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Anyone able to hold my hand through this? DH served with summons, but needs to declare bankruptcy

(13 Posts)
Nothavingfunrightnow Fri 14-Nov-14 10:43:49

DH had a business a few years ago that failed. Along with that and some personal debt, things got out of hand and CAB recommended bankruptcy. We were not able to proceed at the time because we are renting.

However, we have been in our current rental property for 3 years now and have recently extended the lease for another 3 years. I am due to talk to the landlord this afternoon about our predicament and to ask him to consider allowing us to continue living in the property should we proceed with the bankruptcy application.

DH and I own very little. Just the usual household stuff and an ancient car that is falling apart. No savings, no assets we could sell.

So, the question is how do we deal with the summons now pending the application for bankruptcy?

The claimant is suing for an amount of money arising out of a loan from a bank - the bank has supposedly ceded the claim to this collection agency. Would it be worthwhile asking for proof of the original loan agreement and cession or would that be a waste of time and waste of what little effort and resources we have?

This whole thing is awful. I feel completely alone in having to deal with it. Dh is of course upset, as I am, but I tend to have to deal with paperwork and such stuff in our relationship.

Fuck. What should I do?

InfinitySeven Fri 14-Nov-14 10:49:14

Do you have the bankruptcy fee and everything ready to go?

It's worth taking advice, but I believe the creditor will probably progress with the summons until your DH is actually bankrupt, and then cease contact.

Nothavingfunrightnow Fri 14-Nov-14 10:51:51

No, I don't have everything ready, but could probably get most done this weekend. (I work full time and study part time and we have a 10yr old... urgh!). We could probably find the bankruptcy fee - I want to ask my sister to help but DH is adamant that he wont'. Don't have much choice it would seem.

Yes, I would expect the creditor to proceed whatever we did. Just wondered whether it was worth letting them know what our intentions are. Not that it would make much difference! CCJ or bankruptcy order. Lovely stuff.

InfinitySeven Fri 14-Nov-14 10:56:59

Have you spoken to Step change? Theyd be able to give you personalised advice based on the bank and your circumstances. It's probably worth giving them a call.

Also, I understand that you deal with the paperwork, but I'd make sure that he isn't burying his head in the sand. You don't want to cause him more stress, I get that, but you need to at least share the consequences. As it is, it seems you'll encounter most of them.

SageYourResoluteOracle Fri 14-Nov-14 11:01:00

I'm really sorry for the position you're in. We faced a ccj a while back that DH's brother caused. Long story.

We've managed to rent a property just recently (CCJ has two more years until it's cleared). We were honest with the landlady from the start but we did have to pay 6 months rent in advance. I'm guessing that wouldn't be a possibility but I'd definitely talk to your landlord now. Honesty is the best policy.

That said, have you just negotiated a new lease? If so, would this be based on credit checks prior to the debt being picked up?

Sorry if I've misunderstood anything.

Nothavingfunrightnow Fri 14-Nov-14 11:09:08

Thanks, InfinitySeven, I had not heard of Step Change. I will look them up later today. DH does bury his head in the sand. Causes no end of stress and heartache.

Sage, yes, we have just negotiated a new lease which would have been based on current credit checks - even if it had been done 3 years ago, the checks would have been as shit as they are now. No idea how we would be able to come up with 6 months rent in advance if that had to happen to us.

I really appreciate the replies. I cannot talk to anyone about this. I have such a dear friend at work and she knows something is up but I cannot talk about it. On the verge of tears ALL the time.

It's not the end of the world, is it?

InfinitySeven Fri 14-Nov-14 11:52:24

Step Change are brilliant. They have an online chat, but they'd probably ask you to call about this (or offer to call you). They are the national debt advisory service, and they'll be able to walk you through the process, and they can even contact the bank/agency on your behalf.

They are very good at understanding the emotional side.

I'd call them first. Then they'll be able to advise if going bankrupt is the best way for you, and help with the actual process, if it is. If it's not, they'll suggest another way, and help with that too.

It's not the end of the world. You'll feel much better when you've got a clear path forward, it'll feel a little less grey and confusing.

Nothavingfunrightnow Sat 15-Nov-14 08:40:00

I rang the landlord yesterday and he was lovely and kind. He said that he has other properties and this has happened before but that I was the first tenant to actually warn him first. May have scored a few points there smile

He assured us that he will not make us homeless.

First step taken. Now for the next...

lougle Sat 15-Nov-14 09:19:17

Ok, I have lots of advice for you. We are almost 8 years post bankruptcy and over 7 years post discharge. smile

First thing: you could let the summons go to court and the court would decide how much you pay. The company can seek bankruptcy, but if your income is low they're unlikely to get anything so it's a risky move on their part.

First things first: how big are your total debts? If less than £15,000 and you have a very small disposable income, you could get a DRO instead.

If not, you'll need bankruptcy:

Before you file bankruptcy, open a basic bank account with the Cooperative bank. They used to allow bankrupts to open basic bank accounts, but they changed policy a while ago. Now, they say that they will allow bankrupted persons to continue to use a basic bank account they already have, but can't allow a bankrupt person to open an account....

Before you file withdraw all your money from your bank account. Any bank account you have will be frozen at the moment of bankruptcy and you can't use the account without permission from the Official Receiver, who you won't see for a while after the hearing. (You would then declare this as 'cash in hand' on your BR forms.

You can't pick and choose with debts, so all debts in your DH's name will be included in the bankruptcy. You'll need advice about any joint debts (DH and I filled together because our debts were too mingled together and we were told that I may be pursued for debts in his name because he'd assumed some of my debts, etc).

Visit the moneysavingexpert site's bankruptcy forum for advice on preparing the budget sheet. Every pound of spare income will be assessed for payment towards the bankruptcy. You need to be able to think of every cost you have. If you've been living at subsistence level because of debt, you need to assess what a reasonable expenditure on food, leisure, etc., is.

Nothavingfunrightnow Sat 15-Nov-14 10:00:42

Thank you, Lougle! DH had already opened a basic account at Barclays in anticipation of bankruptcy. We have one joint overdraft and I am trying to find a way to get that transferred to my name only. Seems we would have to pay it off - I wonder if a balance transfer may be the right option? I have a credit card I could use but that is the only safety net we have if my car breaks down. Do you have any suggestions about this?

The debt is way in excess of £15k so bankruptcy appears to be the way to go.

Regarding the freezing of his account: what would we do about his income? He is self employed but gets a regular income from one source. Could this still be paid into his account after bankruptcy?

Would my accounts also be frozen when he is made bankrupt? All household direct debits come out of my account - this was also done in anticipation of the bankruptcy. Should he transfer any other direct debits he has to my account (eg optician's for contact lenses and eye checks)

lougle Sat 15-Nov-14 10:30:05

If you have a joint overdraft, then you would be liable for the overdraft once your DH is made bankrupt.

WRT direct debits, etc., the best thing to do is to time BR to be just after the bulk of DDs are paid, so that you have a month to sort out with the OR the unfreezing of the bank account.

You really need professional advice about this because it's more complicated if only one of you files bankruptcy.

Nothavingfunrightnow Sat 15-Nov-14 10:53:49

Thanks, Lougle.

navygreen Mon 17-Nov-14 09:14:38

I went bankrupt a few years ago and it was honestly a very painless process. You will be so relieved once the debts are cleared and your creditors can no longer harass you.

Stepchange were a good source of advice for me and I'd really recommend them. You will be asked if you've sought advice when you (or your DH) goes to court, if they believe you aren't fully aware of the consequences you could be told to go and seek advice first. So really best to get it done properly.

I didn't have my account frozen at all, I'd opened one with Co-op a few months before and had all my DDs transferred over. There was no effect on my day-to-day banking after going bankrupt. Due to my income and outgoings being basically equal, my OR decided that I didn't have enough surplus to pay towards my debts so I didn't get a payment order.

If your OR thinks your DH has enough money left over after his reasonable spending, then he could be asked to pay towards his debts for three years (but the total will be much less than paying off the full debt). The amount you're allowed to spend on living costs is very reasonable, including a small amount towards holidays, fuel/study costs, clothing etc - you're not expected to live on a pittance. I'd been very frugal in the years before going bankrupt as I'd needed to pay towards my debts, so I found that my standard of living was far better after bankruptcy.

I'd be careful about transferring any debts just into your name if you aren't going bankrupt, you will have to check whether that is allowed. Stepchange will be able to give detailed advice.

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