance transfers etc.
My House is valued at 80-85k approx and I currently owe 73k on it. Along with this I have a 22k secured loan on the property which has approx 12 years to run. I can't re mortgage at present because I am tied in until June 2011 and even then there isn't enough equity to pull out of the house because it will be over a 100% mortgage which again the banks aren't doing anymore.
Meeting the mortgage and secured loan payment is no problem at all and I have never missed a payment or been late paying the credit cards but when the interest charge kicks in I don't think I will be able to meet the minimum fee which gives me about three months breathing space may be slightly longer.
I live alone aged 30 and I have my 4yrs old daughter who stops with me half the week. I received no form of Benefits/ Tax Credits etc
My monthly net income is approximately £1500.00 (Annual salary is 25k)
My core house bills total £1050.00 monthly, break down is follows
Mortgage 414.00
Secured loan 244.00
Child Maintenance 150.00
Council Tax 78.00
Electric 25.00
Gas 35.00
house ins 30.00
car ins 32.00
water rates 18.00
mobile telephone 25.00
The only assets that I have are my house and my Local Government Pension which I have paid in to for ten years.
The only other account that I have contributed to is my daughters Child Trust Fund which has approx £1500.00 in it made up of contributions from Family members.
I have spoken to some IVA companies and they have suggested that Bankruptcy would be my best option because I do not really have the spare income to live and make payments into my IVA.
If I decided to go Bankrupt I am confused with what may or may not happen with me house because there is basically no equity in it?
Also do I continue to make my monthly payments (mortgage and Secured Loan) while the Bankrupcy process is happening or do I just stop paying everything?
and final question about Bank Accounts. I undertand that all my accounts will be closed but at what stage am I allowed to open a basic account for my salary to be paid in to? Can I do that now or just before the process has started as long as I declare that I will be declared bankrupt?
Thank you for advice you can give me |
|
|
debtinfo
forum expert
2826 Posts |
Posted - 28 June 2010 : 07:32:44
|
The House, The OR has 3 years to deal with the property but likes to get it sorted as soon as possible, typically within 6-12 months. If it is in negative equity when the property is dealt with they will offer it back to you for £1 plus the legal fees (£470 for a solely owned property). If you wish to do this then you must be able to keep up the payments on anything secured on the property.
Bank accounts - Officially all accounts CAN be closed at the date of the bankruptcy order. In reality if you have a basic account such as one at co-op or barclays then the OR generally allows these to continue so you could open one now, Do be carefull if you have debts to these banks though. |
 |
|
|
Melanie.n
forum expert
United Kingdom
1282 Posts |
Posted - 28 June 2010 : 10:23:32
|
I always recommend to anyone i assist through the process opens a new basic bank account unlinked to any of their creditors - transfer salaries, benefits etc in to the new account together with any DD's for mortgage utilities etc.(don't transfer any DD's relating to debts) Do not enter the details of this new account on the bankruptcy forms. When you have the telephne appointment with the OR you informs them at that point of the new account details. That way you eliminate the risk of your account being frozen (the OR will always unfreeze any basic account which is going to be continued, but this casn take 5 working days and i would not want anyone to go for that period of time without access to funds or risk DD's being paid)
Melanie Nicholas
29 years insolvency experience - 23 of which in the Insolvency Service
- Insolvency Manager
Jones Giles
email me at melanienicholas@jonesgiles.co.uk
telephone 01792 899996
|
|
|
|
carl
Junior Member
115 Posts |
Posted - 28 June 2010 : 17:46:27
|
Thank you for that information - can I ask a few more questions please?
1) Do I have to inform all of the companies that I will be declared Bankrupt when I change the direct debits over to a new basic bank account? (i.e Gas, Electricity provider, mobile phone company, car insurance, mortgage provider, secured loan company etc)
2) I have 18months left in my fixed period of my mortgage. Will I still be allowed to remain on this mortgage deal or does something happen to my mortgage when declared bankrupt? (change to variable rate etc)
3) The house is definately in negative equity with the secured loan on it but I can afford to continue to pay the mortgage/secured loan. Is it a common thing to be allowed to pay the legal fees and have the mortgage/property transferred back to me?
4) What exactly does the telephone interview with the OR entail and what do they ask?
Thank you once again |
|
|
|
debtinfo
forum expert
2826 Posts |
Posted - 28 June 2010 : 17:51:43
|
1. No
2. It should stay exactly as it is, you might have the opposite problem later, i presume it defaults to a SVR after the 18 months and you may have trouble negotiating a new deal and so have to stay on the SVR
3. Yes, happens all the time, The OR has a specific solicitor set up to do these transactions for them
4. Genarally about your assets and liabilities and what ever questions they need to ask to explain how the bankruptcy arose |
|
|
|
carl
Junior Member
115 Posts |
Posted - 28 June 2010 : 18:10:59
|
| Would I be allowed to keep my exsisting mobile phone contract during the process or would this need to be cancelled? |
|
|
|
gettingoutofdebt
forum expert
2418 Posts |
Posted - 28 June 2010 : 18:15:13
|
If you don't have any arrears with the mobile phone company then they probably won't cancel the contract.
You should read the contract carefully though to see if you are obliged to tell them that you have been declared BR. |
|
|
|
carl
Junior Member
115 Posts |
Posted - 29 June 2010 : 15:52:47
|
Hello - sorry another question if thats ok?
Why is it that you are only allowed to have a bank account with either the CoOp or Barclays?
I owe money to Barclays so I won't be able to use these for future Banking but I am worried about uisng the CoOp because I have no CoOp banks near me and two of my local Post Offices have now closed!!
Could I open a Basic Bank Acount with the Yorkshire Bank instead? They operate an Account with appears to be identical in every way and they have a local branch just around the corner (no overdraft facility or debit card, allows salary to be paid in and also allows Standing orders and Direct Debits)
If I did this or used the CoOp instead would I have to tell them that I intended to apply for Bankruptcy shortly? (I am getting this account open - up and running before I hand my forms in?
Thank you |
|
|
|
debtinfo
forum expert
2826 Posts |
Posted - 29 June 2010 : 18:44:54
|
| You can lawfully bank with anyone you want to, it is that most banks wont want to give you an account. Barclays will give you an account even if you have debts with them in the bankruptcy, but if you go with them then you should not open it until after the bankruptcy as they can take any mony you have in the account on the day of the B.O to set of against your debt. There are a couple of other banks such as the natwest that have given bankrupts accounts but they are a bit hit and miss intheir approach, barclays and co-op are more consistant in their aproach. |
|
|
|
carl
Junior Member
115 Posts |
Posted - 01 July 2010 : 18:28:59
|
This forum is an absolute god send when it comes to getting information - thank you all!!
as people can see from the top of this thread, I have listed my current out goings. (These out goings exclude the monthly payments being made to Creditcard providers)
Can anyone tell me how much is set aside to live on (food and clothing)and petrol expenses by the OR when working out your DI??
Thank you once again |
|
|
|
carl
Junior Member
115 Posts |
Posted - 01 July 2010 : 18:46:50
|
This forum is an absolute god send when it comes to getting information - thank you all!!
as people can see from the top of this thread, I have listed my current out goings. (These out goings exclude the monthly payments being made to Creditcard providers)
Can anyone tell me how much is set aside to live on (food and clothing)and petrol expenses by the OR when working out your DI??
Thank you once again |
|
|
|
gettingoutofdebt
forum expert
2418 Posts |
Posted - 01 July 2010 : 18:51:28
|
There is a spreadsheet with the guideline amounts at http://www.insolvency.gov.uk/DocumentLibrary/Policy/Excel/Household%20Expenditur1.xls
Food is normally £200 per month for a single adult, clothing £30 and petrol is dependant upon the mileage you do. If the OR thinks that your petrol expenses are too high then you can just provide receipts to them.
Don't forget things like TV licence, MoT/Servicing for the car (£25 is normally allowed), road tax, dry cleaning if you wear a suit to work, dental/medical (worth putting £10 per month down even if you don't need anything at the moment). You can also claim for the Internet if your daughter needs it for education purposes.
You should really put down the figures that you actually spend but I would also suggest putting the max allowed in case of emergencies. I went BR 14 months ago and, luckily, put £10 for medical/dental even though I didn't need it at the time. 6 months after declaring BR I cracked a tooth and needed a crown so there went £200+. Although the £10 per month didn't cover it, it was certainly better than not having the £10 each month to go towards it. A similar situation with my car, £25pm for servicing/MoT is £300 per year and normally my servicing/MoT is about £170 but 2 months ago I needed a new centre/rear exhaust so that was £150.
Emergencies do happen and even if an IPA is 50%-70% of your DI so you do have some left over each month, the last thing you want is to start getting into debt again before you are discharged. |
Edited by - gettingoutofdebt on 01 July 2010 18:53:28 |
|
|
|
carl
Junior Member
115 Posts |
Posted - 02 July 2010 : 12:00:08
|
I am just going through the SOA form and I am just wondering what will or may happen with my property?
The property is mortgaged for £73,000 and has a £22,000 secured loan against it which has ten years to run. The property is currently valued at approx 80,000.00
In a idea world I would want to give the property up - its close to my daughter school - handy for work etc but in reality will I be allowed to keep it when there is little or no equity in it as long as I keep up the payments on the secured loan and mortgage Whilst going through the Bankruptcy process? also if I kept the property on would it mean that it may take me longer to get discharged? I'm sure I have read something that says after three years the mortgage company or secured loan company could force me to sell it at a later date to try and recover some extra money?
I guess I'm wondering if its worth fighting to keep the property on if it means that it will take me longer to get discharged?
confused!! |
|
|
|
Richard P
Senior Member
United Kingdom
1701 Posts |
Posted - 02 July 2010 : 12:14:49
|
Hi Carl
as the property is in negative equity you will be entitled to stay in the property
however if you do stay in the property you will have to keep paying the Mortgage and second charge (secured loan), this decision does not have to be made when declaring BR. sit down and work out your finances to make certain that both charges are still affordable.
The OR has upto three years to decide if they want to force the sale so that they can release the equity to pay your creditors, if it is in negative equity the OR will likely sell the nominal benefical interest for £1 to you, midway through your bankruptcy
regards Richard |
|
|
|
carl
Junior Member
115 Posts |
Posted - 02 July 2010 : 12:23:40
|
Thank you Richard
The secured loan and Mortgage payments I can manage - am I right in thinking that once the OR offers me to purchase back the property for £1.00 plus costs that means there will be no future come backs on the property?
I guess I'm like everyone else and would like to be discharged A.S.A.P and I wondering if its worth the fight to eeep the property if it means the whole process may rumble on for a few years? |
|
|
|
Skippy
forum expert
United Kingdom
3290 Posts |
Posted - 02 July 2010 : 12:28:25
|
You would still be discharged after 12 months even if you decided to keep the property.
View my blog at http://skippy13.blogs.bankruptcyhelp.org.uk/
Only when the last tree has died, the last river has been poisoned and the last fish has been caught will we realise that we cannot eat money.
Last IPA payment made on 30th June 2010 - it's over at last! |
|
|
|
Topic |
|
General advice please......
