Debt Camel’s bankruptcy information looks at the major questions most people have about bankruptcy – will my job be affected, what will happen to my house etc. There are two other types of queries that people have: concerns about their assets, which I covered in a previous article, and worries about what powers the Official Receiver has to control people’s lives, which I am going to be looking at here.
Will the OR make me move somewhere cheaper ?
The OR doesn’t have any direct power to tell you that you have to move because your rent is too high or because it would be closer to your work or for any other reason.
The OR can control your total expenditure indirectly by setting an IPA which you have to pay each month for three years. Only about 1 in 6 people pay an IPA after they go bankrupt – most people don’t have to make any monthly payments at all.
So in theory if your rent is £4,000 a month the OR could decide that you could live somewhere more modest for say £1,500 and by setting an IPA at £2,500 you would be forced to move.
However, when an IPA is set the OR has to take account of your “reasonable domestic needs” (read more about this here) and that will almost always mean carrying on living where you currently are. I have come across quite a few people worried about their rent levels and I am not aware that any of them had any problems in practice. Unless your rent is absurdly high, then the OR is very likely to just accept it and add that cost line into your IPA calculations.
This is one of those difficult areas where a debt advisor feels pretty confident but the client often would like to see it written down exactly what will happen, and that isn’t going to happen. If you are really worried, then get some more advice, possibly posting on one of the forums, see Where to get help and advice.
I need to do less overtime, it’s making me ill
This isn’t going to be a problem. You don’t have to justify your decision to the OR at all. You earn what you earn, and that’s the amount that goes into your IPA calculations.
Am I allowed to go to uni? I want to change career
The OR can’t stop you leaving your well-paid job. Providing you will be able to pay your bills as a student, that’s fine.
I want to emigrate to X where I have family
You can emigrate whilst you are an undischarged bankrupt. The Insolvency Service says:
Generally, where a … bankrupt wishes to leave the jurisdiction, there is no legal requirement for them to seek leave of the court to do so.
But you do need to co-operate with the Official Receiver so you are not seen as ‘absconding’. It would be sensible to expect to stay in the UK for a month or two after you go bankrupt to have your interview with the OR and organise any information that is requested. You should keep the OR’s office informed of your address at home or abroad.
The fact that you may take some time to settle and find work abroad doesn’t matter. If you have no earnings then there will be no IPA.
(N.B. you may find it more difficult or impossible to emigrate to some countries if you are bankrupt – you need to check the rules for the country you want to go to.)
I need to start paying Child Maintenence
Provided this is at the normal CSA rate for your situation, this will be accepted as a line in your expenditure when an IPA is set.
I’m living at my parents but I want to rent a place myself
No problem – the OR can’t make you stay with your parents even if it is a lot cheaper. Moving out will increase your expenses and so any IPA will be reduced.
You may want to consider doing this before you go bankrupt, because you need to find a deposit and it can be easier to rent before you go bankrupt, but the OR will not stop you moving out afterwards.
Can I accept a gift whilst I am bankrupt?
It depends what the gift is and how much it is worth. Whilst you are undischarged, the Official Receiver may claim “after acquired property” i.e. things which you have been given (or inherited or won etc) after you went bankrupt, but there is a list of exemptions detailed here.
So the OR is not going to be interested if your mum gives you a new coat or some new curtains for Christmas – they would come under the exclusion of ‘normal domestic items’. In practice the OR is neither going to know nor care if there is a £20 note slipped into your birthday card.
You may want to consider alternatives for larger gifts:
- the gift could be postponed until after you are discharged, or made to your partner if they are not bankrupt;
- if it is a car, then mum could buy the car and retain the beneficial ownership and just say that you are allowed to register, insure and drive it;
- mum could pay directly for services rather than give you the money to pay for them e.g an expensive holiday for you and the kids, school fees.
Am I allowed to have savings when I am bankrupt?
Yes. In fact as you are likely to find it difficult or impossible to borrow money, it’s pretty essential that you try to accumulate a small emergency fund.
Other questions
If you have other concerns about bankruptcy which this and my other bankruptcy articles don’t cover, then you could ask them in the Comments below. I can’t give you advice on your specific situation – see Where to get help and advice if you need this – but I’m happy to try to answer general queries.
Bankruptcy – the big Qs (house, job etc)
Will the OR take my… Questions about assets
What you need to know with hardly any jargon!
Summer says
Hi iam considering going bankrupt with 41k debt
We rent and no assetts.
I dont work and just receive 140 week universal credit (joint claim)
And 67 per week universal credit.
We have surplus income but i dont work just my husband.
Will i get a ipa.
Thanks
Sara (Debt Camel) says
These debts are all yours, no joint debts?
Is the £67 a week UC at the moment or after the £20 a week cut coming up to UC.
Summer says
After sorry ill be a bit more clear.
Total income is 140 per week universal credit (joint claim)
Child benefit 35 pw
Me carers allowance 67 pw
Partners income 2100 a month
1 debt is joint 8000 loan balance
Thank you
Sara (Debt Camel) says
Carer’s allowance is treated as income but your income is still very low. If it was only from benefits there would be no chance of an IPA but even with the CA your income is still very low and you would have to pay your share of the household expenses – it doesn’t sound at all likely you would get an IPA. I think it would help you to talk about this and the bankruptcy decision with a good debt adviser, bankruptcy may well be your best option and I am not saying you should be scared of it, but this is a big decision and EVERYONE, even people who seem to have no alternative, should talk to a debt adviser first. I suggest you call National Debtline on 0808 808 4000.
As a household it seems unlikely there is much if any surplus. And I think the UC will be reducing by £20 a week, probably in October, have you had a warning message about this through your UC journal? That joint loan becomes your partner’s sole responsibility to pay when you are bankrupt. What other debts does your partner have? Should they too be looking at getting a clean start?
Summer says
No other debts just the loan wish it was t in joint names.
We do av surplus income off around 3-400 per month
I have took the 20pw off the figures i gave like.
Sara (Debt Camel) says
It is unusal for any family getting that much UC to have such a large surplus. But you don’t have to take the deciaion about whather you husband needs some debts option, and what that is, at the moment if it doesn’t seem urgent to you.
As i said, I would be surprised if you to have to pay an IPA in bankruptcy, but talk to National Debtline – they can advise on bankruptcy and also what you should put on the bankruptcy application as your expenses.
Twinkiethinks says
Quick one, I declared BR in August. The OR has finally written to arrange an IPA which is set to take my NT tax surplus and council tax money of around 446 a month. My tax has been nt from September this year. The IPA document I signed says I pay the tax til April 22 and the council tax until March 22, 28 days from when the OR signed the paperwork. Does this literally mean this is only paid for 4 or 5 months then stops?
I am so confused
Sara (Debt Camel) says
That is what it sounds like. But ask the OR and they will tell you – it will be a weight off your mind to get this confirmed.
RE says
Hi Sara,
I’m getting some conflicting advice. I have debts of £32k and have effectively lost my job. Because of poor handling of my stress I’ve secured 3 months PILON from my employer. I want to use this to pay a years rent in advance to secure my housing then to go bankrupt but I’m getting some conflicting advicec between nation debt helpline and stepchange. One arguement is this would be seen as dumping assets (i.e savings). Currently I’m on a very expensive flat that I need to move from, but can’t move without a job reference unless I take this approach. Is this is a bad idea?
Sara (Debt Camel) says
when does your current tenancy end? what benefits are you currently claiming?
RE says
Thanks Sara – it doesn’t, I’m on month to month now so can move but am without a job so can’t get a reference. I’ve just applied for benefits, not sure what I’ll receive tbh but likely not much for a while – I had to ‘resign’ to secure the PILON.
Sara (Debt Camel) says
ok, do you mind saying what the rent is? is this a 1 bed flat?
How much the PILON was and what your chances are of getting a new job soon…
RE says
Thanks Sara
2 bed flat
Roughly outline of situation
£1000 rent
£32 debt at £1300 a month minimum payments/repayments
£11000 PILON roughly (£60k a year)
£2k in bank
Unlikely to secure similar salary – role was frankly overpaid and I was underqualified. Hopeful I can secure £30k in next 3 months realistically but that would leave me underwater with repayments by about £1k a month
DF says
I have been planning to apply for bankruptcy, and will do fairly soon and though I can find info on receiving gifts during bankruptcy there’s not much I can find about gifts before bankruptcy. However, my mum is about to receive money as part of an inheritance and wishes to gift me £3000 (I’m not named in the deceased’s will), and I am trying to find advice on how this would be viewed by the official receiver if I receive it not long before applying for bankruptcy
More specifically I would quite like to be able to get a (cheap) car, as I’ve not had one since I had to give mine up 6 months ago due to defaulting on the hire purchase agreement after being unable to keep up payments during the lockdown etc (just one of my many debts), and have at least a month’s bills/rent saved up before going into bankruptcy, as I’m self employed and have somewhat unpredictable income (and none if I’m ill etc)
Any advice/tips/who to ask about this would be great, I also still need to tell my mum about my financial situation (she only know about the car not all the rest) and arrange with her regarding the gift if it’s a problem for me to receive this sum before bankruptcy.
Sara (Debt Camel) says
If you have the money in your bank account when you go bankrupt, it is the same as any other money – it is an asset that the OR would take (obviously leaving you enough for the month’s normal expenses).
If you have bought a car with some of the money and it is worth over £2000, the OR would take it and sell it and give you £1250 back if it is considered that you need a car.
It isn’t clear to me if a car is essential for you if you have managed without one for 6 months?
If the car is worth less than 2k and it isn’t essential then it would be taken and sold.
In general it is probably better for you not to be given this money before bankruptcy but for your mum to give it to you after you are discharged in a year. Or she could give you bits during the year if your income drops.
Another option is for your mum to buy the car and let you drive it – then it is not your asset and can’t be sold by the OR. However there is still the issue about whether the car is essential – if it isn’t the car expenses wouldn’t be an allowable expense in bankruptcy.
Have you taken bankruptcy advice? If not, I suggest you talk to Business Debtline https://www.businessdebtline.org/. Their webchat is good or phone 0800 197 6026. They can talk about these options and whether a car is essential for. Also everyone should take advice, even if you are convinced bankruptcy is your only option it is worth the time to do this.
Andrew says
When being assessed for a possible IPA will the monthly payments my partner has to make towards her own debts be taken into account
Sara (Debt Camel) says
Broadly the OR will expect you to pay a certain percentage of the household bills. If you and your partner earn the same, that would be 50%. If you earn twice as much as your partner you would be expected to pay 2/3s of the bills.
What you partner does with the rest of her money eg paying her own debts is up to her.
But you can’t argue you have to pay more of the bills as she has her own debts to pay.
Jimmi says
Hi, l am going bankrupt, l have a house worth £100000 and my debt is 60000 and my mortgage is £50000. Can’t sell my house when l made bankruptcy, but l am happy to hand over my house to OR, would it be enough or they want more for example my wife car. I have no mor asset Thanks
Sara (Debt Camel) says
Have you actually gone bankrupt?
Bluebella77 says
Hi,
Wondering if you can help. Having taken advice from national business debt line my partner and myself will both be applying for bankruptcy.
Based off our current income and expenditure we have a defecit of £388 per month which doesn’t take into account paying anything toward our debt.
Can you help me answer the following:
– Will an IPA be likely?
– If it is not required, will they review it during the 12 months we are bankrupt?
– I usually get a bonus once a year (not guaranteed) but so far it is likely that I will get one of around 2k – will the OR get wind of this or only if I notify them?
– We expect both of our wages are due to increase within the next 3 months, not enough to be able to afford the debt but enough to generate a surplus income. Will the OR be notified of this or again, is it only if I notify them?
Thanks in advance for your help!
Sara (Debt Camel) says
IPAs are worked out individually, not as a couple. But if together you have a deficit of £388 then it is incredibly unlikely that either of you will get an IPA if National Debtline or Business Debtline worked out that number for you.
An IPA can be imposed at any time in the first 12 months.
You have to inform the OR if you receive an increase to your incomes or a bonus/windfall during the first year. It is a criminal offence not to.
You may want to postpose going bankrupt until you have received the bonus. It could, say, pay for your bankruptcy fees!
You may want to wait until you have both had pay rises and then talk to National Debtline again about a revised Income & expenditure. In the mean time you could make token payments of £1 a month to the debts.
Bluebella777 says
Thank you so much for the response.
Confirmation today that my pay will go up and my bonus is not until April next year – I don’t think I can hold everyone off for much longer.
Can I just ask if an IPA is not set then do they take the tax directly from my wages until April? Do they also do this in addition if an IPA is agreed at the start?
Also, my husband is self employed – how will his wages earned during the bankruptcy be calculated? Is it just his drawings that go as income or is it the profit left in the business?
Sara (Debt Camel) says
How large are your debts? Your husband’s debts? Any joint debts?
What sort of debts do you have that it is difficult to “hold everyone off”?
Bluebella777 says
Combined about 102k – approx 32k of that is mine the rest is business sole trader debt – hmrc, suppliers, credit cards, bounce back loans, overdraft.
Although not guaranteed, the bonus is annually so it would only happen again if I waited until after April
Sara (Debt Camel) says
So you should ask National Debtline if it is likely that with your higher income you may have to pay an IPA.
And your husband should ask Business Debtline the question about how his “income” in calculated for an IPA.
I was suggesting waiting until April as that would give you the money for 2 sets of bankruptcy fees, but if you have other ways of getting that money
Money will be taken until April instead of taxes until April. Any IPA is in addition to that.
An IPA isn’t a big problem compared to the mountain of debts you two have. A clean start is very probably your best option. I assume Business Debtline has given advice on the impact on your husband business.
Anon3 says
How often does the OR check your expenses vs what you declare? What evidence do they require if any?
Sara (Debt Camel) says
This depends on your situation. If you only have benefit income, there may just be a cursory glance at the start. Not many people have to make monthly payments. Bank statements are the normal evidence.
Have you talked to a debt adviser about bankruptcy? This is always worth doing, even if you are sure it’s your option.
Anon3 says
I haven’t but I self declared due to not being in the UK and the uncertainty around my cost of living expenses in the US.
Currently just been assessed as not needing IPA but concerned about how variable my costs will be month to month. I am worried that I may well have >£20 surplus one month and then <£120 the next making the IPA request trigger.
Equally, I am concerned that if my outgoings come in lower, can I create emergency funds to pay for big costs such as insurance or will doing that prove an IPA was feasible in the first place?
Sara (Debt Camel) says
I suggest you talk to National Debtline on +44 121 227 4780 or use their webchat to see what they suggest.
Gary says
Hi,
I have debts as per below and no assets of any value. I’m being relentlessly chased for the property related debts. I could never pay these figures off, I’m just putting off the inevitable and ensuring these companies get their monthly interest, though my salary allows me to nearly cover these monthly payments.
Am I right in thinking that if I quit my job and declare myself bankrupt without any income during the year, I won’t be given an IPA and instead be allowed to get on with my life again after being discharged from bankruptcy, some 12 months later?
186k mortgage (in 30k negative equity!),
3k property service charge,
10k unsecured loan,
4k CCJ
3k Overdraft
3k Credit Card
Thanks
Sara (Debt Camel) says
Are you in arrears on the mortgage? What is the mortgage rate?
Gary says
Yes, in arrears by 6k. 8% rate or so.
Claire says
Have you tried speaking to a debt charity ? I did this for around 6 months and to be honest it worked out I’d be in debt forever. But I did find the bankruptcy steps challenging at times as the first 12 months you can’t do anything so you have to be prepared to live 12 months with no job etc or you got a job that paid less. I felt like for something I paid to do I had to give my soul over. But at the same time it was the best thing I ever did, my income didnt cover any payments so I just kept my head down for 12 months and now I am fully out of bankruptcy in January after 6 years. Good luck
Sara (Debt Camel) says
can I ask what your income is and if you intend to carry on living in the property? If not where, as you will need enough income to cover the bills and living expenses