Going Slightly Mad

A question about : Going Slightly Mad

Hi All,

Apologies in advance if this post seems repeated or the answers are already on the forum. I am in a place at the moment where the more I read the more confused I get!

My situation is as follows -
I have previously (2003) been made bankrupt and am more than likely about to go down the same route.
I am married with one young child.
My debts unsecured are around Ј27,000 and my secured debt (car) is around Ј16000.
My monthly outgoings are (jointly, including utilities) around Ј4000 and mine alone count for Ј3300 of this.
I am literally moving money one month to the next to get the bills paid and I am only managing to do so because of work expenses (mileage), but this has now been reduced from next month drastically and will put me in a very difficult, almost impossible financial predicament.
My concerns on going bankrupt are:
My car is on HP and has 2 years remaining. I need this car or a car to do my job. Given its worth, I am working on the assumption that the OR will take it off me. How will I fare on doing my job if this happened?
If I do end up going BR, I will more than likely have a decent amount of excess funds remaining, will the OR deduct monies directly from my salary? This would cause me huge issues as I work for a financial company.
I only share a joint account with my wife and she isnt looking to go bankrupt. However, she also has some assets (car) that she is paying through HP, would this be considered as part of my assets?
Lastly, on my wife, how will she be effected by me going bankrupt?

Something else I just though of, is it worth stopping my current direct debits as I, at the moment, have no way of saving for the possible BR fee?

It is highly likely that due to these debts and this position I have put both myself and my family in, that my wife and I will separate shortly.

I thank you in advance for any help or advice you are able to give.

Best answers:

• Hi, and welcome.
  Firstly, you mention you work within the financial sector?
  Do you hold a post for which BAnkruptcy is not allowed? [If you are unsure, check ASAP with your HR dept.?}
  If this is the case, your options may be an IVA...or a DMP.
  [1]...The car belongs to the HP company, so is not your asset. If the payment schedule is deemed reasonable by the OR, you may be allowed to continue....which is also subject to the HP company agreeing, as well.
  Since you appear to have a good case for a car being 'exempted-as-an-asset'....then you would be allowed to retain a car, but its value must be no more than circa Ј1000.
  [2] If there is a surplus of income [yours alone]...then the OR will seek an IPA. Should this be agreed, then it will run for 3 years from inception, [and subject to variation in amount should your circumstances change during this period] and is not deducted directly from your salary [unless a Court orders it to be so]....
  [3] It is best for both parties to sever financial inks...close the joint account, open up individual accounts.. You would only be allowed basic bank accounts..currently, the only two BR-tolerant banks are Co-op and Barclays.
  Co-op needs to be opened prior to the BR petition....but they allow retention of internet access [CAshminder accounts]...[whilst Undischarged]
  Barclays will open an account or two, after the date of petition [whilst Undischarged]...but will not allow internet access for this period [1 year]
  Your wife's assets are not yours, so are not involved with your BR..
  [4] It is likely the relief from the debt burden may make things easier?
  You don't mention whether you have a mortgaged property, or rent?
  If the former, this will be affected by a Bankruptcy.
• Thank you for your reply alastairq, much appreciated.
  There isn't anything in my contract about going bankrupt, however, you cannot join the company if you are bankrupt, if that makes sense? My concern arises from if the IPA figure was to be directly taken from my salary, it would undoubtedly be frowned upon.
  I am currently renting a property and have no secured credit aside from the car.
  Regarding the car, given the value will be more than the Ј1000 do you think the OR will allow me to purchase one or would it be prudent to do that now?
  I have opened a Barclay's account but I have just noticed that it is a current account and not a cash card one. I am assuming that I can downgrade that account easily?
  Do you know how strict the OR is with additional income remaining? I read that it can by 100% of the remaining excess monies you have?
  Thanks again for your reply.
• Hi Tafy1978 and welcome to the forum.
  It's not clear whether you have already sought advice elsewhere on your specific situation, but I definitely recommend it. There may be more options here than a simple choice between maintaining your payments and going bankrupt. alastairq refers to debt-management plans (DMP) and individual voluntary arrangements (IVA). These have various advantages over bankruptcy if you're trying to avoid doing anything too drastic.
  First of all, you need to check with your employer how/if bankruptcy would affect your job, as alastair suggests. Not all roles in the financial industry are equally affected.
  It's worth having a read of our bankruptcy fact sheet if you haven't already done so:
  https://www.nationaldebtline.org/EW/...y/Default.aspx (covers England and Wales)
  Dennis
  @natdebtline
• Hi again
  Cross-posted with your last post so didn't see this extra info at the time.
  Quote:
• Hi
  Very useful information on Income Payment Agreements & Orders from Citizens Advice (includes a calculator)
  https://nedcab.cabmoney.org.uk/ipaipo.asp
  The name of the game is reasonable living costs at the outset and not continued struggle after bankruptcy and don't forget the O/R examiners can be challenged they are not the law
  DC
• Thank you all for your help and advice. It blows me away, hugely appreciated.
  I will look into it all and come back if that's ok?
• Welcome to the board.
  Just to add to the excellent advice you've had so far I would like to add it is very, very unlikely that the HP firm will let you keep the car even if the OR ok's the payments. If youdecide to go down the BR route then I would stop all HP payments and buy a car for around Ј1k to Ј1500k,
  Please get advice from someone like National Debtline as your petition may be refused if you haven't had advice.
  If you want to post your SoA then the folk can give you an idea how an OR may look at it.
  https://www.stoozing.com/calculator/soa.php
• Statement of Affairs and Personal Balance Sheet
  Household Information
  Number of adults in household........... 2
  Number of children in household......... 1
  Number of cars owned.................... 0
  Monthly Income Details
  Monthly income after tax................ 2500
  Partners monthly income after tax....... 800
  Benefits................................ 80
  Other income............................ 0
  Total monthly income.................... 3380
  Monthly Expense Details
  Mortgage................................ 0
  Secured/HP loan repayments.............. 309
  Rent.................................... 840
  Management charge (leasehold property).. 0
  Council tax............................. 114
  Electricity............................. 77
  Gas..................................... 77
  Oil..................................... 0
  Water rates............................. 33
  Telephone (land line)................... 26
  Mobile phone............................ 30
  TV Licence.............................. 13
  Satellite/Cable TV...................... 47
  Internet Services....................... 26
  Groceries etc. ......................... 150
  Clothing................................ 40
  Petrol/diesel........................... 100
  Road tax................................ 12
  Car Insurance........................... 66
  Car maintenance (including MOT)......... 40
  Car parking............................. 40
  Other travel............................ 0
  Childcare/nursery....................... 286
  Other child related expenses............ 45
  Medical (prescriptions, dentist etc).... 30
  Pet insurance/vet bills................. 35
  Buildings insurance..................... 0
  Contents insurance...................... 18
  Life assurance ......................... 0
  Other insurance......................... 0
  Presents (birthday, christmas etc)...... 30
  Haircuts................................ 20
  Entertainment........................... 25
  Holiday................................. 100
  Emergency fund.......................... 0
  Total monthly expenses.................. 2629
  
  Assets
  Cash.................................... 0
  House value (Gross)..................... 0
  Shares and bonds........................ 0
  Car(s).................................. 0
  Other assets............................ 0
  Total Assets............................ 0
  
  Secured & HP Debts
  Description....................Debt......Monthly.. .APR
  Mortgage...................... 0........(0)........0
  Hire Purchase (HP) debt ...... 16000....(309)......5.9
  Total secured & HP debts...... 16000.....-.........-
  Unsecured Debts
  Description....................Debt......Monthly.. .APR
  American Express...............3000......0.........18.7
  American Express...............3000......0.........15.9
  Barclaycard....................3000......0........ .19.9
  Barclaycard....................2800......0........ .19.9
  Tesco..........................1800......0........ .18.9
  MBNA...........................10500.....0........ .17.9
  Capitol One....................1000......0.........34.9
  Total unsecured debts..........25100.....0.........-
  
  Monthly Budget Summary
  Total monthly income.................... 3,380
  Expenses (including HP & secured debts). 2,629
  Available for debt repayments........... 751
  Monthly UNsecured debt repayments....... 0
  Amount left after debt repayments....... 751
  Personal Balance Sheet Summary
  Total assets (things you own)........... 0
  Total HP & Secured debt................. -16,000
  Total Unsecured debt.................... -25,100
  Net Assets.............................. -41,100
  Created using the SOA calculator at
  Reproduced on Moneysavingexpert with permission, using other browser.
• Hi All,
  I have completed the SOA calculator the most accurate I can. I would appreciate any feedback if you can please.
  A point to note that I have included my wife's income on this but she has since moved out of the martial home and therefore the above will obviously change if it stays like this. Consequently the figure for child maintenance will also change too, although I have no idea what this looks like at the moment and its all quite fresh.
  I'm really beginning to think it may be a good idea to cancel my current direct debits to allow me to get the money needed for bankruptcy and possibly purchase a cheap vehicle to allow me to keep earning money.
  Also the above does include my wife's wages but doesn't include her bills which come to around Ј600 per month.
• Just commenting on SOA as no expert on bankruptcy.
  You car payments are very high - I assume it is a high end car! You really can't afford it so get a much cheaper car.
  Ј100 per month on holidays is also a luxury you can't afford. This money should be going towards debt repayments or into en emergency fund.
  Do you need cable tv? Could you get a free view box instead?
  Groceries are actually relatively low - while I know you are living on your own at moment but are you sure you are spending less than Ј40 a week?
  What are your credit card repayments? If you cut down on holidays, cable tv and got a much cheaper car could you not service this debt?
  Did you buy anything with the credit cards you could sell?
• You need to be clear about whether this is a household of 3 or 1 as that obviously has a huge impact. Have you given yours and your partners % of the bills or the whole cost?
  The one that jumps out at me is the TV/Phone/Internet - over Ј100 for this seems very expensive - I have unlimited BB/TV/Phone inc line rental and daytime calls for Ј43 from one of the large providers - the OR will expect some economies there.
  The motoring costs have been commented on elsewhere but the reality is you need to start looking for a much cheaper car and if you take the BR route, its highly likely the HP agreement will be cancelled anyway.
  Presents/Entertainment are not usually allowed but an emergency fund is so move that around a bit.
  Food is OK for one but on the low side for 3 inc a child.
• Thanks for the responses, much appreciated.
  To clarify, the detail above isn't fully accurate i've noticed since completing it as there are more unsecured creditors than are listed. However, the detail that is included are just my bills but with both salaries.
  I understand the comments on the car, its not a particularly high end car per se, its a 4 year old car of which I am 1 year into a 3 year HP agreement. Not sure what I can do about that now, unless I am missing something? It is a luxury and one that I need to change but how exactly given I have an agreement in place? Apologies if I am missing the obvious.
  The TV/Phone/Internet is incorrect, I must have duplicated the phone and the internet as its Ј26 per month for both. The TV package is Ј47 per month which is a deal with Sky, giving a total of Ј73 per month for phone, TV and internet. Unfortunately they are both 2 year deals that I signed into to enable me to get the fastest or biggest package at a discounted rate.
  Regarding the car, as its likely to be taken away, is it worth purchasing a car for around Ј1000- Ј1500 to be prepared? And to do that (as with the BR fee) I would need to stop paying my direct debits.
  Again thank you all for your advice / feedback.
• Once you are clear when you are going BR (if that is the case) then there is no point paying anything from then on - just stop paying for the car as soon as you know and at the point that you go BR - if you don't want the repo men at the door then just drive it onto the garage forecourt - tell them you are BR (take a copy of BR certificate to give them),hand them the keys - and get a signed receipt that the car has been returned. Buy yourself a Ј1000 motor in the meantime if you have the cash.
  Same with the TV/internet etc - just stop all the DD's but I would line yourself up with a new, cheaper package/supplier in the meantime if possible - the OR might allow the Ј73 but there is a chance they wont. I found it didn't matter how many channels I had - there was still 'nothing on' now we just have the basic and its fine - I got 6mth free Netflix thrown in with my package so I didn't miss the TV channels.
  I found that it took about 3 months for the cancelled DD's to start really catching up - I got away with telling them 'I'm so sorry - I'm switching banks and it must have got held up" for 8 weeks
• Thanks TheGardener, makes total sense now. Thank you very much for your detail, advice and replied.