Author Topic: Help on Bankruptcy please  (Read 1092 times)


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Help on Bankruptcy please
« on: Mar 06, 2011, 11:57:06 AM »
Can someone point me in the right direction as we are getting to the wits end point with this.
We have a mortgage £114k and secured loan £29k with a house which hasnt sold in 2 years and was up for £140k so I guess its worth around £125k from a selling point of view if that.
We owe £26k on a dmp for credit cards and loan and 5k to a family member.  We have recently again accrued a further £750 on cards with high interest rates and also with another lend a further £900 short term loan.  We repay the high interest and borrow it straight back.  I think we are realising now that BR may be the only option left for us, can someone please advise if this looks like it??
We take home around £2500 between us and pay out around £1750 that is before food, petrol, spends and other things that may crop up, we have two children.
I have been looking at info on BR now for a long time and think I have it sorted in my head. 
1 - Would it go against me the fact that I used credit lately to book a £500 holiday, nothing else has gone on credit for a while.  We dont really do anything other than that?
2 - Can tax credits debts going into BR unless its for fraud?
3 - My biggest concern is how the hell do we get out of this house as all the houses except 1 two bedroomed property are with agency who do credit checks?
4 - What kind of info is the OR looking for in terms of past spend? and bank statements etc?
5 - What would be deemed as dodgy spending, ie we havent done anything other than spend on holidays (never expensive ones) and general stuff like that, living expenses, car repairs etc etc etc.
6 - Are any funds allowed for things like small holidays and the like, or do we need to sit tight for the full 3 years.
7 - After agreeing the payments to go into the BR, does the OR need you to keep all receipts for all spending you do in the 3 years or is it that you allowed x amount each week and that is that?
We keep on redoing the figures and looking for ways to resolve the issue, we even talked to our lender about interest only which they would agree only short term though, the arrears which were sorted through a court are around £3500 on the mortgage.
Many thanks in advance for your assistance.

James Falla

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Re: Help on Bankruptcy please
« Reply #1 on: Mar 07, 2011, 05:52:07 PM »
Hi Tintin
Given your property is in negative equity, bankruptcy does seem like an option for you. However, before making any final decisions, I think you should speak to a debt advisor who can go through everything with you. That said, in terms of the questions you have:
1. No - Many people who declare bankruptcy end up using credit right to the last minute. However, it would be sensible to stop using more credit if at all possible.
2. Yes, you would need to include overpayment of tax credits. However you may still have future payments deducted so these can be reclaimed.
3. You need to speak to an advsor about this but generally speaking the best thing to do is secure your rented property before going bankrupt
4. The OR can ask for whatever information they feel appropriate. However, generally speaking bank staements will be sufficient.
5. Using credit for general living expenses (even holidays) should not be a problem
6. Not really. You are going to have to sit tight for at least 12 months and 3 years if you receive an income payment agreement.
7. You do not have to give the OR records of spending. However, while you are bankrupt or in an IPA you do need to inform them if your income changes for any reason.
Debt Expert & Author