Advice on Bankruptcy and Benefits

[scotsbabe]

Hi

I shall not go into my longwinded story but facts are, I have been told to make myself bankrupt or one of my debtors are going to do it for me, said it is best if i do it voluntary. I am disabled and on incapacity benefit of £102 per week, that is all i have, my debts include very large overpayments, one from concil, one from counicl tax and the other from dwp. I would like to know if i go bankrupt does this wipe everything including dwp amount? Can my benefit be affected? do they also come to your home and reposses possesions? not that i have any just basic stuff. Any help would be greatly appreciated

[abc123def]

The only difference in who petitions for bankrupty is who pays for it. If the DWP or council whom you seem to owe it won't cost you anything, whereas if you apply you will need to pay £575 assuming you would get the £125 court fee waived due to income. The only advantage of applying yourself is it places you in control of the timescale, otherwise no reason not to let them do it for you and save the hassle of the fees.

 

Unfortunately, many overpayments are not included in bankruptcy if the overpayment was not the fault of the payer. So if you failed to disclose change of circumstances or income or something and this led to the overpayment then bankruptcy will not end the debt.

 

The better news is the official receiver does not take any of your income if it solely consists of means tested benefits with the possible addition of DLA.

 

The official receiver would only place a claim on possessions if they were valuable and not everyday household goods. So they are interested in jewellry, antiques, your car (unless it is deemed exempt) etc. and would not take every day belongings such as your TV, sofa, cooker etc.

 

If all of your debt is overpayment and the overpayment was made due to failure to disclose change of circumstances or you claimed with incorrect information in the first place however, the bankruptcy will not end the debt and you will still be liable for the debt after discharge. If you have nothing they can claim wrt assets or income, it is often not worth making you bankrupt and many organisations won't do it.

 

You will of course transfer from incapacity benefit to employment support allowance at some stage.

Edited August 4, 2012 by abc123def

[Stigman]

Bankruptcy will wipe the Council Tax Debt, however, DWP debts for either overpayment/loans from the social fund etc. are excluded from Bankruptcy will you will remain libel to continue payments/pay the amount back.

 

Who advised you to go Bankrupt and pay for it yourself instead of a creditor?

 

Your Benefits will not be effected in any way, the only issue you will have is to open up a new bank account, both Co-op and Barclay's offer basic bank accounts that are Bankrupt friendly.

 

No one will come to your house and start repossessing items unless they are of a high value.

The Official Receiver will have to take into account, the replacement value of a cheaper product (i.e. replacing your Picasso with a printed version) and this also includes the collection, storage and auction costs.

 

Stigman

[scotsbabe]

Thank you so much for your repies.

It was the council who told me it was in my best interest to go bankrupt or they would do it, i owe 14000 council and 8000 council tax about 14000 dwp and thats not on top of all the other debt i have, my head is spinning, so is it best i just leave for them to make me bankrupt rather than doing it myself? i do not have any monies to pay for bankruptcy, out of my 102 a week i have 4 pounds to live on

[abc123def]

If it were me I would wait for them to do it.

 

Do phone either of these two who offer free advice and make no charges for their help

 

Consumer Credit Counselling Service - Website: CCCS Telephone: 0800 138 1111

National Debtline - Website: National Debtline Telephone: 0808 808 4000

[stu007]

Hi

 

Have a look at this link for the Insolvency Service: http://www.bis.gov.uk/insolvency/personal-insolvency/bankruptcy-debts#council-tax-arrears

 

Please read this part from that site about Council Tax :-

 

What happens to my council tax arrears in a bankruptcy?

Certain amounts of council tax are classed as provable debts in bankruptcy. These are:

 

All arrears outstanding at the date of the bankruptcy.

• The monthly instalment for the month in which you were made insolvent where, at the date of the bankruptcy order, the day on which that payment is due has passed and the payment has not been made.
  
• Where you have failed to comply with a reminder notice. This would mean the whole amount of the council tax for the year is due and payable, so the whole sum is a provable debt in a bankruptcy.
  

NB Where there have been no unpaid reminder notices or instalments due there is no provable debt in a bankruptcy for Council Tax. This means you must continue to pay your instalments as usual.

[sequenci]

Bankruptcy will wipe the Council Tax Debt, however, DWP debts for either overpayment/loans from the social fund etc. are excluded from Bankruptcy will you will remain libel to continue payments/pay the amount back.

 

Although Social Fund loan debts are now excluded regular benefit overpayments would still prove within bankruptcy as fas as I believe

[skintandfat]

I see you may be in Scotland.

 

Look at the AIB website there's lots of info.

In Scotland it costs £200 to be sequestrated (the Scottish term for BR)

 

You can pay the fee by instalments and I would suggest you look at the LILA route -this will not apply if you own your home.

 

Low Income Low Assset route to bankruptcy

 

LILA is the route into bankruptcy for people who have low income and low assets.

Low income means gross weekly income of no more than the standard national minimum wage for a forty hour working week. This is equivalent to £237.20 a week. Any pensions or maintenance payments that you receive are also counted in with your income.

 

If you receive income support, income-based jobseekers' allowance or working tax credits you will be treated as meeting the low income test, even if your actual income is more than £237.20 a week.

When calculating your income no account will be taken of other social security benefits or tax credits you receive or any income paid to another member of your family. However, your income, pensions, maintenance payments, benefits, tax credits and the income of other family members may be taken into account when considering whether you should pay a contribution while you are bankrupt.

Low assets means that you have no single asset worth more than £1,000 and your total assets are not worth more than £10,000. In addition, it means that you must not own or jointly own a house or any other property or land.

[abc123def]

Although Social Fund loan debts are now excluded regular benefit overpayments would still prove within bankruptcy as fas as I believe

 

Not if the overpayments were caused by the claimant not notifying the DWP of a change of circs or claiming incorrectly when they were not eligibe or giving false info etc.

[sequenci]

Not if the overpayments were caused by the claimant not notifying the DWP of a change of circs or claiming incorrectly when they were not eligibe or giving false info etc.

 

Fraud would need to be proven, otherwise they would be included

[scotsbabe]

Thank you all so much , i have received advice for CAB about bankruptcy, they actualy noticed a letter which in the middle of satted the overpayment had been reclassified from overpayment to fraud, upon telephoning them i was told i had been reported to procurator fiscal but nothing happened but they have still changed to fraud can this be done when there was no charge

[semayden]

Hallo, I'm not sure whether to start a new thread but as my question concerns Benefits and Bankruptcy I thought I should start here.

 

I am on ESA and had a successful Tribunal appeal on the 22nd Jan of this year. I also took myself to bankruptcy last March (due to be discharged from BR on 29th March 2013, so this year).

 

My worry is that due to my successful appeal, the DWP have not only raised my fortnightly benefits, but have paid backdated money of £1200 into my bank account as owed for the work related component of ESA (I was waiting for tribunal for nearly a year)!

 

I rang my examiner to update her on events and was told that I need to send her details of amounts and also a letter etc. explaining what I intend to use the backdated monies for (she described it as a 'letter of argument') which she will then present to someone in higher position for their consideration. At this time, she herself cannot say whether or not I will be able to keep some or all of this money.

 

Obviously I am quite upset and shocked by this turn of events: to think that I had to go to tribunal (a harrowing experience) only to win BUT then to learn that I have to fight for this relatively small amount of money.

 

The backstory is that I entered bankruptcy on benefits (ESA) with no assets (no property, lands, cars, businesses, children etc) so I was a very straightforward case. I had and have no other income whatsoever: just my fortnightly benefits, and I also get housing benefit and council tax paid.

 

I would be very grateful for any advice as I try to prepare this letter of 'argument' to send to the bankruptcy officer/examiner concerned.

[semayden]

Bumping the above request from me, as I really am worried and would like to start drafting a letter to BR officer. Or should I put this into a new thread? Thanks.