Bankruptcy Do You Still Have To Pay

[MickKane]

Hi I know nothing about Bankruptcy apart from its a last resort and is also a very good option in certain cases.

 

Could anyone tell me if you do go bankrupt do you still have to make payments to your creditors and how long does this go on for?

 

Thanks

[tomterm8]

You have to pay a large percentage of any disposable income for the first year, and if you have a job, you may be required to make payments of roughly 50% of your disposable income for the next three years. Any windfalls may be subject to being clawed back as well, during the period of your bankruptcy (and after if your IPO requires it, though I haven't looked that up recently).

[powelll]

I would strongly recommend that you speak to a specialist adviser if you are considering going bankrupt as it's very difficult to advise when we don't know your circumstances. Also certain debts are not proved in bankruptcy ( ie they are not written off ) this includes student loans and CSA arrears as well as criminal fines.

 

Speak to someone like National Debtline on 0808 808 4000 its free confidential impartial advice

[pugsley]

is there a specific facts thread on bankruptcy on here

 

I need to know what personal possessions can be taken from the home and as I am home schooling my daughter whether they will take my car (L reg jeep) as I use this to take her to tutors. I also need to keep a computer for lessons too.

 

I am only on child support csa/child benefit/child tax credits,housing benefit so assume this income will be classed as benefit for my daughter, I have no other income/assets so am considering bankruptcy, for about £7,000 unsecured debt.

 

As I got a statutory demand from Lowells recently I thought they might pay for it.

[tomterm8]

is there a specific facts thread on bankruptcy on here

 

I need to know what personal possessions can be taken from the home and as I am home schooling my daughter whether they will take my car (L reg jeep) as I use this to take her to tutors. I also need to keep a computer for lessons too.

 

Well, assuming the car is worth less than £2k it won't be reposessed, and it is rare for personal posessions to be reposessed unless they are significant assets. While computers *might* be reposessed, in theory, in practice this is rare. if they were worth significant amounts of money they might be. If you were to say it is a basic tool of your trade, then it could not be reposessed.

 

I am only on child support csa/child benefit/child tax credits,housing benefit so assume this income will be classed as benefit for my daughter, I have no other income/assets so am considering bankruptcy, for about £7,000 unsecured debt.

AFAIK, all the benefits you have mentioned can't be charged during bankruptcy - they are yours, and untouchable.

 

As I got a statutory demand from Lowells recently I thought they might pay for it.

If you don't own your own home the chances are they will not file a bankruptcy petition

..

[fermi]

Cars worth less than £2000 can be and are often claimed by the Official Receiver if the bankrupt cannot show that they have a pressing need for the vehicle.

 

In order for the OR to declare any vehicle an "exempt asset" it is up to the bankrupt to show why the vehicle is necessary rather than simply convenient. Where the OR decides that a vehicle is necessary but the vehicle is worth in excess of £2000, they will look to realise the excess for the estate and provide funds for the bankrupt to obtain a cheaper replacement.

 

However, if the OR decides that they do not have grounds to exempt a vehicle (even one worth less than £2000) it is then the legal responsibility of the OR to deal with it. For low value vehicles this can result in the vehicle being offered back to the bankrupt or a third party for a reasonable price, as this avoids auction/disposal that would otherwise result in little return for the estate.

 

Motor Vehicles

 

Chapter 31.2 Part 3 - Exempt vehicles (bankruptcy only)

 

Disposal of motor vehicles

 

Bankrupt claiming vehicle as exempt property

 

It the bankrupt's responsibility to satisfy the official receiver that a vehicle is exempt property, i.e. that it is necessary for his/her use personally in his/her employment, business or vocation, or is necessary to meet the basic domestic needs of the bankrupt and his/her family.

 

In the case of a claim for exemption to meet domestic needs the official receiver must be satisfied that the motor vehicle is necessary to the extent that no practical alternative exists, to meet a genuine need and not merely a matter of convenience.

 

If the use of a vehicle does not meet the test for necessity the vehicle is vested in the bankruptcy estate and the official receiver as trustee should instead pursue with the bankrupt the option to make a reasonable offer for the purchase of the vehicle

 

The bankrupt's claim should be dealt with at the initial interview in either the narrative statement or in supplementary questions to the Preliminary Interview Questionnaire.

The bankrupt needs to be able to satisfy the official receiver that the vehicle is both necessary for his/her employment, business or vocation and is necessary personally to the bankrupt. This does not mean that the vehicle must be used exclusively by the bankrupt but it must be necessary to him/her not just to the other users.

 

Whether or not a vehicle is exempt property is in some cases a difficult question. In such circumstances, official receivers will need to use their discretion and consider each case according to its merits within the guidelines issued to official receivers.

 

In all cases official receivers should apply the guidance strictly and rigorously. It is for the bankrupt to convince the official receiver that any motor vehicle is necessary within the exemptions.

 

The value of the vehicle is not a determining factor.

Exempt vehicles of excess value

 

Where an exempt vehicle appears to have a significant value, the official receiver, when acting as trustee, may claim it for the estate if he/she considers that the realisable value of the vehicle exceeds the cost of a reasonable replacement. The vehicle must be claimed by notice in writing no later than 42 days after it came to the knowledge of the trustee (in the case of the official receiver, on his/her becoming trustee). Any notice after this time can only be made with the leave of the court. The official receiver should not normally take any steps to claim an exempt vehicle unless the potential net realisation to the estate is at least £500 after taking into account any costs of sale and of a replacement vehicle. A third party contribution equivalent to the net value of the car to the estate may be accepted to avoid the seizure, sale and replacement of the vehicle.

 

The official receiver will need to consider the nature of the bankrupt’s business in assessing whether a vehicle has excess value since in the past the courts have concluded that a bankrupt could retain a high value vehicle because he/she operated a business which provided chauffeur driven vehicles.

 

Provision of a suitable replacement

 

Where a decision is made to replace an exempt vehicle with a cheaper alternative the official receiver should inform the bankrupt of the amount he/she is prepared to make available out of the sale proceeds. The official receiver has discretion as to the amount allowed for the replacement which should be sufficient for the bankrupt to buy a replacement vehicle which is suitable for his/her needs. For consistency between official receiver's offices a guideline maximum figure of £2,000 has been introduced. While official receivers may exceptionally exceed this figure depending on the purpose for which the vehicle is used, it should be adhered to as frequently as possible.

 

Depending on the circumstances of each case the payment to purchase the replacement vehicle may be made to the bankrupt directly or to the vendor of the vehicle. The most secure way to undertake the purchase is payment direct to the vendor. It is recognised that a bankrupt may be able to obtain a better deal to purchase a vehicle by negotiating a private sale or attending a car auction and in such circumstances immediate access to cash is required. If an allowance from the proceeds of sale is made directly to the bankrupt then the official receiver should request evidence of the purchase of the vehicle within 21 days.

General policy on disposal of motor vehicles

 

Where a motor vehicle is not subject to any finance agreement and the official receiver considers that it is not an exempt asset, steps should be taken to dispose of the vehicle as soon as possible. The vehicle should be disposed of even if it appears that there may be an insolvency practitioner appointed to deal with the estate later as a vehicle is a potential source of liability and must be dealt with accordingly.

 

The use of agents in the sale of a motor vehicle is not mandatory. A private sale by the official receiver may result in a better realisation for the insolvent's estate. If the official receiver is unable to reach an agreement with the bankrupt /director for the sale of the vehicle or if the bankrupt/director is unable to meet all the criteria for the purchase of the vehicle the official receiver should employ agents to sell the vehicle.

 

In bankruptcy, where a bankrupt has expressed a wish to keep the vehicle, wherever possible the disposal of the vehicle should be effected so that the bankrupt retains use of the vehicle. In company liquidations there is no necessity to make special efforts designed to give a director continuing use of the vehicle.

 

Disposal of a vehicle to a director/bankrupt should be dealt with by the local official receiver's office at an early stage and should not be left to the RTLU.

[pugsley]

thanks for the info, much appreciated