A reader asked if he has to give the Official Receiver details of his expenditure.
If the expenditure is before he went bankrupt, the answer is “Yes, definitely – but this probably won’t be in a huge amount of detail”.
But if he is worried about whether he has to report to the Official Receiver about his spending while he is bankrupt, the answer is “No, not normally”.
Expenditure before you went bankrupt
After you go bankrupt, someone on the OR’s office will look through your bank statements and you may be asked what some items were.
You have a duty to co-operate with the OR, so you do have to attend an interview (normally done over the phone), provide bank and credit card statements and answer questions about them.
This may sound alarming – almost everyone who goes bankrupt has made some spending decisions and the previous year or two that they now really regret.
But the OR isn’t interested in foolish over-spending or purchases that weren’t really necessary.
He is looking for dishonest or reckless behaviour. So the items that the OR will ask about are things like:
- transfers of money to other people;
- evidence of significant gambling;
- large purchases where there is no corresponding “asset” listed on your bankruptcy application;
- large debt repayments to one creditor when other creditors were not being paid.
There will be in practice a sliding scale of importance – the OR will be more interested in larger and more recent amounts.
Sending your son £50 for his birthday ten months ago isn’t going to matter. Sending him £1,000 three weeks before you went bankrupt is rather different.
After you go bankrupt
The OR is much less interested in what you do with your money after you go bankrupt.
On your bankruptcy application, you have entered details of your expenses. The OR uses these to decide whether you have enough “surplus income” to set an Income Payments Agreement. The large majority of people going bankrupt don’t have to make any monthly payments.
From then on, providing you make any set monthly payments, you can spend the rest of your money as you like.
So for example the OR won’t want to see monthly receipts showing how much you spent on groceries. If you decide to become a vegetarian, grow all your own food and spend the money you save on setting up a hedgehog sanctuary, the OR won’t know and won’t care.
You have to inform the OR of additional income and any windfall payments you get before you are discharged after a year.
If you are paying an IPA and your expenditure has increased or your income has reduced- perhaps you have moved house and your new rent and council tax are higher – you can tell the OR and the IPS will be recalculated, possibly down to zero.
What happens when? A bankruptcy timeline
Going bankrupt soon after taking out a loan
What happens before, in & after bankruptcy
Rob says
Just reading up on this as may have to look at bankruptcy in the near future with mounting debts and a possible failing relationship due to them. My question is after I’ve declared bankruptcy if I go down the route of selling my home l/having it sold for me I was planning to move back in with my parents for a while until I got myself sorted, the only issue would then be after I’ve paid them rent and then paid child support, would all of my left over wages be classed as ‘spare income’ as with not having a household to run etc none of it will be earmarked for essential bills. The reason I ask this is as I have a reasonably well paying job and can take home as much as £3000 some months, so if the OR decided the set me up in an IPA it’s likely I could be putting in around £2000 a month in a worst case scenario. So my question is this, if after selling the house and then paying so much into an IPA what would happen if my creditors were all paid back within the 3 years as is possible with such a high amount, would the IPA cease or would the OR continue to collect and just pocket the money themselves?
Sara (Debt Camel) says
Ignoring your question for a minute… your house – is there any equity in it? And how large are your debts?
james allen says
hi there. would the OR be able to look into my partners income? i.e bank statements e.t.c?
Sara (Debt Camel) says
The OR only cares what your partner earns so that bills can be fairly divided between the two of you. If your partner doesn’t want to say how much they earn, the OR will usually split bills 50/50.
Is there anything you are particularly concerned about?
Dave says
I’ll be honest my spending has been reckless, holidays and going out and buying stuff I do not need, usually to overcome anxiety/depression. I earn a very low income. 24 hour p /week and have luckily lived rent free at my parents although now they and I want to start paying my way. Will this be held against me, one look at. Y statements both bank and credit will show rather reckless spending on stuff that if totally not necessary. My debts are now more than I earn when you take away travel passes and so on. I’m really worried to go bankrupt and them looking at my accounts. Also another worry is once my account it frozen how long will a basic account take to set up so I can be paid etc.
Sara (Debt Camel) says
How large are your debts? How much do you think you could pay to them a month once you are paying your nice parents some rent?
You can open a basic bank account on the day your bankruptcy application is accepted. if you go into a branch with all the relevant ids it should be up and running in a couple of days.
Dave says
Thanks for the quick reply.
Debts credit cards, catalogues, loans, overdraft are around £24000.
I’m on a very low wage take home £793 per month(reduced hours to keep job)
I’m living rent free now but want to pay parent around £280 per month before they get fed up, I can’t go on like this, budgeting at £200 per month shopping £80 travel pass and £50 for other, would they expect me to pay creditors?
When would you suggest applying? I was thinking at the start of a month once I’ve been pain at the end of the previous month so I can take out wages to cover me whilst things get set up? My biggest worry is getting a basic account set up in time for my next wage to go In?
Any other advice would be great, I’m under great stress with the worry of bankruptcy
Louise says
If someone was made bankrupt in the last year and afterwards received a lump sum of money ie £14k, should they be reporting this to the insolvency and by not doing so, would this be a criminal offence? Thanks
Sara (Debt Camel) says
what was the date of your bankruptcy? Where did this 14k come from?
Louise says
It’s not mine, just asking for someone but it was last year around April time. It came from an ex partner
Sara (Debt Camel) says
In that case the person needs to ask for themselves and gives some details about the transfer.
Rainbow Bright says
Hi there can anyone tell me what happens if your debts (34k) are from excessive gambling and you apply for bankruptcy please?
Sara (Debt Camel) says
Your bankruptcy will be approved – it won’t be turned down because of the gambling. If a lot of your debts are from gambling it is likely you will get a Bankruptcy Restriction Order for several years. See https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy-2/bankruptcy-restrictions-orders. In practice many people take the practical view that the restrictions won’t affect them very much at all.
Patrick says
I’ve been bankrupt since February and recently got a better paying job and position.y IPA is under review to possible make higher payments. My question is if the OR makes exceptions to put money aside for visiting family abroad as everyone in my family doesn’t live in the UK.
Also how likely would a gym membership be approved if it is less than £30 a month ?
Sara (Debt Camel) says
The OR calculates a reasonable budget to determine how much to set the IPA at. It isn’t likely that the OR would see trips abroad to see family as an approved expense, nor a gym contract.
It’s important to remember that the OR doesn’t monitor what you spend your money on when you are bankrupt and doesn’t care. But there will be some allowed for holiday and some for entertainment. If you want to spend money on a trip abroad to see family or a gym membership that’s up to you, but it means you have less money left for things the OR did put in the budget. The cost of a gym membership would probably pay for a flight to Europe to see family?
Mal says
Hi
I did make some purchases for furniture and household electricals. Usually what does the OR consider too large a purchase? Or what would the OR perceive as extravagant?
Sara (Debt Camel) says
How long ago were these?
James says
Hi
I have 50k of debt with some related to gambling debt.
I pay over 2k in repayments and min pay a month.
I left uk around 18 months ago (to try and leave the gambling behind) and continued to make repayments from abroad. However, I have recently lost my job and continuing to pay is really not a option.
My question is will OR check my statement prior to 18months and should I disclose the gambling. How many months of statements will I need to provide for bankruptcy ?
Sara (Debt Camel) says
Wouldn’t it be better to spend a few months trying to get a new job first?
James says
I can’t make the current monthly payments.
Sara (Debt Camel) says
So tell the lenders you have lost your job and can’t make any payments, ask them to freeze interest so your debts don’t get worse. Bankruptcy should not be your first thought with a temporary problem! Then review after 6 months.
Mark says
Hi I’ve just had a IVA proposal rejected because a car finance company declined to enter into this agreement i owe altogeather on various debts around 40k and the car finance company are a majority percentage holder they have tried to get a AOE but the courts have suspended that until November i want to go bankrupt but im wary of that being rejected and i cant affird to loose 680 pounds i need help.
Sara (Debt Camel) says
You no longer have the car concerned?
Do you have any assets to protect, eg a house with equity? Another car that you own?
Is there a reason you went for an IVA rather than bankruptcy?
Harry says
I have 24k debt from gambling. Once I go bankrupt and the BRO is put on me will the OR continue to monitor my spending due to the BRO or do they still not look at that?
Sara (Debt Camel) says
No, they aren’t going to monitor your spending. I hope you are getting some help to stop gambling.
Joe says
If i go bankrupt will the OR find another bank account i have? The reason i ask is i have had a lot of money pass through it from Gambling and don’t really want them to see it, if i don’t declare it or close it down will they ‘find it’ or are they dependant on what i tell them please?
Sara (Debt Camel) says
Yes they probably will. Trying to conceal a bank account is not just very foolish, it is a criminal offence. See https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy-2/bankruptcy-offences/.
Joe says
But will they actually find it unless you declare it? Do you know what and how they look into this anyone?
Sara (Debt Camel) says
Does the bank account show on your credit records? Are there any payments, credits or debits, to that account from your other bank account?
If gambling is a major reason why your financial situation has become desperate, then it will normally be obvious to the OR that *something* is missing if the accounts you admit to don’t give any indication of why you need to go bankrupt.
If the OR sees it had been caused by gambling then you are likely to get a BRO. Do you really care about that? Planning on lying to the OR is a seriously stupid move. Be honest, face up to everything and put it behind you. Bankruptcy should be a clean start for you.
Joe says
Thanks for the reply, yes it’s on my credit file but other than that it’s not visible at all so my question is will they do a credit report? I had a lot of money pass through that account and I’m very worried about it, my main account will show enough gambling so I wondered what they use to look into my affairs?
Sara (Debt Camel) says
Yes the OR will look at credit records.
Sara (Debt Camel) says
I’m not sure why you are so worried about this? Really getting a BRO for gambling is not a huge problem for most people. Why do you care?
Vladimir says
Hi , How far back in time can the OR go on checking my bank accounts / cars I’ve sold / holidays or so? please?
hank you
Vlad
Sara (Debt Camel) says
You are asked on the bankruptcy application form whether you have in the last 5 years, sold, transferred or given away any properties; sold, transferred, or given away any pension, endowment or life insurance policies; or sold, transferred or given away any assets worth more than £500 each for less than they’re worth.
Hugh says
Evening
After the interview with the or realistically how often do you hear from them ? And how long does it take to see if you get a bro or have to payou an ipa cheers
Sara (Debt Camel) says
I am sorry but this is completely case by case. Some people never hear from the OR again. Why are you concerned about a BRO? have you talked to a debt adviser about whether you are likely to have to pay an IPA?
Hugh says
Think i will get a bro because I got a ppi refund and gave money to family members (can get this back) spent about 1500 on kids clothes and days out also I put the refund into my wife’s account as she deals with all finances as I had a breakdown several years ago I’ve had interview with or and said I don’t need another interview so can he look at wife’s account it’s only in her name and will he get funny as I put all the money into wife’s account before bankruptcy and lastly my only income is benefits but my wife gets maintenance from her ex so will that go towards a payment many thanks
Sara (Debt Camel) says
How long ago was this PPI refund? How large was it in relation to your debts?
Hugh says
It was £4.300 refund a month before I went bankrupt my debts are £13000 didn’t know about preferential payments can get the 2nd back from parents it’s just the money I spent on kids clothes and days out which was £1.500 as they needed the clothes the rest went for bankruptcy fees I moved the money to wife’s account as I had a nervous breakdown and she deals with all finances
Jamie says
Hi
Think I will get a bru/bro as I gave £7.500 to family before I went bankrupt I owe them 10s of thousands my question is if I do get a bro will I have to repay the 7.500 my income is only made up of benefits and what happens if I don’t cooperate with the insolvency people what’s the worse that can happen
Sara (Debt Camel) says
Giving money away – or repaying your relatives in preference to other creditors – is a reason why you may get BRU/O.
You don’t have to repay this money if you do get a BRU/O, but your relatives may be asked to return it.
This page https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy-2/how-to-go-bankrupt/dealing-with-the-official-receiver-after-bankruptcy/ looks at what can happen if you don’t co-operate with the OR – it is a seriously bad idea. My strong advice is not to make a difficult situation worse.