Input needed from current/past bankrupts

[djweeble]

Hi all, I'm looking for some information on the experiences of current and past bankrupts, on how the whole process went for you.

I currently live in Norway, and I found that a friend of mine is currently having very bad financial problems, and it's causing him and his whole family big time stress.

We, my girlfriend and I, decided to try and help them out with a break, so we paid for everything for the whole family to come over here for a week, passports, flights, car fuel, even the airport parking.

We now know the extent of their problems, and it's not looking good for them, 22K in debt, 2K of it to doorstep loans, the rest to some loan company tied to HSBC, which started out as about 10K and grew through "consolidation" to 20K over about 4 years :o

There is no way on this planet that they will ever be able to pay off the loans in a reasonable time scale, and his meagre wages (£1100 a month for 60+ hours a week) are currently being swallowed up every week by his bank overdraft and charges, £300 went in yesterday, it left him with about £50 available, the bank then paid out a loan payment putting him £250 over the limit, gawd knows what will happen next, but I assume the payment will bounce on Monday, he'll go back into "available funds" only then to get stung with charges taking him straight back over his limit....... round and round and round we go...... where it stops nobody knows

I told him that I think he'd be best going bankrupt, but his wife is terrified that they (recievers) will take everything they have.
They live in rented accomodation, they have a car worth about £2000, a £1000 TV, they have 2 computers, one of them their daughters, all the normal stuff most families have, but nothing of high value apart from the car and TV.
I told her that I didn't think the recievers would be bothered with stuff of that sort of value, and it's only the larger more valuable stuff like houses and decent cars that would consider taking, but I don't know enough realy to be totaly sure.

Can anyone with experience give me some true life stories here to put their minds at rest, or is it as she thinks . . . they will take everything ??




EDIT: One thing I'll add, just in case it isn't obvious enough, he's based in the UK, and all his debts are there, not in Norway..... just for clarification.

[tomterm8]

From what I understand, a car worth £2,000 would be excempt as it is a tool of the trade (its book value is probably less than £2k ). They might take the TV, but only if it is worth the hastle.

It's really quite rare for the OR to reposess anything unless there are substantial assets - oil paintings etc. Worth discussing the matter with the national debt line.

have you considered reclaiming all the late payment / over limit / returned payment charges? it's what the site does

also, when and what type of loans are they (I really need a list) and what is their disposable income? ignore bank charges.

Given your friends situation, i would personally open a basic bank account with another bank, and make sure income is paid into that account / basic DD transfered. Then contact citizens advice bureau and try for a debt management plan, or find out if bankruptcy is best.

FYI, with an income of £1,100 it is likely that a percentage will be taken by the O/R for the year of bankruptcy, and 3 years after discharge.

[Tau]

Hi djweeble.
Couple of questions for you.

Are any of the loans or credit cards in joint names at all.

Does your mates wife work at all

Are they in receipt of WTC/CTC

How many children do they have.

I must point out that bankruptcy should only be used as a last resort to deal with his financial problems.

Im going to disagree with TomTerm 8 regarding the statement that a percentage of the £1100 would be taken as an IPO/IPA.
By the time that all of the household expenses are taken out of that and everyting else that can be classed as monthly expenditure, there wont be much left as disposable income. That needs to be £100 per month or more, then the OR would be looking at something like 50% of the D/I as an IPO/IPA.

As far as I am aware, any payments of CTC or Child benefit are not taken into account when your monthly income is worked out, as these are supposed to be for the kids.

Regarding the car. It has been known for the OR to take a car even with a low value such as this. Its not a common practise, but if they think that you do not need it, then they will try and take it.
If you need it to get back and forth to work and there is no other way for you to get there then you will most likely be ok.
You will have to prove that you have a genuine need for the cars use.(I personally doubt that they would take it any way)

The OR may have an interest in the TV, depending on what its second hand value would be at auction. With the price of large screen TV's nowdays they may not bother as it may cost then more than it would realise at auction.
Sorry, back to the car.
If the car is not being used due to failed mot or cant afford the insurance, THE OR WILL TAKE IT. They have no choice. They would be liable if you were driving it in that condition and had an accident, the OR's office would be liable for any claim.

I would also mention that the Judge will ask if thay have taken any legal advise on the desecion to petition for bankruptcy. I would advise that they do this anyway.

If they have debts in joint names and they are quite high, they may both have to go down the BR route as they would both be liable for the repayment of the joint loan/credit card.
You are looking at the best part of a grand for both to go BR

I would say that the computers are safe, as they will have almost no resale value in then at all.

I will post a list of things that you can claim for, for expenses. You will be surprised.

[Tau]

This is what we claimed for as expenses. Nothing was queiried by the OR.

The houlsehold costs are for two adults and three kids.

Mortgage/Rent £411
Council Tax £122
Electricity £105
Gas combined with above
Heating Oil N/A
Water Rates £38
Telephone £80 includes cable TV and internet connection **
Mobile Phone £55 two phones
T.V Licence £10S
Satellite TV ** see above
Buildings Insurance Contents Insurance £15
Life Insurance £10
Groceries £560
Clothing £150
Petrol £170
Car Tax £30
Car Insurance £41
Car MOT £9
Car Maintenance £40
Car Parking £28
Bike tax £5
Bike insurance £15
Bike mot £3
Other Travel £5Childminder N/A
Medical/ Dental Expenses/optical £10
Pets Insurance/Vets Bills £10
Birthdays/Christmas £30
Holidays. £70
Hairdressing/barbers £35
Royal college of nursing £15
School trips £20
Emergency fund £25
TOTAL MONTHLY OUTGOINGS. £2117

Hope this helps.

[Belaflat]

Thread drift a little, I have £1730 a month and am keeping 2 adults, 3 kids and paying maintenance for 1 more. No wonder I am struggling. I wish I had the guts to go BR but there are too many implications for me longer term.

[fermi]

I have to agree with Tau. The "reasonable domestic needs" of the bankrupt and their family are taken into account in their Income and Expenditure. It is only income that is surplus to this that is claimable under an IPA/IPO.

The percentage of any surplus taken is on a sliding scale:



When the Official Receiver is deciding whether to claim a vehicle for the estate, it is up to the bankrupt to show why continued access to a vehicle is essential for their reasonable domestic needs or their employment rather than just convenient.

If the Official Receiver decides that they cannot declare the vehicle as an "exempt asset" on those grounds then it belongs to the estate, not the bankrupt, and it is therefore the OR's responsibility to sell or dispose of it. This is irrespective of the vehicles value.

However if the vehicle is declared exempt the Official Receiver will then look at it's value. It is then that the "much quoted" figure of £2000 comes into play.
If a vehicle is considered exempt but has excess value then OR can claim that for the estate. The normal threshold for this is £2000. Considering that sale costs to the OR account for around another £500, then roughly the OR will look to realise any excess value in cars that are worth over £2500. The OR will return sufficient funds to purchase a cheaper replacement.

There is a sticky on another site here that goes into much more detail on cars: Cars and Bankruptcy

As the others posters have said, most household items are safe. The items that are required for your "reasonable domestic needs" are exempt under law anyway, and most other items have so little value at auction that it would be uneconomic for the OR to take them.

Getting some professional advice is a must. The court/judge usually asks whether you have done this and who you took advice from.

Hope that helps a little.

Bankruptcy is not as scary as it sounds, but it is the last resort.

[loopinlouie]

I was frightened to not go BR by DCA ten years ago and as result whilst on benefits and single mum, have been harassed by them for the ten years. I have paid a few pounds monthly over this time and although dont answer phone to them have nightmares about them still.
I wonder if since my situation is not going to change through long term illness should I really be frightened of going bankrupt. The shear dream of them leaving me alone and not chasing me for the rest of my life as they said would cut a lot of stress. The dca said they would take my furniture and electical items even though they are years old. I dont even have carpets in my three story council house, only books old telly and six year old stereo. They really put the wind up me, do you have any advice of what they would take as I am considering trying to raise the BR fee some how.
I incidently found old letters between cab and dca years ago and them nastily telling cab that we shouldnt be allowed to allow money for clothes for baby and should concentrate on giving it to them. I now understand why I became so terrified of them!
Any advice appreciated on this from previous bankrupties is appreciated

[fermi]

Originally Posted by loopinlouie

The dca said they would take my furniture and electical items even though they are years old. I dont even have carpets in my three story council house, only books old telly and six year old stereo.

For starters that is UTTER RUBBISH, and is typical of the scare tactics and misinformation used by DCA's.

The Official Receiver is required by law not to take items that you need to meet your "reasonable domestic needs", and most other items are simply not worth enough at auction for them to claim. Most bankrupts with the normal range of household possessions won't see a single one touched.

Have you discussed your situation with anyone apart from CAB?

The two agencies below can give you free and unbiased advice on what your best long term options might be.

National Debtline - Tel: 0808 808 4000

The Consumer Credit Counselling Service (CCCS) - Tel: 0800 138 1111

If you haven't already, then it might also be worth posting your situation with the DCA's on the Debt Collection Industry or General Debt Issues forums.

There are often ways to deal with DCA's that fall far short of bankruptcy.