Bankruptcy - Need info please
Discussion
OK here’s one for the PH collective that I have not got a clue about.
Bloke I work with (no its not me, I’m not this daft!) is well known for being constantly in debt right back from when he was at uni. He says his debts run into the tens of thousands!! But has just started talking about making himself bankrupt (as he can no longer meet all the payments) and was asking me if I knew if this was possible.
As I said to him I haven’t a clue but I’d ask some people who might; which is where you lot come in.
Personally I can’t see how this is possible seeing as he does have a house albeit in his wifes name (as he couldn’t get a mortgage) and he has a job that pays a reasonable salary. Surely you have to be unemployed and homeless before you can claim bankruptcy?
Anyone got any useful insight into this that I can share with him?
Thanks
Matt
Bloke I work with (no its not me, I’m not this daft!) is well known for being constantly in debt right back from when he was at uni. He says his debts run into the tens of thousands!! But has just started talking about making himself bankrupt (as he can no longer meet all the payments) and was asking me if I knew if this was possible.
As I said to him I haven’t a clue but I’d ask some people who might; which is where you lot come in.
Personally I can’t see how this is possible seeing as he does have a house albeit in his wifes name (as he couldn’t get a mortgage) and he has a job that pays a reasonable salary. Surely you have to be unemployed and homeless before you can claim bankruptcy?
Anyone got any useful insight into this that I can share with him?
Thanks
Matt
mattw said:
OK here’s one for the PH collective that I have not got a clue about.
Bloke I work with (no its not me, I’m not this daft!) is well known for being constantly in debt right back from when he was at uni. He says his debts run into the tens of thousands!! But has just started talking about making himself bankrupt (as he can no longer meet all the payments) and was asking me if I knew if this was possible.
As I said to him I haven’t a clue but I’d ask some people who might; which is where you lot come in.
Personally I can’t see how this is possible seeing as he does have a house albeit in his wifes name (as he couldn’t get a mortgage) and he has a job that pays a reasonable salary. Surely you have to be unemployed and homeless before you can claim bankruptcy?
Anyone got any useful insight into this that I can share with him?
Thanks
Matt
ok, anyone can be declared banckrupt. there is a creditors petition, where someone else makes the petition for your bankruptcy because you owe them money or a debtors petition where you declare to the court that you cannot pay you debts.
if your friend has any assets, share in the house, car etc these will be listed by the official receiver and another person can buy the beneficial interest in the property if there is more to pay than the house is currently valued at. this is unlikely given the current housing market. if there is equity in the property, the case will be passed to a private insolvency practitioner who may realise the value in the property. if the property is in his wifes name, the house will probably be untouched but it depends if it was in his name and when it was transferred. If he has been paying off some of the mortgage, this will be investigated.
you are allowed to keep a car to continue working, though if it is a luxury car etc, this wll be realised and a suitable car purchasd with the proceeds, the rest going to pay off some of teh money owed to creditors.
if your friend has a good salary, the offical reciever can apply for an Income Payments Order, this means a percentage of his annual salary goes to help pay off the debts each month. obviously it will not pay off all the debts but it is the principle.
the best advice i can give would be to try everything but decalre yourself bankrupt, its not the stigma it used to be but its still not looked upon favourably by financial institutions! Furthermore, if he did sdeclare himself bankrupt, people like the official receiver have a lot more time for people who comply with their requests. they have some big powers which you really do not want to get hit with.
If your friend is in difficulty and considering bankruptcy, he should speak to an Insolvency Practitioner before he takes it any further. Most IP's will have an initial interview/ telephone conversation without making a charge.
An alternative to bankruptcy is an Individual Voluntary Arrangement. Look at www.R3.org.uk and a leaflet "Is an IVA right for me?". Any problems e mail me and I can send it to you as a pdf.
An alternative to bankruptcy is an Individual Voluntary Arrangement. Look at www.R3.org.uk and a leaflet "Is an IVA right for me?". Any problems e mail me and I can send it to you as a pdf.
Back in '91, I was decleared bankrupt as a result of a failed business (non paying clients and me - stupidly - not registering as a ltd co'!).
The process of bankcruptcy itself is not as painful as people imagine. In fact, for me anyway, it was a huge weight lifted from my shoulders. However, the years after are a nightmare.
It's only in the last five or so years that we have been able to regain any degree of financial freedom - despite being discharged in '94.
Despite amassing a substantial level of savings, excerising supreme financial dilligence and not borrowing a single bean since 1991, we were unable to obtain credit cards, loans, mortgage (at a sensible rate) - even a bank account until around 1999 - 2000.
PLUS - Bankcruptcy doesn't wipe out all debts. The Inland Revenue and Customs and Excise can call in whats owed to them whenever they see fit (although as I understand, this is rare for relatively small amounts).
It works for different people in different ways. For me, it was a viable solution to a very difficult problem related to my then business. It wasn't becuase I liked running up debts, spent and spent for the sake of it or was particularly crap with money.
Your friend sounds as though he has brought it on himself and thus would use bankcruptcy as a form of credit control.
If it's the route he's going to take, he needs to commit to change his ways Bankcruptrcy should never be viewed as simply a means to wipe the slate clean. It's a process of managed consolidation designed to provide financial breathing room.
Either way, wish him well!
The process of bankcruptcy itself is not as painful as people imagine. In fact, for me anyway, it was a huge weight lifted from my shoulders. However, the years after are a nightmare.
It's only in the last five or so years that we have been able to regain any degree of financial freedom - despite being discharged in '94.
Despite amassing a substantial level of savings, excerising supreme financial dilligence and not borrowing a single bean since 1991, we were unable to obtain credit cards, loans, mortgage (at a sensible rate) - even a bank account until around 1999 - 2000.
PLUS - Bankcruptcy doesn't wipe out all debts. The Inland Revenue and Customs and Excise can call in whats owed to them whenever they see fit (although as I understand, this is rare for relatively small amounts).
It works for different people in different ways. For me, it was a viable solution to a very difficult problem related to my then business. It wasn't becuase I liked running up debts, spent and spent for the sake of it or was particularly crap with money.
Your friend sounds as though he has brought it on himself and thus would use bankcruptcy as a form of credit control.
If it's the route he's going to take, he needs to commit to change his ways Bankcruptrcy should never be viewed as simply a means to wipe the slate clean. It's a process of managed consolidation designed to provide financial breathing room.
Either way, wish him well!
steviebee said:
It's only in the last five or so years that we have been able to regain any degree of financial freedom - despite being discharged in '94.
Despite amassing a substantial level of savings, excerising supreme financial dilligence and not borrowing a single bean since 1991, we were unable to obtain credit cards, loans, mortgage (at a sensible rate) - even a bank account until around 1999 - 2000.
I can second that. I had something similar but with a CCJ. The effect on your credit rating afterwards is total. No matter how well behaved you are you get turned down by everyone.
Tell him to head down teh CAB and ask about an 'IVA' (I think thats what its called)
You enter into an agreement with the people you own money to to pay back at a rate that you can afford for a period of time. They accept this knowing they may not get all their money but its better than nothing.
Causes less problems that bankrupcy!
You enter into an agreement with the people you own money to to pay back at a rate that you can afford for a period of time. They accept this knowing they may not get all their money but its better than nothing.
Causes less problems that bankrupcy!
You mention that he is employed, one thing he should check is his contract of employment. I know in a previous position mine used to say that if I am ever declared "bankrupt" it was grounds for termination of my employment. I can see a conflict of interests under the circumstances if I had worked for a financial company but I didn't.
I think this is a common clause in many COE.
I think this is a common clause in many COE.
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