A reader asked:
I’ve just received a backdated Severe Disability Premium (ESA top up as on PIP too) and I am aiming to go bankrupt in May or June. I’ve been advised by a money advisor to use this money for essentials as I have just been given permanent accommodation having been homeless. No furniture came with the flat.
I’ve been paying £1 a month to my creditors since last year. Should I now be dividing the whole amount of my back payment up and giving it to my creditors instead of using some of it for clothing and furniture? I don’t want to do anything to jeopardise the bankruptcy.
It’s great you have got a flat – and what a good time to get this backdated money!
Furnishing a flat cheaply
I agree with your money adviser that it’s fine to use this money buying essentials for your flat: bed, bedding, towels, sofa, TV, table, chair, microwave, toaster, oven, fridge, plates, cutlery etc. If there is anything that would help with your health needs that should also be on your list.
Rugs, carpets, curtains would be good if there is enough money as they can help to keep your flat warm. And if you need some clothes, get them!
Don’t forget to keep enough money for your bankruptcy fees.
It’s often a good idea to look at second-hand furniture to make the money go further. See if there is a good charity shop that does furniture or electrical goods near you such as BHF, or a member of the Furniture Reuse Network. And see if there is a local Freecycle or Freegle group.
Will this affect your bankruptcy?
I don’t expect you to have any problems with this. Paying £2,000 for a leather sofa wouldn’t be a good idea, but I doubt you have enough money to be able to do that. I suggest keeping receipts for everything you buy, so you can show them to the Official Receiver if you are asked.
I’m going to tell you the “worst” that could happen, not because I think it will, but because it may stop you worrying.
Your bankruptcy can’t be jeopardised whatever you spend the money on. You could blow it all on a holiday and it wouldn’t matter, your bankruptcy would still be approved.
The worst that could happen would be that the Official Receiver decides you spent the money recklessly and it should have gone to your creditors. Then you might get a Bankruptcy Restriction Order. That may sound worrying but in practice, a BRO would probably make no difference to your life at all.
It’s normally good to go bankrupt as soon as possible. But getting yourself settled in and everything in the flat sorted in April then going bankrupt in May or June sounds like a sensible plan.