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cleanfreshstart
Starting Member
United Kingdom
21 Posts |
 Posted - 02 September 2009 : 12:42:39
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We have had advice from different sources and due to change in circumstances it looks as though we have to file for Bankruptcy.
I'm not sure what way I should go about the bankruptcy.
A bit about our situation first then a few questions?
Our situation currently is we have a mortgage with a secured loan, the house is in negative equity, we both work and have to pay high child care costs and have an hp agreement on a car which i need to get to work with.
Our plan is find a new house and rent nearer my work (10 minutes not 1.5 hours drive) my wife to give up work as it will be too far for her to travel and then she will be able to look after our child, which means no child care costs. Which means our total income will be just under 40k before tax.
We need a deposit for the new house, so if I didn't pay the mortgage and secured loan for 2 months that would give us a deposit and enough money to file for bankruptcy.
Do I need to hand the keys back first on the house before we move in to rented accommadation or do I declare myself bankrupt?
If I hand the keys back how do I do this?
By doing what we plan to do will the OR look at our case in that we have avoided paying our creditors back, especially as my wife will be giving up work?
Will we lose luxury assets, i.e playstation, dishwasher, tumble dryer?
Will I still be able to keep the car, I won't be able to buy a new one as I won't have any money to buy one but will need transport to still get to work? We pay £256pm
Can my wife and I file for bankruptcy jointly?
Sorry for all the questions but some advice would be good. |
Edited by - cleanfreshstart on 02 September 2009 12:51:46 |
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mick1972a
Junior Member
235 Posts |
Posted - 02 September 2009 : 16:44:46
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Hi a lot of people do not pay there debt leading upto BR and keep the money for the BR fee. You wont lose your dishwasher and tumble dryer as these are things you need to live and really only stuff of real value such as expensive jewellry and paintings and cars may be at risk.
Both yourself and wife can file for BR but each will have there own fee of £510 each to pay.
Mick |
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Reviva UK
Advanced Member
United Kingdom
2452 Posts |
Posted - 02 September 2009 : 22:23:04
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Hi
you probably have considerably longer than 2 months available before you need to hand the keys back.
In most cases you will need to pay a bond or advance rentals if you have credit issues so check this out carefully first.
You may also decide that there is a risk that the HP car ( please check that it is HP and not a fixed sum loan agreement ) should go back so you can have a really fresh start.
if you plan correctly and get your ducks in a row there is no reason why you couldn;t afford a replacement car before you petition.
As I have said before it is all too easy to get carried away and want to rush the process and as a result put too much pressure on yourselves.
Get a plan and a timescale, stick to it and you will be in much better shape,
we have helped numerous people with first and second mortgages, cars on HP and crippling personal debts. They all look so much less stressed afterwards than when we first met and they are much better prepared financially for the future.
Paul Johns
Bankruptcy Specialists
Reviva UK
www.revivauk.com
Real People ..... Real Debt Solutions |
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ripski
New Member
United Kingdom
90 Posts |
Posted - 03 September 2009 : 05:15:40
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John's advice is sound re do not panic or rush Easier said than done as I've been there. You could have as long as 6 mths re mortgage and I would advise getting your money together for deposit and bond and getting somewhere before petitioning. The decent rental places usually are with agents who do checks so in my experience ( only) I would get somwhere first but you certianly will have a few mths.I was already 2 mths in arrears when I stopped paying in Feb. I was still getting letters threatening legal action in June , after I had informed them I was BR. I sent the keys back with 2 letters saying I wanted voluntary repo in June ,July. Others have had about 3 mths. Do not sign or say or sign anything re shortfall/ paying back the neg equity. My OR also advised me not to sign this. The OR will not frown on you for the action you are suggesting but will consider it sensible planning to get of debt. Your plans to date sound very sensible. Not only will you save on childcare but your child will benefit far more from the care of her mum rather than 3rd party ( believe me I work in childcare).
OR will not be interested in most of your goods. They are only interested in expensive paintings and jewellry and your car. Mine asked me about my computer ( though these are no longer a luxury item)I suspect other areas do not ask. It was old and I needed it for work anyway so no probs. You will not beleive how sympathetic the Court staff , judge and OR are. Non judgmental and helpful They do want to know that you have taken advice and you can say that you have taken advice on this forum/internet as they know how chocker the CAB and others are. You will also feel the pressure lifted- the phone calls stop etc.and you can sleep again. There is loads of good advice on here about most topics advice so keep watching
ripski1 |
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cleanfreshstart
Starting Member
United Kingdom
21 Posts |
Posted - 03 September 2009 : 16:51:22
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Phew, I've just missed my first months payment and northern rock and first plus have already been in contact by letter and phone asking for reason and money. Now i know i've got a bit of breathing space beofre any action is taken I'll just avoid the contact. Well as much as possible anyway.
We have found a rented place and I spoke with the estate agent today who said that I had passed the credit checks and that they were awaiting personal references which seems really promising, as they have asked for 1.5 months rent deposit which could mean no advanced rentals.
Another question I have is that I have an axa sun life policy that is due to expire in 2012. We had planned to pay off my brother in law as he helped us out with the motgage a while back while my wife was out of work.
If I were to cash this in and pay him back would this be allowed or would the OR want this money back and he would then become a creditor. He has told us not to worry about the money as he has written it off but I feel rather guilty on the way things are turning out. I can prove that he helped us out due to bank statements?
Failing that I could cash it in to pay for another car, that way I could certainly start afresh and money left over can be part of the rental deposit. Any further advice would be a great help.
Thanks for your replys so far.
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gettingoutofdebt
forum expert
2418 Posts |
Posted - 03 September 2009 : 18:28:38
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If you cashed the policy in and paid your brother in law then this would be seen a favouritism by the OR as you should pay all creditors equally. The OR also has the power to take the money back.
If you cashed the policy in and bought a car/rental deposit the OR would want to know why you didn't pay the creditors with this money. Basically any additional cash that you have when (from windfalls, bonuses, etc.) you know you are declaring BR should go towards your creditors. If they are used for other purposes the OR will want to know why.
Using money to pay a rental deposit isn't too bad as this is something you need when you give up your house. Although you mentioned that this could come from not paying the mortgage for 2 months.
Once you declare BR the OR has complete control over your finances and will look very closely at them for the last year and possible longer. If there are instances when you have cashed in policies, received bonuses at work, etc. the OR will want to know what you did with the money and why it didn't go towards paying your debts.
If the OR believes you have used any money for luxury items (holidays, etc.) rather than paying your creditors and you knew that you would be declaring BR then they could impose a BRU, which would increase the length of time that the BR restrictions apply.
The safest option is not to pay the mortgage for 2 or 3 months and use this money to pay for the BR fee and rental deposit. |
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ripski
New Member
United Kingdom
90 Posts |
Posted - 04 September 2009 : 06:56:29
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I would advise you keep the policy for another 12 mths until you are discharged. Any windfall etc would be used by OR to pay creditors.I have an IPA for 3yrs,which states that you have to inform of any changes in Income. I am expecting an inheritance £15000 from a elderly relative. I asked my OR re this and my IPA. She was definate that once discharged no interest and I can even win the lottery and OR would not be intersted.The IPA states 'inform of changesincome ' -literal.
I had a small life policy that I have paid for 20 yrs and I was offered the chance to'buy' it back for £50. Similar to Beneficial Interest in a house. I was puzzled about their interest in insurance policy but it makes logical sense when you consider that OR has charge of your finances for 12 mths and thier duty is to try and repay creditors.They are not their to act for us but it does feel in reality that they are as the OR is so helpful and understanding The OR explained that if I died in next 12mths ,the money would go into my estate and rather than given to relatives it would be used to repay creditors but after 12 mths -no interest
ripski1 |
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cleanfreshstart
Starting Member
United Kingdom
21 Posts |
Posted - 04 September 2009 : 13:05:51
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Thanks ripski, but I thought the OR will make me cash this in anyway as the money from it would pay my creditors. I think it stands at around 5k. I cannot see them allowing me to continue paying for it as it costs me £40 a month.
I'm confused, will I be able to keep the life policy during BR and wait until after the discharge to cash in? |
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Reviva UK
Advanced Member
United Kingdom
2452 Posts |
Posted - 04 September 2009 : 20:04:12
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Hi
The OR will cash in the policy and does not need your authority to do so. All of your assets belong to the bankruptcy estate.
Therefore if you do nothing you will lose the asset.
If there is a substantial value to this it may be worth cashing in the policy now as this will help with bankruptcy fees, possible help with advance rental and definately a replacement car ( 2k ish ) that way you can lose the loabnility of the HP car as well and have the whole thing tifdied up before you petition.
Lets say the value is £10k, then you can use
car £2k
Bankruptcy fees £1020 ( for 2 people )
rental deposit & month in advance £ 1600 (@£800pm)
pay a firm to move house £ 700
the balance would then need to go to the official receiver or at least be accounted for ( for example if you needed a new cooker etc.
Some people elect to pay for assistance, others elect to pay creditors on a pro rata basis and others elect to make a cheque out to the OR.
Either way you need to account for what you spend.
You cannot pay your brother back because this , as said earlier, would be classed as preferential treatment and then the OR would definately require your brother to repay this and you may get a Bankruptcy Restriction Order as well because of the preferential treatment.
just some thoughts
Paul Johns
Bankruptcy Specialists
Reviva UK
www.revivauk.com
Real People ..... Real Debt Solutions |
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What to do before bankruptcy
