help needed re bankruptcy!

[jules2008]

i am considering going bankrupt as i have insurmountable debts and will never be able to pay them if i live to be 100.

my main question is if i do consider this option will i loose my home which is in negative equity and will i loose my car which is only worth say £900 if that.

any help gratefully received

[Nibbler]

Re: help needed re bankruptcy!

If the home is in negative equity, then there will be no need for the OR/trustee to have it sold. They wouldn't gain anything for your creditors.

You may well be able to have someone buy your beneficial interest (future interest in any equity that does develop) for a token £1 plus legal fees. However, new guidelines on dealing with property mean that you might not be offered that until just over 2 years have passed, in case any realisable equity does appear. Even if some equity has developed by then, then your interest could still be bought out.

See: What will happen to my home?

With the car you would need to convince the OR that it is necessary for work or other domestic needs.

That really does mean necessary. Convenient doesn't cut it.

That applies even to a low value car like that. If you cannot convince the OR to declare the vehicle as an "exempt asset" then it would legally belong to them, and they would have a duty to take and deal with it.

However, for a low value car like that the OR isn't going to get much for it at auction so they may be open to a low buy back offer.

More info on how the OR looks at cars here: What will happen to my car?

[Jester]

Re: help needed re bankruptcy!

Have you looked into having an IVA rather than going bankrupt ?

There is a BIG difference and it may be worth you looking into before you opt for bankruptcy.

[jules2008]

Re: help needed re bankruptcy!

thank you very much for your replies! the reason i am thinking of bankruptcy is because i am currently on income based job seekers allowance so i cannot do an IVA. i think my next port of call will be the CAB! wish me luck!

[Caspar]

Re: help needed re bankruptcy!

CAB advised me to go bankrupt four years ago, but as my debts were high and income low they suggested I wait until one of my creditors made me bankrupt so I didn't have to pay for it.

In reality this has meant I've been able to push boundaries a bit on behalf of sites like these to find out what they will and won't do, but nobody will make me bankrupt, so I'm still waiting and not paying a penny to any non priority debts as advised. I have been told this was terrible advice, and I can see that for many it would be.

We have lost our home, but we beat any creditors to it by selling it on mortgage rescue to a REPUTABLE (cannot be expressed strongly enough) council recommend social housing association. Only got 80% of its value, but means we still live in "our" house and we don't have to pay a penny if the boiler packs in etc... which is not a bad situation to be in if you have no money. Our rent is about £450 pcm whereas on the private market it would be around £800 for a house the size of ours.

If CAB recommend the same to you, be prepared for it hanging over you for a very long time as that is a thing some can cope with OK and others would find next to impossible. Fortunately it doesn't bother me, though I wish someone would do it before the new rules come in.

[TUTTSI]

Re: help needed re bankruptcy!

Hi Jules

Long time no see..... where have you been hiding?

Good Idea to visit the CAB - I hope they can help with a solution.

I have posted up some general stuff, which I am sure you are already fully aware of.

Let us know how you get on hun.
Personal Bankrutcy





What are the advantages of going bankrupt?

• Often the fastest and cheapest way of becoming debt free.
• If you have no assets, then losing them is not exactly a hardship. i.e losing ownership of your home is not exactly a worry if you live in rented accommodation!
• Removes some of the pressure on you because you’ll not have to negotiate individually with a number of creditors.
• The problems and harassment caused by creditors or bailiffs end once the order is created.
• Bankruptcy helps you make a fresh start. The moment the bankruptcy order is made, you’ll achieve relief from pressing creditors. Depending on your circumstances, you can be automatically discharged from bankruptcy after 12 months, which may be a shorter time than it would take to come to other agreements with creditors.
• The majority of assets that people believe they will lose in bankruptcy, they can actually keep in most cases. I.e low value cars, cars on HP, their television etc.

Is bankruptcy right for me?

All too often people who would benefit greatly from the protection of going bankrupt dismiss the idea out of hand due to nothing more than misplaced fear caused by a simple lack of knowledge of the facts. We heavily suggest reading our frequently asked questions for more information so you can make your own decision.
Suitable circumstances for those who might benefit from entering into the protection of a Bankruptcy Order:

• People with no assets (including those with no equity in their property).
• People living in either rented accommodation or with friends and family.
• Those whose employment would not be lost or adversely affected by a Bankruptcy Order. (You can simply check your contract of employment).
• People who agree with the moral aspect of bankruptcy.

Misconceptions

It is a generally held misconception that personal bankruptcy is punitive and that bailiffs will seize your goods and chattels leaving you nothing but a change of clothes. This is false. You enter the protection of a Bankruptcy Order to do exactly that; to protect yourself from creditors and to allow you to wipe the slate clean and get a fresh start. Under Section 283(2) of the Insolvency Act you are allowed to keep the tools of your trade, all clothing, bedding, furniture and even your car (provided it’s not too expensive and subject to certain conditions) the general principle is that your goods and chattels are safe.
The law changed in 2004 and the mandatory period required to serve under the Bankruptcy Order was reduced from 3 years to 1 year even if you have been adjudged bankrupt before. Bankruptcy is no longer a punitive action and is there to allow discharged Bankrupts the opportunity of rebuilding their lives. In some cases, bankrupts can be discharged from bankruptcy in as little as 3 months at the Official Receiver’s discretion. An early discharge is possible provided no creditors object. For those granted an early discharge, the average discharge period is around 7 months.
Your name no longer appears in the local paper when you enter yourself into the protection of bankruptcy. This stopped in April of 2009. There are some restrictions to this however for example your name will still appear if you owned a business that had complaints made against it in the local community.
To find out more about common misconceptions in bankruptcy and to get further information on making the right choice we heavily recommend reading our frequently asked questions page, or contacting an advisor.
Assets you can keep!

You can keep the following items of property unless the individual value of each is more than the cost of a reasonable replacement:
Tools, books, vehicles, and other items of equipment necessary to your personal use in your employment, business or vocation; and clothing, bedding, furniture, household equipment (for example, a cooker) and possessions necessary for satisfying your basic domestic needs of you and your family.
Most household items will not be sold. You will usually be allowed to keep furniture, a television and similar items. However, items which go beyond satisfying basic domestic needs, for example, antiques, expensive jewellery, a good quality new hi-fi system or a new DVD player, may be sold.
A car will usually not be sold unless it is valued over £1,500. However, the value of the car can influence the decision made about its sale.
Inland Revenue approved pensions are excluded from being taken into account as an asset in bankruptcy.
You can apply to court if you believe that the trustee is acting unreasonably when taking or selling goods. Also, if an exempt item is sold, then you may be provided with a reasonable cheaper replacement, if your circumstances require it, by the trustee. For example, if you need a car for your job, a cheaper replacement vehicle may be supplied.
If you have items of value, the trustee may take possession and sell them. They may instruct an agent or auctioneer to value such items. You may dispute the value of the property by obtaining an independent valuation. Bankruptcy has the benefit of writing off all unsecured debt with the exception of court fines and maintenance payments directed by Court Order and student loans.
It’s a good idea to have an experienced company to help with the bankruptcy and prepare the petition for you. Experience is important and often helpful to enable you to steer around problems like income payment agreements, especially if you have chosen to come out of an Individual Voluntary Arrangement (IVA) or Debt Management and enter bankruptcy. Contact an advisor to find out more.
Your choices

There are choices for anyone who is experiencing difficulties in either their financial or trading positions:

• Do Nothing: This is only an option if you are confident that your circumstances are going to change for the better. If you do nothing and you have no exit strategy then you may leave yourself exposed and your situation may well get worse. It is better to be proactive than reactive. It is better to deal with a problem rather than ignore it, as it will only get worse. Only do nothing if you are sure your situation will improve.
• Consider Bankruptcy: Often bankruptcy is the fastest and cheapest way out of debt. Bankruptcy should always be the first debt solution considered as it almost always requires the least repayment to your creditors. If you have no assets to protect, live in rented accommodation or a mortgaged property in negative equity, and are in employment that will not be affected by bankruptcy then this is something you should definitely research further.
• Consider an (IVA) Individual Voluntary Arrangement: IVAs were originally designed to provide relief to debts generated as a result of business insolvency. In recent years, increasing levels of consumer debt has led to many insolvent individuals with non-business debt seeking the legal protection offered within an IVA. IVAs are usually appropriate where you have assets to protect or your employment or moral beliefs regarding your debt situation make bankruptcy an unsuitable option. It may be that you have special reasons for not wanting to enter into bankruptcy in which case an IVA is a suitable debt solution to consider. Please contact us now to discuss with one of our advisors.
• Consider a Debt Management Programme (DMP): You may like the idea of a debt management company handling your creditors for you. Once your circumstances are known an affordable monthly payment will be agreed whereby you pay this affordable amount to the debt management company who will then write to all of your creditors and request that interest be frozen and distribute a proportionate amount to each of your creditors. You have access by telephone to your debt management company and do not have to wait to see someone. All this can be arranged in one phone call. This relieves you from having to contact your creditors directly as the debt management company liaise with your creditors through the debt management plan. Debt management is quickly becoming popular for property/home owners as there are no restrictions against your property, unlike IVA’s.