Bancruptcy..some help and advice needed please

[Mich&Mash09]

Hi

My husband is being made bankrupt on the 10th Feb for a debt owing to a building supplies company of £3000.

 

He's a self employed carpenter and is currently out of work ..has been for a good few months.

 

We don't have the money to pay this so don't have much choice but to let this go ahead.

 

We are currently living on Tax credits and child tax credits, which is paying the mortgage and putting food on the plates of our four children.

 

We also have other debts totally around £25k including

a car loan (not HP) for £12500. The car is currently worth probably around £7500.

 

We jointly own this property which would be in negative equity of around -£50k.

 

We also have our previous home which is currently rented out as we couldn't sell it.

It is also in negative equity of around -£30k. It is in my husband's name only.

 

Oh and I almost forgot .

.he got a letter from the Taxman recently to say he owed them around £50k

- now this is all mostly penalties and estimates from 2006 onwards

(he hasn't submitted his tax return since then..stupid I know).

 

We can't afford to pay an accountant to do the books to resolve this but a friend who does his own books,

looked through them and thought that we were actually owed money after paying wages, materials etc.

 

Sorry this is all a bit mixed up but I'm not really thinking straight as this is on my mind all the time

- I don't know what is for the best.

 

We really don't want to loose our home, we are up to date with our mortgage payments

..it's the only thing we have been able to pay and the other property mortgage is up to date also.

 

What is the situation regarding the property and car.

I would really prefer for this not to be happening but I can't really see any other way out for him/us.

 

Any advice would be gratefully appreciated!

[spamheed]

Hi

My husband is being made bankrupt on the 10th Feb for a debt owing to a building supplies company of £3000. He's a self employed carpenter and is currently out of work ..has been for a good few months. We don't have the money to pay this so don't have much choice but to let this go ahead. Being made bankrupt for such a relatively small amount seems a little harsh, it will cost them moeny and if as you say there is negative equity on the properties, there is little chance that they will get anything at all, at what stage is this, what documentation have you had that would indicate that they have a genuine intention to BR you, rather than they are just threatening you in the hope that you will pay up? Have you had a Statutory Demand from them?

 

We are currently living on Tax credits and child tax credits, which is paying the mortgage and putting food on the plates of our four children.

We also have other debts totally around £25k including a car loan (not HP) for £12500. The car is currently worth probably around £7500. We jointly own this property which would be in negative equity of around -£50k. We also have our previous home which is currently rented out as we couldn't sell it. It is also in negative equity of around -£30k. It is in my husband's name only. The OR will look at all of your husbands property with a view to releasing equity with which to make an attempt to pay something towards the creditors, however this doesn't mean that they will allow you to live in poverty or make your children walk the streets barefoot. You are allowed to keep some of the money coming into the house, how much of it depends on how much there is and what your needs are.

 

The car, I would expect to be sold, a vehicle is allowable, but normally a value of under £1000 would be acceptable, it may be that after the sale, the OR will allow some of the proceeds to purchase a cheaper vehicle.

 

 

The property that is in joint names: it is possible that the OR will offer you the opportunity to purchase husbands interest in the property, if within a three year period, you are unable to do this and there is no third party available to purchase the interest, then your husband may be able to buy the interest back for a nominal fee (circa £1)

 

 

The property in your husbands name only: It is not in the interests of the OR, the creitor, nor your husband to sell a property that is negative equity, it is in everyones interests to maximise any return, I would believe therefore that the OR will allow this situation to continue, but with the proceeds of the rental to go towards the settlement of your debts (after reasonable upkeep costs)

 

Oh and I almost forgot ..he got a letter from the Taxman recently to say he owed them around £50k - now this is all mostly penalties and estimates from 2006 onwards (he hasn't submitted his tax return since then..stupid I know). We can't afford to pay an accountant to do the books to resolve this but a friend who does his own books, looked through them and thought that we were actually owed money after paying wages, materials etc. This looks like it may be of interest to the OR, if there is a refund, it would be used to pay towards your debt, if there is a shortfall, then it would need to be identified prior to the BR hearing, otherwise you could have creditors pursuing you after the BR. Of course if there is no refund and it turns out that you owe HMRC, then this will reduce even further the likelihood of the building supplier getting a penny

 

 

Sorry this is all a bit mixed up but I'm not really thinking straight as this is on my mind all the time - I don't know what is for the best. We really don't want to loose our home, we are up to date with our mortgage payments ..it's the only thing we have been able to pay and the other property mortgage is up to date also. The OR will always allow reasonable living costs and will normally expect you to maintain your mortgage payments, (unless they are unreasonable - you poperty is viewed as an extravegance - a 6 bedroom house for a 1 child family)

 

they may contact your mortgage provider with a view to an interest only arrangement, but in the case of negative equity, joint ownership and young children in the household, it is unlikely that the OR would order any sale.

 

What is the situation regarding the property and car. I would really prefer for this not to be happening but I can't really see any other way out for him/us.

 

Any advice would be gratefully appreciated!

 

There is an awful lot to look at here, You really need to separate out the different assets and liabilities and clearly identify what is owned and who to, it is a case of sorting out your affairs, and you will be earning brownie points by making the OR's job less difficult. Have your husband open a parachute account (co-op have one for people with credit/BR issues) maintain the peiority debts, mortgage must be paid if you are to keep the house.

 

Without going into the ins and outs of your income, you need to identify what you have coming in and what your outgoings are, make a list and clearly identify where the money comes from and equally where it goes. at the very least it will help you both to sort out the confusion you currently feel and hopefully put things into context.

 

Since the BR is being forced on you, it will be down to them to bear the costs

Edited January 28, 2010 by spamheed

[loobyloo85]

Hi there

 

Bankruptcy will last for 12 months, but can take up to 3 years if an income payment order is requested. It is a quicker way of clearing the debts, however, I agree with the above post with the fact that £3K is not a lot of money to go down the bankruptcy route with. The positive side of this is that your husband does not have to pay to make himself bankrupt, and his debts will be written off.

 

The following may happen as your home is dealt with during bankruptcy:

• Your interest may re-vest back to you
  
• A friend or relative can purchase your share of the equity
  
• Your house may be sold on the open market, without the need to go to court, if your non-bankrupt co-owner agrees and the trustee agrees
  
• You may be able to come to an arrangement with the trustee to buy back your interest over a period of time
  
• The trustee may apply to the court for an order for sale and possession
  
• The trustee may apply to the court for a charging order
  
• The trustee may apply to the court for suspended possession order
  

[debtinfo]

As long as you co-operate the bankruptcy will only last for a maximum of 12 months.

 

If his only income is benefits he will not have to pay anything to the OR from his income. If he starts working during the bankrupty he MAY have to pay an amount for up to 3 years depending on the household income and expenditure

 

All of his debts are included in the bankrupty even if they are not known exactly at the date of the bankruptcy order they, cannot persue him afterwards. If the tax turns into a rebate this will be payable into the bankruptcy.

 

The family home - the OR will let him buy his interest in the property back for £1 IF it is in negative equity and he can continue to make the mortgage payments. If there id possitive equity the OR will want an amount equal to the value of the equity paying in order to buy it back.

 

The rented property is not a family home and so the OR has an indefinate period to deal with it. If the Mortgage lender does not appoint an LPA receiver to collect the rent for them then the OR will collect the rent for the bankruptcy. The OR will not pay the mortgage with this money. This means that it is likely that the property will be repossessed, as long as he does not sign a deed of acknowledgement when this happens the shortfall will fall into the bankruptcy regardless of how long it takes to resolve the matter.

 

If the car loan is NOT HP then the OR will see if it is necessary for him to keep the car, if not the OR will sell it for the benefit of the creditors. If he does need the car the OR will decide if he needs a car of that value, if he does not the car will be sold and an amount released to him that is needed for a replacement