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 as the Insolvency Service’s Technical Manual makes clear provided you 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 are a list of exemptions detailed here. In general the OR is not going to be interested if your mum gives you 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.
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.