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. See Might you get a Bankruptcy Restriction Order? which looks at the facts about BROs – they are actually pretty unusual, less than 2% of people who go bankrupt get one.
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.
Sarah says
Hi
I’m in a financial mess and looking at bankruptcy. Last summer I paid off my daughters credit card as she was struggling more that I was with some major personal issues we going through .
Will I get penalised for doing this and not using money to pay towards my own debts
Sara (Debt Camel) says
Sorry, quite a few questions.
How much if a financial mess were you in last summer when you paid off your daughter’s debts? Has your position got much worse recently?
Are you currently making payments to all your debts? How much do they add up to?
Do you have Any assets, property or a car say?
Sarah says
Last summer things seemed fine yes I was spending unnecessarily but i was making my payments , it’s since the new year really that i realised that it had to stop I told my partner what had been happening he had no idea but he’s being very supportive . It’s only been the last couple of months I’ve been unable to make payments . I have no assets , I don’t own a car or house ..
Sara (Debt Camel) says
Then there may not be a problem if you weren’t having problems when you paid your daughter’s debts., I suggest you talk to StepChange and see what they suggest. they may say yes, bankruptcy. or they may suggest a debt management plan which they can help you set up.
Resilient Rita says
Good afternoon,
My partner and I were declared bankrupt Dec 2019 and we do not have any IPA’s. Both of us have been furloughed by our existing employers with 80% pay and no top ups. (We have informed the Insolvency service we have been furloughed.)
This wasn’t enough to live on with 2 children, rent, food etc, so we have applied for Universal credit.
Just wanted to ask if you knew whether the furlough payments are regarded as earned income or a state benefit from an insolvency/ OR perspective please?
I know this is a temporary grant from the government, but unbelievably our furlough payments plus a bit of help from UC may just push us over our acceptable income and expenses figure meaning an IPA.
We get help on the one hand but then it maybe taken away with the other? Any ideas or information on this sort of situation please?
Thank you.
Sara (Debt Camel) says
do you know how much UC you will be receiving?
Resilient Rita says
Thank you for your reply. Yes we do and the total of furlough plus UC will be over the agreed income and expenses figure. If all income is taken as benefits then from my understanding we should be ok if not then it looks like an IPA will be imposed??
Thank you.
Sara (Debt Camel) says
Has the OR asked you to report what UC you will be getting?
The furlough income is treated as earned income so far as I know. But I would be surprised if the OR is interested in you getting a small temporary increase due to benefits.
Have any of your expenses gone up since your I&E in 2019 eg council tax?
Resilient Rita says
Yes, council tax and water have increased, but still the receipt of UC, furlough and child benefit will be over our I&E, therefore receiving these benefits will push us over.
We haven’t informed the OR yet as we have only just applied to UC and been told today that our advance payment has been agreed. We get our formal decision the end of May which I would assume is a forgone conclusion if an advance has been agreed? Everything else has been confirmed. We will inform the OR of situation as we must do this, but I suppose I just wanted to preempt what his response maybe.
It seems as though we were entitled to some UC before Covid19 and furlough but was not aware of it so we never applied.
In a nutshell, all of our income with our outgoings plus the repayment of the UC advance will still mean we are over our I&E figure. The benefit has tipped the scales.
Sara (Debt Camel) says
The advance is just that – you may not get exactly that amount.
The advance is also NOT income, it is a loan that you have to repay from your UC.
I suggest you tell the OR that you are getting an advance payment from UC, this is a loan which needs to be repaid, ask if they need to be informed about this? Say you will know the full UC amount at the end of May, ask if they need to be informed about that.
How secure are your jobs, do you have any idea if you will be back to work and off furlough when lockdown ends for your firm?
Resilient Rita says
Yes, totally understand the advance has to be repaid. I haven’t broken any rules here have I? Just thought as it’s a loan from DWP and not a CCA loan it was ok? I wasn’t asked about bankruptcy either. Have I just made a serious mistake?
We needed it to pay our rent/bills until furlough payments come through for my partner as he has just been furloughed and that won’t be paid till the end of May.
We will definitely ask the OR if he needs info on this and as you say we will also ask if they need to know the UC amount on the decision date.
Ok, so if we do not receive the advance figure of UC as a monthly sum that may help.
Will see what their decision is and tell the OR what that is then.
As far as we know our jobs are safe.
I’m now worried about the advance Sara. I hope I haven’t made us look dishonest.
Sara (Debt Camel) says
No, it absolutely isn’t a problem taking this advance, it isn’t a loan, you haven’t broken the rules about not borrowing when bankrupt.
But neither is it income, it has to be paid back. So you won’t have so much income over the next few months as you expect.
I suggest you inform the OR now as i said. Tell them of the advance, ask if they want the details (I don’t think they will) and ask if they want the details at the end of May when you get UC being paid (I don’t know if they will). Also at that point it may be clearer when you will be back to work.
Resilient Rita says
Thanks a lot Sara.
Will do everything you suggest and inform the OR first thing in the morning.
So grateful for your time and help.
Your website and all the info on there helped us tremendously when we were going through the first steps of bankruptcy. Whilst going through such a traumatic time your info was invaluable, so thank you so much for what you do. Take care and keep safe x
Darren says
I own a pc with my partner.
We are both only receving state benefits.
I was wondering how id go about declaring the pc as parts were purchased by my partner and some by me.
Is there a minium amount that it must be for the official recevier to take away pc. As the parts ive personally purchased are only around £350-£400 new and i iamgine sexond hand around £250-£300.
Also i suffer from many mental health problems and the PC is my escape. Especially now there is nothing else to do. So could this be regarded as a exempt assest on the basis it will impact my health if its taken away.
Also i am the one declaring bankruptcy.
Sara (Debt Camel) says
When did you buy these parts?
Have you taken any advice on bankruptcy & how much do you owe overall?
Darren says
3 and a half months ago Ive spent around £300 in total. But these parts are not really new they are 2018/early 2019. So resale/second hand value may be much less.
My partner spent more on the two major components which are the graphics card and the motherboard. I only bought the case, ram and cpu. So arguably the pc is my partners and a fraction of the parts are mine financially speaking but would be difficult to resell. Cex value the parts I can sell at £200 as an example. If I were to sell them there. But it would cost me quite ahit more to replace them If they were sold and as they are separate parts it wouldnt likely fetch much more than cex value. So I cant see them wanting to take it as it would cost more to sell them fee wise than they would gain.
Its abit difficult to explain.
I’ve got around £20,400 debt at the moment but I also am unaware if I need to add advanced payments for universal credit etc. Also I’ve seeked advice from stepchange and Citizens advice. They
Darren says
I forgot to mention my partner also contributed abit towards these parts also and I’ve got proof of transfers and who paid what.
I’m not sure as upto a few months ago we shared finances but in reality my money and hers are separated so we can hopefully prove she owns majority and maybey then it’s a case of her paying a reasonable resale value so it could become her fully property?
I am just bouncing ideas here.
Sara (Debt Camel) says
I don’t think the OR is going to have any interest at all in parts which you bought secondhand and which your partner contributed some of the money.
If you look at the bankruptcy application, it says to list “items over £500” – that is their secondhand value. See https://debtcamel.co.uk/8-sections-bankruptcy-application/
Simon says
I may have to go bankrupt as earnings have decreased due to the corona virus and I work in entertainment so likely to be one of the last industry’s to return to normal. I used my spouses credit card with their permission to do a balance transfer onto one of my credit cards. However, I have repaid it now with one of my cards…and I put the money into my spouses account to repay the card I originally used. Would this look off to the OR ? Even though I can show the statements and the amounts match ? Not trying to conceal anything just need to be honest and able to to prove where the money went to if that makes sense. Thanks.
Sara (Debt Camel) says
How long ago was this?
Simon says
It was within the last few months.
Sara (Debt Camel) says
At that point I assume you didn’t realise you would have to go bankrupt and were just trying minimise your interest by this shuffling?
That would need to be explained to the OR but it doesn’t sound as though you gained from it or borrowed any more money.
What is important is that you take debt advice now from an expert about whether bankruptcy is a good idea for you or if you have any other options. I suggest you talk to national Debtline on 0808 808 4000 about this.
If they say that a form of insolvency will be a good idea now, or is likely soon, then from that point you should not borrow any more money or do any other clever debt shuffling..
Dave says
Hi
I’ll be applying for bankruptcy. Unfortunately things went very wrong in my life. I spent a lot of money on illegal substances. The problem has been dealt with. Will I have to disclose it during interview? Can I go to prison? I’m so scared about revealing the truth.
Sara (Debt Camel) says
If you are asked to explain what was happening – and if your finances looked hard to understand you may well be – then you should be honest about the reasons. You have a legal duty to co-operate with the Official Receiver.
But what you tell the OR is usually in confidence (unless you are a company director abusing your position in some way). I have never heard of an OR informing the police about any matter connected to substance abuse. And as a matter of practicality I doubt the police would be interested even if they did!
Have you taken advice on bankruptcy? Even if you are sure it is your best, or only, option it is always worth your time to talk to a good debt adviser. I suggest you phone National Debtline on 0808 808 4000.
Jodie says
Hi when the or looks at your income and expenditure what is the cut off before they decide you need to pay money back after all your outgoings.
Thanks
Stefano says
Hi my debts are large – over £80k caused by my business failure. The business was guaranteed against my house. I lost my income, lost my house, all my nice possessions. I’m sofa-surfing with family/friends with clothes and old car (WeBuyAnyCar value at £1,100). I sunk into heavy depression and illness. I have erratic self-employed, casual work bringing in a few hundred per month. I am due £10,000 insurance payout to help with my illness which will take a couple of years to recover from. Some payout was for mental help – some for a monthly income. I need to find accommodation (rented place) and items of furniture to live, also some stuff for rehab of skills and getting more consistent work of my own – I do graphic design eg printer, laptop etc. What can I reasonably spend before applying for bankruptcy without risking being “reckless” or having the 12 months extended? Thanks
Sara (Debt Camel) says
You can certainly use the money to put down a deposit and first month rent on a place. And buy essential furniture.
You should not use any of the money to repay debts to friends or relatives – that would be giving them “preference” which will cause problems if/when you go bankrupt (which is likely with that size of debt but you do need detailed advice on this.)
.
I don’t know what your current benefit situation is, but having that much money in the bank will affect your current benefits – talk to your local Citizens Advice about that.
Also you can play with benefit calculators to see how your benefits could change if you are renting a place. eg https://www.turn2us.org.uk/. Although this can be complicated with erratic self employed income.
A lot will depend on what the equipment for your new business would cost and how soon the business would generate enough money to live on. Could you rough out a business plan? And then talk to Business Debtline to get bankruptcy advice and talk about how bankruptcy would affect your future business plan?
Stefano says
Thanks for such a quick reply. I’m not on benefits. I’m not owing to friends besides them giving me living space etc. I can rough out a business plan nut simply I just need a decent computer, screen, printer, desk etc most of which I can buy new or second hand for less than £500 each. When I get income depends on how quick I can get work – but my illness stops me from working full on anyhow. Is there a list of “essential” furniture – I’m planning on using gumtree ebay or local marketplace for this. The illness payout is in two part – first specifically listed and awarded for mental rehabilitation – am I allowed to reserve some money for this rehabilitation. The second is to contribute to income whilst I get back on my feet (est 18 months). Could this be reserved and allocated towards income eg £300pm for the bankruptcy year – Dr reckons it will be needed for 18 months) or will they take it and leave me with nothing? If they take it does that delay things or extend the 12 months? Thanks again
Sara (Debt Camel) says
If you go bankrupt, the OR will usually take the money in your bank account – less what is needed to get through the month. So far as I know, it doesn’t matter that that money was intended for some purpose.
There is no list of essential furniture. Would you be renting unfurnished? If you are thinking ebay / IKEA you probably will be fine.
I think you should talk to Business Debtline about going bankrupt, buying things for your business and the timing of this. You could delay going bankrupt until the money runs out or you are established and earning well, until then you can use this money to help support you, that is what it is for.
Stefano says
Thank You Sara – that’s really helpful
Kate says
Hello Sara,
I went bankrupt last month. My husband is about to go bankrupt following serious family trauma that led to a failed business. My OR has confirmed she does not want any more about my debts but has asked me to provide I&E for both our personal accounts, and our two sole trader accounts for the next three months. If there is more than £20 left over she will look at an IPA.
Our income is sporadic at any time. Because of that, we have to make allowance for our income to last long periods – we are currently budgeting to December, not October. We will have more than £20 left over, because that’s allocated to future bills, not surplus. How would that be viewed?
Also, she won’t discuss a budget – am I safe to spend within guidance limits and present valid reasons for being over for food, for example? (My husband has a very physical job and I have allergies). Can I make a modest allowance for leisure and holidays, as we have a two year old son?
The quarter she is looking at will include the second SEISS payment, which won’t be repeated. Our income will drop significantly after this quarter, so an IPA made due to SEISS inflating our income would simply result in us going back the next month to say we can’t afford it. Will the IPA be assessed over this quarter, or the whole year, which will be very different?
Many thanks for all your advice.
Kate
Sara (Debt Camel) says
where are you getting “guidance limits” for food from? how much do you estimate you spend a month?
OR’s are used to the self employed having erratic income. They do not expect to take all your money in a good month and leave you with nothing for the next month. I would expect SEISS payments to come into this category. You need to explain what you expect your income is likely to be over what period.
Lisa says
Hello
Please help, I have been stupid. I have been working on and off for the last 4 years and I have been living off credit for the last 2 years. I have ended up with 80k plus debts, I have also been gambling to try and claw some money back.
My main concern though is back in March I got a full time job and thought I would be ok, So I decided to get more credit to help out my partner because he was struggling with all the bills and a large loan, In short I gave him 25k back in March so he could pay off a single loan he had, Then I lost my full time job. I have now been declared bankrupt and the OR obviously wants to know where that 25k has gone. I know this looks bad but I genuinely thought I would be able to pay it all back.
I am concerned the OR will think I paid it off and then went bankrupt on purpose. I can prove the money paid of his loan and I know I have to cooperate with the OR, but I know my husband cannot afford to pay the full 25k back to the OR and continue paying all the household bills. He has told me he could pay back up to about 10k at a push. Is there anyway they would take the 10k? or what else can they do? Can they take my husband to court to get the money back? Can I get into trouble? Please help.
I am so worried and I really do not know what to do for the best. Any help or advice would be very much appreciated.
Thank you
Sara (Debt Camel) says
Did you take debt advice before going bankrupt?
Does your husband have 10k in the bank? HAs he taken debt advice?
Lisa says
Hi Sara
I did not take any debt advice before I went bankrupt.
My husband does not have 10k in the bank but he can get a loan for 10k and still afford to pay all the household bills. He would not be able to afford a 25k loan and still pay all the bills. Do you think I should offer them this or would they take him to court for the full amount? Or would they be satisfied that it was a gift and I thought I could pay it back?
He did not take a debt advice as he only had the 1 loan that I helped him pay off, He has no other debt apart from the mortgage.
Thanks Lisa
Sara (Debt Camel) says
Is the house owned solely by him? If it is, have you had advice on whether you may have any beneficial equity in it?
Lisa says
Hi
The house is jointly owned and been valued, we have around 32k in equity and my Husband has told me he can get the 16k of his parents to purchase my share of the beneficial interest, Would this make a difference to the 25k I gave him to pay of his loan?
My hubby has said he can get the 16k to purchase the BI and also an extra 10k loan at a push if they request the 25k back, however he could not afford the full 25k.
Thanks
Sara (Debt Camel) says
would this 10k loan be from his parents? Because his credit record will be affected by your bankruptcy and he may well have problems getting a 10k loan.
Lisa says
The 10k loan would be from a bank, he has a perfect credit score,
Why would his credit score be affected? None of the debt was joint it was all in my name only. The only thing we have that is joint, is the mortgage and he has never missed a payment. I have read this should not affect his credit score.
If he could get it, Would they take the 10k or would they want to take it further?
Sara (Debt Camel) says
If he has a perfect credit score, what was the point of you getting a large loan to pay off one of his debts? I assumed that debt was at a high interest rate and you could borrow more cheaply?
Lisa says
My hubby was struggling to pay all of the bills and his 25k loan on his own and I was out of work so I could not help with any of the bills, So when I got back into full time employment I paid his loan off, so he could afford to pay all the other household bills. I genuinely thought I would be able to cope with all the debts and my husband would carry on paying all the other household bills however I lost my job due to covid and ended up with even more debt than I originally had. So my hubby still has a very good credit score as he managed to keep up with all his bills.
I could not see another way out and decided to declare bankruptcy without telling my husband or getting any advice. My hubby is still trying to get his head around it all, we did split up for a time but he is now back and we are trying to sort everything out, but it is all a mess.
I am more concerned of keeping our house, but the fact I paid of his 25k loan is worrying me, as I have no idea if they will try and claim this money back.
Do you think they would except 10k or would they pursue my husband for the 25k I gave him for the loan? I really dont want to get my hubby involved as he knew nothing about how much debt I was in before I offered to pay his loan.
Sara (Debt Camel) says
“I could not see another way out and decided to declare bankruptcy without telling my husband or getting any advice.”
I am saying this for anyone else reading this, but that was a disastrous decision to take. It is ALWAYS worth getting debt advice before going bankrupt. If you had, a debt adviser would have explained the problem you are now facing. And for what it’s worth it is simply unkind to not tell your husband who you own a property with that you are going bankrupt.
“I am more concerned of keeping our house, but the fact I paid of his 25k loan is worrying me, as I have no idea if they will try and claim this money back.”
You are not going to find this helpful, but what the Official Receiver decides will depend on the facts of the case. The fact that you did not expect to lose your job is in your favour. It will also be in your favour if you could clearly manage all the debt repayments without difficulty before your lost your job. But if your decision to borrow to pay off your husabnd’s loan did not actually save the household any money at all, it may be viewed as so irrational that the OR may decide that you were doing this to put your husband in a better position knowing your debts were impossibly large.
I suggest at the moment that you need to co-operate fully with the OR. Explain your situation. Show that your finances were fine after the new loan but before you lost your job.
Don’t let your husband rush into taking out a large loan when you don’t know if this (a) needed at all or (b) will be acceptable to the OR.
If it seems that the OR is going to take the “wrong” decision for you, you/your husband should consider taking legal advice. You can go to your local Citizens Advice or a local Law Centre. Or get a solicitor with experince in insolvency, which would cost money but you may feel an inital consultation would at least esatblish if you have a chance of challenging the OR’s decision. Perhaps your in laws would be able to fund this?
And don’t let your in laws make an offer to buy your share of the equity until this other matter is sorted out, one way or another. Because if your husband has to repay that money the two of you need to consider your situation and the best options for him. At that point please talke some debt advice!
Rae says
What does the OR ask in the interview?
Sara (Debt Camel) says
This is going to sound unhelpful, but it all depends on the facts of your case. Could you give a rough outline and say if there is anything you are worried about?
sally says
Hello
i am in the process of going Bankrupt my main concern is 18 months ago i did 3 balance transfers and 2 loans and transferred the money to my husband to pay off his debts as balance transfers were 0% and loan % was lower than he was paying this amounted to a total of about 28k am i going to be in trouble for doing this and will my husband be asked to pay it back as all current debt are in my name
Thanks
Sara (Debt Camel) says
18 months ago … has your financial situation changed completely since then? or is it much the same?
Sally says
Hi Sara thank you for replying
Have been paying all debts no arrears but I have now had to give up work due to ill health and income has dropped to nothing my husband is paying all Bill’s but cant cover my debts as well
Sally says
It has changed now due to I’ll health my income has dropped to zero as cannot work
Dan says
If I get employed during my bankruptcy order do I have to notify my official receiver of my new income? If I have surplus cash of 300 per month what will happen to this money?
Thanks
Sara (Debt Camel) says
during my bankruptcy order
That is a bit of a confusing term.
If you get employed during the first 12 months, you have to tell the OR and an IPA (monthly payment amount) may be set. Your surplus cash may be less than you think – you may be earning a lot more but your benefits will have dropped and you may pick up commute costs – talk to a debt adviser about this.
If you are not working at the end of the first year, you will be discharged with no IPA set. After that one cannot be set, no matter how much you earn. This applies even if you are one of the small number of people who have a Bankruptcy Restriction Order imposed.
Anonymous John says
Hi there,
Firstly – thank you for this incredibly insightful website. It has been invaluable over the past year.
I am in a DMP since May 2020, debts circa. £19,000 now reduced to £17,000. My income is decent, but my wife has lost her job and we have a baby coming so the amount going towards the debt is dropping significantly. As such we were recommended about bankruptcy from our DMP provider.
I feel it would be a good option – I have no real assets to my name and my wife is not actually financially associated with me in any way (believe it or not we were very careful to keep that the case!)
However, naturally I am concerned about my past habits affecting me with the official receiver. My debt problems spiralled in 2019 – I ended up taking out more credit to repay minimum repayments on others, or took out credit for two electrical items (£1500 each) and sold them at a little less than their retail value (£1000 each) to make minimum payments. Yes, dumb. I regret it. And I honestly think this would count as reckless behaviour to the OR.
Do you agree with that assessment?
Thanks!
Sara (Debt Camel) says
Your DMP provider is best placed to give you advice. If they have suggested bankruptcy, then that is almost certainly your best option and I will assume you have no assets to protect or other problems that would make bankruptcy difficult.
Your bankruptcy application won’t be rejected however reckless you were. The only question is whether you would be likely to get a bankruptcy restriction order. No-one can say for definite if you will or won’t, that will depend on how your Official Receiver sees your case. But some points to think about:
1) It sounds to me as though your DMP was going pretty well – paying off 2k in 5 months. If you had managed to carry on with that, your debts would have been repaid in full, including the ones you know realise it was foolish to take out in 2019, in under 5 years.
But now your wife has lost her job – possibly connected to Coronavirus – and is having a baby. These sound like events that derailed your DMP. So it is possible that your OR may not see what you did in 2019 as so much of a problem as you think.
2) Do you actually care if you get a BRO? Obviously it would feel better not to, but in practice would it make any difference to you at all?
You will not have to pay more monthly payments or for longer if you get a BTO.
You will still be discharged after a year.
Read https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy-2/bankruptcy-restrictions-orders/ carefully – do any of the extra restrictions with a BRO make any real difference to you?
3) what other option do you have? A 10 year+ DMP is not a good idea at all, especially with a growing family. An IVA is possible, but with no assets to protect, you would be making payments for 5 years and IVAs can fail… Unless your DMP firm though an IVA was a good idea, you should probably rule this out.
So you might not get a BRO, it isn’t certain. If you do, it probably won’t much difference to you. And it’s unlikely you have a better alternative than a bankruptcy even if you get a BRO.
Bicky says
Hello, I am on disability benefits and my daughter has been helping for many years for food bills etc I have had few large payments into my acct and last year sent the money back to her acct to pay her what she had been using, even took out balance transfer options. I used to live with my youngest daughter and have racked up a lot of debt 23000 daughter has now after being on Furlough lost her job and we are struggling spoke to debt advise and he suggested as there is no way in benefits to pay all the money back that I should declare bankruptcy. My concern is the money in transferred to daughter will they ask me why I gave it to her? Although she regularly sends money to help with rent food etc? I have never missed a payment with credit cards but now unable to pay please advise
Sara (Debt Camel) says
Sorry quite a few questions as I am trying to see more of the picture
I have had few large payments into my acct
Where did these come from?
How much did you pay your daughter?
You say Your daughter was helping for many years with food bills. Was she living with you? If she wasn’t, why were you having difficulty paying the bills?
Who gave you this advice to go bankrupt and did you tell them about the payments to your daughter?
You should not rush into any form of Insolvency just because you can’t pay credit cards this month. I suggest you phone the cards up and say you are taking debt advice as your daughter has lost her job, offer each of them a token £1 a month and ask them to freeze interest and charges.
Bicky says
I’m on esa/pip housing benefit so money is tight rent with youngest daughter who lost her job the daughter I sent money transfer payment from credit cards lives elsewhere but helps with food medicines and other essential. Didn’t know youngest would loose job as was paying regular so I got in few months roughly £13000 on cc as for over the years she has helped she’s spent it but now I need help again step change advised to go bankrupt but I forgot to mention these payments payment holiday now
Sara (Debt Camel) says
In that case I think you may have a problem. I know you weren’t expecting your youngest to lose her job, but £13,000 is a very large amount to take out on cards to give away when your only income is benefits. By repaying your daughter you have given her what the official Receiver may see as “preference” over your other creditors.
I think you should go back to StepChange and explain about these payments and see if they still think bankruptcy is a good idea. If they say know, they can help you look at other options, eg making token payments until your daughter is back in work. See https://debtcamel.co.uk/token-payment-debt/
Bicky says
I was doing so well and everything was covered now I’m in such a mess. How long can you give token payments for? At the moment I’ve asked payment holiday for 3 months can token payments go on for couple years as getting back on my feet is going to be hard now and if I have to live alone ( if daughter moves out) what Could I do I’m so stuck
Please advise
Sara (Debt Camel) says
I think you should go back to StepChange as they about your situation in more detail. The payments to your daughter are an important part of this and StepChange need to know about them – then see what they say the options are.
Kb65 says
Hi,
I’ve been advised by stepchange that bankruptcy is my best path and they’ve told me to stop paying any cc/loans immediately. I also have a 2,000 OD that I’m well and truly in but not paying non essential bills will obviously help to reduce the OD. Would this not be seen as prioritising my bank OD over other debts?
Sara (Debt Camel) says
How long will it take to apply? Is the main need to save up the bankruptcy fee?
Kb65 says
Hi there,
Yes partly and the fact that after filling in the budget sheet I’m 164 in debt every month after payingput all bills.. Son moved out and now 400 down on rent each month.
They said that money saved would go towards saving for bankruptcy fee
Sara (Debt Camel) says
so there are couple of things you can do.
One is to ask the bank to stop charging you and fees on the overdraft – explain you are asking your other creditors to stop adding interest and you won’t be paying them any money.
Another if to get yourself a new bank account with a different bank, no overdraft and move all your banking there. Then the old bank overdraft is just another debt that needs to be repaid at some point but which will in practice go into your bankruptcy.
But if your expenses are £164 more than your income every month, even if you try to live on as little as possible, how ill you save up the bankruptcy fees? This seems to be your real problem…
Have you read https://debtcamel.co.uk/help-with-bankruptcy-fees/?
You could also look for a lodger?
Dolphins says
Hi, I have just had my Bankruptcy approved.
My question is: I took out a personal loan and ticked the creditor form that it was to repay debts.
I repaid part of my debt but used the other half for a holiday & general living expenses.
So, I hadn’t used the whole amount for debt consilidation.
Is this classed as fraud? What do I tell the OR? This was more than 12 months ago.
Thank you
Sara (Debt Camel) says
How many payments did you make to this loan?
Was it Covid-19 that tipped your finances over the edge?
Dolphins says
My boyfriend (who is not included in the bankruptcy nor have I listed his income as he wants nothing to do with my bankruptcy & was being funny about providing his salary to me). It’s his home I moved in with him last year. He was furloughed and took a pay reduction hence me now having to pay half the expenses which I hadn’t had to do before!
So all in I’ve only paid 5 months payments before I took a payment holiday.
Will they accept that as a reason I wonder giving that my boyfriend is not cooperating & won’t disclose his financials to me! Only that he has lost some of his salary & I need to start contributing half!
Sara (Debt Camel) says
I can’t say for definite what your OR will say as that will depend on the facts of your specific case.
But in general:
– most loan application ask you to tick one box. Was it even possible to say you wanted the loan for part consolidation and part holiday?
– there is nothing wrong with taking a loan to go on holiday if you expect to be able to to repay it. It may not be sensible, it may cost a lot in interest, but it is not fraud.
– if you were happily repaying it up until lockdown, when you had to contribute more to household expenses, then this could not have been expected.
– if your partner is happy for you to show the OR any evidence about him being furloughed and having his hours cut, that may help. But it is possible that the OR won’t see this as big problem anyway.
Lindsay says
Hello can I ask how you found the process in in the middle of sorting mine out, I’m rather nervous about it all, having a new born baby is having its strain with all this debt I have too.
Did you have to attend meeting or provide anything . Sorry to be a pain
Weatherman says
Hi Lindsay – not a pain at all!
You’ll need to fill out the online form, then if your bankruptcy is granted you’ll have an interview with the Official Receiver. It’s nothing to be scared of – they just need to understand your financial situation (so will ask for bank statements, payslips, and a budget etc).
If it all feels a bit daunting, National Debtline can talk you through it all. They can also help you prepare a budget, and can advise you on whether bankruptcy’s definitely the best option for you (there might be others!). You can call them for free on: 0808 808 4000
Steve says
Hi I am 15k in debt, all in my sole name. I work as a taxi driver, self employed and the Seiss grant has been my only form of income since the march lockdown. Does the OR take this income into account as its a grant.
Also my partner receives our benefits in to her sole Account and uses that for our food bills and living costs whilst i pay the bills out of my sole account and recently due to the my own situation she transfers money across to help with the bills. We have no joint accounts and the debts are solely mine.
Will the OR ask to see her accounts as she is not willing to get involved as she was not aware of my problems until last month and has a substantial amount of her own money and savings.
Thanks
Sara (Debt Camel) says
The OR cannot insist on seeing your partner’s accounts. If she is not prepared to share information, then the OR will typically assume you have the same income and that the household bills and expenses should be divided equally between you. The benefits may be paid into her account but they are part of your income.
I suggest you talk to Business Debtline about whether bankruptcy is a good option for you (I’m not saying it isn’t but it is ALWAYS good to get advice on this, especially for a self-employed person and if your cab is on finance) and if it is, how you should complete the income and expenditure section of the bankruptcy application.
PS I don’t know how “substantial” her savings are, but savings over £6000 have to be declared for some benefits.
Alen says
Hi I went bankrupt in 2010 I had bad health and mounting debt but it was suspended indefinitely after a year I have not heard anything since and my name is still on the register a solicitor told me I should come off around 2016 but it seems I haven’t now my aunt has died and left me £1000 can you tell me what is going to happen and how do I go about lifting the suspension I am still not working due to ill health and this was explained to the bankruptcy people in 2010 going bankrupt has been like dragging a ball and chain around it affects more things than you realise thanks
Sara (Debt Camel) says
why were you not discharged from bankruptcy? This is INCREDIBLY rare.
Alen says
Hi Sara in 2008 I had a mental breakdown basically and Iv never really recovered from it Iv lost everything including my family I told the bankruptcy person during the telephone call all this back in 2010 I cannot remember most of what happened since I had mounting debts swapping one card payment to the other etc and the tip of the iceberg was a credit card representative coming my house asking for payment etc so I paid to go bankrupt I’m still in the same rented house 11/12 years later and I thought I’d automatically be discharged within a year or two a solicitor checked once and said I’d be discharged around 2016 because they suspended my discharge in 2010- 2011 so Iv always thought I was discharged until now, it’s been 11 years now how much longer do you think I can be suspended from discharge for thanks Alen
Sara (Debt Camel) says
I think you should talk to your local Citizens Advice and they can talk to the Official Receiver on your behalf.
Alen says
Ok i will thanks Sara
Limdsay says
I’m currently in the process of bankruptcy, I have a 6 months old child who father is currently living abroad, I have giving him a little money now and again to get things for my son as he wk be spending time there. Would that be looked at wrong ?
It’s only until his visa is approved to come here and with Covid everything has been placed on hold.
Larry says
when assessing for a DRO, what does the OR look at during the process? What do they request from intermediary advisor and from myself in terms of monthly budget, do I send bank statements etc? Once my budget for going forward is agreed with intermediary, will the OR still review it? My food budget is high as I’m on special diet for digestive issues and have multiple food intolerances. Everything else is within suggested budget.
Also part of the picture is my debts rose several thousand (maybe 5000 over 6 month) during lockdown, some was essential ie furniture a PC to work from home as mine broke down and a bicycle ( these my only asset and assets are under 1k) but some could be seen as ‘excessive’ spending on other things like clothing, online shopping and alcohol due to stress anxiety and loneliness. I now owe 20k. Will this spending be looked at /questioned? It’s now been 2 months since I last used credit.
Weatherman says
Hi Larry
The OR will ask for bank statements, but they’ll also look at the budget the intermediary & you have prepared. The intermediary can make a note to explain any particularly high levels of expenditure e.g. on food.
If you owe more than £20k, you won’t get a DRO (at least until May, when the limit might increase to £30k). So if you think your debts are at or above £20k, you’ll need to look at different options. Contact National Debtline: 0808 808 4000
It’s hard to say what might be considered ‘excessive’ spending – £5,000 over 6 months doesn’t seem absurd to me, especially as it was ‘extra spending on normal items’ (and not gambling, or a sports car!). But National Debtline can also advise you more on that.
Sara (Debt Camel) says
The OR in a debt relief order goes by what your DRO adviser put on your application. Your adviser can, as Weatherman says, add in a comment about the reason some spending is high.
So it is your adviser you have to convince that your food spending is ok, not the OR. It may help if you have a letter from your GP about your health problems. But you may well be worrying unnecessarily – the amounts allowed for food in a DRO are more generous than many people expect.
You won’t be refused a DRO because you have spent too much in the past. It is possible you could get a Debt Relief Restriction Order but these are very rare – a lot more people worry about them than actually get one. Read https://debtcamel.co.uk/bankruptcy-restriction-order-bro/ which looks at this – it is about bankruptcy restriction orders but exactly the same applies for DROs.
Larry says
Thank you both for your replies.
Sara – so once the intermediary asseses my situation and send the application, will I be contacted by the OR or asked for anything further? I’m anxious about this stage of the process and want to be prepared mentally for what might come up
Sara (Debt Camel) says
That would be very unusual. If your application is put forward by your intermediary, the next thing you normally hear is that it has been accepted.
Larry says
Thank you. That’s reassuring. It gets confusing the differences between bankruptcy and DRO. Much appreciated