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
July 11, 2018 at 12:49 pmJust 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
July 11, 2018 at 4:08 pmIgnoring your question for a minute… your house – is there any equity in it? And how large are your debts?
james allen says
August 8, 2018 at 7:19 pmhi there. would the OR be able to look into my partners income? i.e bank statements e.t.c?
Sara (Debt Camel) says
August 8, 2018 at 9:10 pmThe 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
October 16, 2018 at 1:45 pmI’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
October 16, 2018 at 2:31 pmHow 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
October 16, 2018 at 3:23 pmThanks 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
October 24, 2018 at 11:57 pmIf 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
October 25, 2018 at 10:12 amwhat was the date of your bankruptcy? Where did this 14k come from?
Louise says
October 26, 2018 at 3:34 pmIt’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
October 26, 2018 at 5:26 pmIn that case the person needs to ask for themselves and gives some details about the transfer.