Topic: Bankruptcy While on Benefits

[CAMK]

I am a single parent of 3 school age children.  The only money I have coming in is Income Support and child benefit.  I don't receive any maintenance from their father.  I have been advised to apply for bankruptcy.  My concern is: are benefits used to pay into an IPA or are they exempt.  I have been given conflictating opinions

[Sovereign]

Hi CAMK,


Before we go any further, what is the total amount of your debt and what assets do you have (such as house, car etc)?


If bankruptcy is the right solution for you, and you are entirely dependent upon benefits, it is extremely unlikely that you will be required to pay anything towards your creditors. Before going further though, let us have a little more information and I will see what I can do.


Remember also that the fee for a bankruptcy application is likely to be £450.00. Can you afford this amount?


Best wishes,


Steve

[CAMK]

Hi Sovereign. 
Thanks for replying.
I have £21,150 in unsecured debt.  I don't have any assets at all.  I live in privately rented accomodation which is paid for by Housing Benefit.  I don't own any type of transport.  My debts are caused by my splitting up with a partner and walking away with just the clothes myself and my children had on our backs.  I had to rebuild a new life for us in a different part of the country.  I receive Income Support (full entitlement, as I don't work) and child benefit.  According to the CCCS my allowances by the OR will be minimal and therefore I should expect to be paying around £90 a month into an IPO.  I really don't understand where they get their figures from.  Surely the benefits are for basic living expenses only. 

[Sovereign]

Hello again,


I am amazed that CCCS have calculated an income payment figure of £90.00 per month. That would mean that you have at least £160.00 per month disposable income. 


They may have overlooked the £100.00 threshold for income payments. That being said, I feel it highly unlikely that you would have to contribute towards your debts in bankruptcy.


Your unsecured debt level is too high for a Debt Releif Order and therefore BR may be the right solution.


Can you find the BR fee though?


Steve

[CAMK]

Hi. 
According to CCCS there is no £100 threshold.  All surplus money is subject to 70% fees.  They gave a phone number for "Fund Finders".  I had planned to get a loan from social security (to be paid back weekly from my benefits) but again, according to CCCS, this is not allowed either.  I am quickly losing faith in them.  Is there a better organisation I could speak with?

[Sovereign]

Hi again,


There is a threshold of £100.00 when considering an income payment agreement. If the Receiver accepts that you have £99 or less disposable income per month then you would not be asked to make these payments. Look at the Insolvency Service website and the section that deals with income payment agreements/orders (IPA/IPO). Also there is a variable scale that applies which starts at 50% of your disposable income (di) and rises to 70% depending on how much di you have. Whilst on benefits it is unlikely that you will have any disposable income and as I hasve said before you will not have to make any payments.


There are als schemes such as the Social Security loan scheme and one offered by British Gas, I believe, that would help with the fee. Most people look to their friends and family for support in raising the required Court fee. This cannot be by way of loan for obvious reasons.


There are many experts on this forum who can help you without charge. You first have to find the Court fee though.


You will find the forms on the Insolvency Service website and you can also complete the forms online if you want. The forms are numbered 6.27 and 6.28.


Hope all this helps.


Steve

[CAMK]

Hi again Steve.
The social security loan scheme that you mentioned is what I had planned, however, CCCS said I am not allowed to do that as it could be interpreted as fraud.  I am exhausting myself gathering as much information as possible with regards to bankruptcy and speaking to the relevant people thinking I will come out of it intact, only to have doubt cast on everything I thought I had learned by the CCCS.  I truly cannot understand the figures they say I should be able to live on.  The social security say I need X amount to live on a week (no more, no less, than anybody else in my position) and CCCS say that other than food and utility bills I am not entitled to put any other expenses forward.  So why do I get X amount per week if I don't need it?  Totally baffled!!!!

[Sovereign]

Hi. Usually CCCS are a fantastic source of information but on this occasion it seems that they are misleading you. You can put into your expenditure almost everything that you need in normal everyday life to include hairdressing, dry cleaning, school meals and even an annual holiday allowance.


You have all that you need now so please try and believe in yourself and look towards the future. You will come out of BR with your life intact and be debt free. That means less stress and worry for you.


You can have all the help that you need to complete your BR application here.


Best of luck.


Steve

[CAMK]

I really appreciate your input so much.  Thank you .
Ok.  So I have no assets, no vehicle to run.  Should be straightforward!!!
I am trying to find total expenditures allowed for 1 adult and 3 children but cannot find figures anywhere.  Is this information only available to selected people?
Going by what I can put on my form (so much that I pay for is not allowed.  i.e.  judo, swimming, birthdays, Christmas, pocket money.  All for the children of course). 
I also have 2 cats to budget for.
I myself never go out socially, nor do I drink or smoke.  The budget that I can do on what is allowed, (electric, gas etc)is looking like I have surplus money of around £150.  I know I don't, but nothing is adding up. 
Can you give any advice as to what I can put down and how much for 4 people. 
I know what I cannot budget for.
Also I have been told that I cannot have anything for emergencies.  So what happens if my washing machine or fridge breaks down?
 
Will the fact that I am on benefits discount me from an IPA regardless of how much excess I have?
 
Thank you once again for your help.
 
 

[Sovereign]

Hi,


The recommendations from the governments insolvency service website can be found at this link. This link updates to May 2010.     http://forums.moneysavingexpert.com/showthread.php?t=1953827.


To be honest, it is not that brilliant since you cannot open any of the links BUT it does show you the items that you can claim for. For an annual holiday for example, put £60.00 per month into expenditure. For three children, follow the guidelines on how to up the figures. Include the basics for Sky TV if you have it of £22.00 per month, include internet charges, hairdressing, dry cleaning, newpapers etc. You will easily bring your DI down to below £100.00. If you can, show a loss each month.


You can include an amount for pets and for Christmas/birthdays. For the latter, show £20-30 per month.


You dont need to deal with emergencies because the Receiver will only take 50-70% of your DI and the remainder is there for such emergencies.


Because you are on benefits will not exclude you from an IPA but they will not be looking too closely at you unless you go and get a job.


Good luck.


Steve

[Steven Jackson]

Hi CAMK
 
The advice from Steve is spot on. If your sole income is from benefits then there is no official receiver in the land who is going to ask you to start an income payment order after you have declared yourself bankrupt. It is just not going to happen. Whom ever you were speaking to at the CCCS is simply wrong.
 
I strongly suspect that they were trying to sway you against bankruptcy as this process will lead to your creditors having to write off all of their debt. And who funds the charity which is the CCCS? It is in fact the creditors themselves. A slight conflict of interest perhaps....?
 
Unfortunately as you owe more than £15,000 you do not qualify for a debt relief order so bankruptcy is the right way forward. The cost of the procedure is normally £600 at the court but because you are on benefits, the court fee element of £240 will be waivered. You will still have to pay £340.
 
More information about completing the expenditures element of the bankruptcy forms can also be found here:  http://www.beatmydebt.com/bankruptcy/bankruptcy-living-expenses-guide.htm which gives you the actual ranges of expenditure which will be allowed. Always put down the max allowable.

[CAMK]

Steve and Steven.
 
A HUGE thank you to both of you.
 
The information you provided and links that you both gave were very beneficial. 
It's amazing how I have spent weeks researching the topics and not finding the required information.
 
Then hey presto, I get links.
 
What you are doing on this site is amazing.
I am astounded at the amount of support you give to people out there.
You have certainly given me an entirely different outlook on  my situation.
I am actually looking forward to my BR now.
 
Cheers guys.
You're fantastic
 

[Sovereign]

Thanks, all of those comments make it worthwhile. Good luck 

[Steven Jackson]

Hi CAMK
 
Its really great to hear that we have been able to help
 
Let us know how you get on

[Kate]

Hi again.
This is my budget for 1 adult and 3 children.
Are there any areas that need amended.
Thank in advance.
                                            Incomings                          Outgoings
Income Support                            905
Child Benefit                                 203
Electric                                                                             33
Gas                                                                                  36
Water                                                                               25
T.V.License                                                                        12
Mobile, Phone and Broadband                                                58
Food                                                                               450
Pets                                                                                 30
Swimming (compulsory at school)                                          30
Clothes                                                                            100
Dry Cleaning                                                                       10
Travel                                                                               80
Repairs and Maintenance                                                      15
Christmas/Birthdays                                                             30
Holiday                                                                              60
Hairdressing                                                                        25
Sky                                                                                   21
Medicines                                                                             7
Annual School Trips                                                               5
 
Total In                              £1,108
Total Out                            £1,027
Surplus                               £    81