bankruptcy petition - please help

[lisalou_24]

Hi

Please can someone help me?

I have been filed with a bankruptcy petition for a large debt, which I cannot pay as both my partner and I have lost our jobs recently.

However, I am unsure what to expect, is this just a preliminary meeting to ascertain what assets we have etc and then have another court date to return or will we actually be made bankrupt tomorrow with all bank accounts frozen? This is the first court date, and was only filed with a statutory demand before.

We do not have any assets e.g. house/mortgage, car (well we have a little car, but isn’t worth anything as its practically on its way out and only worth £500 - which we do need to get my son to and from school etc, as live in a remote village with no real buses, and the school is 2 miles away). We currently live in rented accommodation, although I think they are under the belief the house we are living in belongs to us (and we have never had a mortgage), hence why I think they had instigated this bankruptcy petition.

Basically I just wanted to know what is likely to happen tomorrow and if we need to prepare / take along any information, as haven’t been given any good advice on what to do.

Thanks in advance for your help.

[PGH7447]

Hi and welcome

 

firstly is it a bancruptcy petition or a statute Demand.

 

secondly what is the debt Loan; Crdit Card, overdraft etc

 

thirdly who is chasing the Original creditor or a Debt collections agency

[lisalou_24]

no its a petition. I have already had the statutory demand served.

 

I am to attend court tomorrow.

 

The debt is for £11,932 for school fees, both our sons when to private school, lost job and wasn't able to pay the fees, you cannot just take them out without giving them one terms notice, so even if you pull them out you still have to pay basically.

 

We also have other debt, am I right that I can rule all other debt off with being bankrupt too, as long as its old debt prior to the bankrupt proceedings even if they aren't the people who filed for bankruptcy?

 

But if we are going to be made bankrupt, which I am fine about I want to ensure that all other debts are wiped clean with all creditors also e.g. credit cards, loans etc.

 

Also, as we live in rented accomodation, will they inform our landlord about the decission of being declared bankrupt? if so, how is this done e.g letter, phone, email etc?

[lisalou_24]

oh its a solictor who has been instructed that has filed the demand and petition etc

[ODC]

I really dont see what they hope to gain by making you bankrupt. By the sounds of things they are doing you a big favour as this will allow you to write off all your debts and start again with a clean slate.

 

I have contacted one of the Mods who is well versed in Bankruptcy to advise you further

[fermi]

We also have other debt, am I right that I can rule all other debt off with being bankrupt too, as long as its old debt prior to the bankrupt proceedings even if they aren't the people who filed for bankruptcy?

 

But if we are going to be made bankrupt, which I am fine about I want to ensure that all other debts are wiped clean with all creditors also e.g. credit cards, loans etc.

 

Yes. With a few exceptions.

 

Student loans, some fines, CSA arrears, and a few other odd debts are not cleared.

 

But all normal unsecured loans, credit cards, etc will be cleared.

 

If you have a joint debt and it is just you going bankrupt then the debt will fall to the joint signatory.

 

Also, as we live in rented accomodation, will they inform our landlord about the decission of being declared bankrupt? if so, how is this done e.g letter, phone, email etc?

 

The official receiver (OR) will normally write to a landlord. Many people have arrears after all if they are in financial problems.

 

If you can provide the OR with a copy of the tenancy and proof you are up to date then some will agree not to do that. But not always.

 

To be honest, the vast majority of landlords are just fine.

 

They care about getiing paid their rent. If you have no other debts, then that is more likely not less.

[babydoll0141917]

subbing

[ukaviator]

You will need to submit an income and expenditure statement (budget sheet) to the court so the judge can see that you are able to afford to live, let alone pay any outstanding debts. Have you made any offer of payment to these fees?

 

The Budget shhet is here:

 

http://www.consumeractiongroup.co.uk/forum/attachment.php?attachmentid=9136&d=1243157204

 

When being made Bankrupt the court will need to have details your income, outgoings, debts and assets. The court will decide whether to make a Bankruptcy Order. You will be interviewed by the Official Receiver. The Official Receiver is a civil servant who will deal with the creditors and decide what to do with assets such as vehicles and property, which in your case is rented accomodation. Do you have any arrears on the rent?

 

In Bankruptcy your assets are usually sold. Your creditors are then paid with the proceeds of the sale. If the creditors are not paid in full then any shortfall is written off. You will then have certain restrictions during and after the Bankruptcy proceedings. Remember that the courts would have to approve the petition just as they would if you petitioned for your own Bankruptcy.

 

A time order maybe a way of asking the court to give you more time to pay a loan agreement if you have fallen behind with the payments. It can change the amount you have to pay each month, how long the loan will last, and in some cases it is also possible to change the interest rate if any is charged.

 

You can only apply for a time order if your credit agreement is regulated by the Consumer Credit Act 1974 you took the loan out after 1 May 1998 then the loan can be up to £25,000 and still be covered by the Consumer Credit Act.

 

The court should look at making an order for you to pay in instalments you can afford. Interest is normally frozen on court judgments for agreements under the Consumer Credit Act automatically.

 

It really depends on your circumstances. If your and your partners credit ratings are completely shot to bits by this and other financial institutions demanding money, then the bankruptcy may be the only option you have to start over.

[lisalou_24]

Hi

 

Thanks, no we are no behind on our rent at all, and completely up to date.

 

Thanks for your help.

 

However, if anyone knows what will happen tomorrow that would be a great help - as still unclear if we will be made bankrupt tomorrow or if its just a preliminary hearing to ascertain what assets we have etc?

 

I don't want my funds in my bank account being frozen by the bank, so if this is the case, I will be taking out all my money!

[lisalou_24]

its ok you replied with an answer as I was typing the above.

[babybear39]

Get enough money out of the bank to live on for a few weeks and if any of the accounts which could be included in the BR are with your current bank open a new bank account that's not assocciated with your debts.

 

Who is the original creditor and who is the company making you BR?

[lisalou_24]

its a school for debts owed. I do not have any debt with my actual bank I bank with, neither does my partner.

 

Although we have various credit cards and loans etc, non again through our bank - all unsecured.

 

Also what is the situation with council tax, do they wipe any debt owed on that?

[babybear39]

Council tax arrears cannot be included in a BR. All your other debts look like they can though if thats what you want

[fermi]

Council tax arrears cannot be included in a BR. All your other debts look like they can though if thats what you want

 

Actually they can. Subject to a few conditions.

 

Unsecured Creditors

 

40.101 Council Tax

 

Each District Borough Council levies and collects a tax, called a council tax which is payable in respect of dwellings in its area. The occupiers of the dwellings have joint and several liability for council tax.

 

Council tax is charged on a yearly basis from 1 April each year [Note 3] but the liability to pay council tax is determined on a daily basis [Note 4]. The billing authority is required to make a demand for payment of the council tax separate to the notification of the amount of council tax and the tax becomes due when that demand is made but most council tax payers agree a statutory monthly payment scheme for payment of council tax [Note 5].

 

Any amount due and unpaid under the instalment agreement prior to the insolvency order is an unsecured debt in the proceedings [Note 6]. If the bankrupt's council tax is up to date under the instalment agreement at the date of the bankruptcy order, no amount is provable in the bankruptcy as it relates to future occupation of the dwelling. Where a liability order has been obtained by the council, prior to the bankruptcy order being made the whole debt as notified within the liability order becomes due and it is therefore a provable debt as defined in paragraph 40.12.

 

So basically, arrears from a previous year are written off.

 

If you are paying the current bill by instalments and you are in arrears, then the part of the bill due up until the bankruptcy date is written off.

[ukaviator]

Are the bank accounts joint?

 

Are you able to make payments to the debt over a period of time, or are you fully stretched with other commitments?

[lisalou_24]

no accounts not joint, but BR is for both us anyway as a joint debt as sons were at the school.

 

No this is not an option plus all the other debts we have an unable to pay as both lost jobs.

 

To be honest they are doing us a favour by doing this anyway, and was something we were toying with for a while to help get all debts cleared and start a fresh clean state.

 

I am not worried about what is happening, I just wanted really to know what to expect tomorrow when attending and what happens afterwards?

 

Will this BR last for 12 months to pay back some of the debt owed - although at the moment we have litterally £8 spare a month after bills, rent, food etc.

 

How are you finances managed whilst being BR?

[babybear39]

Are you and your OH on benefits?

[fermi]

Will this BR last for 12 months to pay back some of the debt owed - although at the moment we have litterally £8 spare a month after bills, rent, food etc.

 

How are you finances managed whilst being BR?

 

12 months or maybe less. If your OR is not too busy and your case is fairly simple then you may be discharged before the 12 months.

 

If you are both unemployed with no income apart from benefits then you are not going to be asked to pay anything back.

 

But for the sake of argument, if you did find work then you may be asked to pay something back from any surplus income for up to 3 years. But that really is from surplus income, so not a big deal.

 

While BR you manage your finances. You simply have a legal duty to inform the OR of any increases in income within 21 days of them incurring.

 

It is a surprisingly "hands off" procedure, relying on a) trust and b) the fact that you have a legal duty to cooperate.

[babybear39]

Was the best thing I ever did 'cos was tressed it made me very ill and suicidal having debts. I got discharged within a year and got over £25,000 of alleged debt written off.

[mr.ton]

You must state down all your expenditure on bills,clothes,food,travel costs etc...do the figures in such a way that you have a £1 per month leftover.

Ive never known a court to require receipts....especially not for the amount of food you buy

You will not be on trial here, there is no guilty or not guilty involved - its all very informal & sorted out sitting round a table.

[mr.ton]

I don't want my funds in my bank account being frozen by the bank, so if this is the case, I will be taking out all my money!

 

If you can..set up a basic bank account somewhere else & move all your money into there

[fermi]

Have a look through the links in my post here:

 

http://www.consumeractiongroup.co.uk/forum/show-post/post-1929934.html

 

Should help answer many questions you have.

[fermi]

If you can..set up a basic bank account somewhere else & move all your money into there

 

Barclays Cash Card or Co-op Cashminder account if you can.

 

Most others are likely to be closed as soon as the bank finds out.

[mr.ton]

Barclays Cash Card or Co-op Cashminder account if you can.

Most others are likely to be closed as soon as the bank finds out.

 

Co-op is good yes as i have 1 with them

[ukaviator]

Well that does look like your best option in the situation you are both in. Just remember to fill in the income expenditure sheet and print it off.

 

Let us know how you get on. . .