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Original poster

Can you file for bankruptcy if you are earning a wage ?

23 replies

Kayleigh · 03/03/2006 07:58

I have a friend who is separated from her husband and he is threatening to make himself bankrupt. But although he has debts he has a good job and earns a reasonable wage wheich I am almost positive he won't give up. Can he make himself bankrupt if he is earning ?
Common sense makes me think he can't do this, but I have no idea how bankruptcy works.
Thanks

OP posts:
TheBlonde · 03/03/2006 08:04

this might help \link{http://www.direct.gov.uk/MoneyTaxAndBenefits/ManagingDebt/CourtClaimsAndBankruptcy/CourtClaimsAndBankruptcyArticles/fs/en?CONTENT_ID=10023215&chk=UCiQEB\link}

Original poster
Kayleigh · 03/03/2006 08:09

Thanks TheBlonde. From that it looks like you can still be earning and make yourself bankrupt Sad. Not good news.

OP posts:
NotActuallyAMum · 03/03/2006 08:31

Sorry Kayleigh but yes you can, my brother did it last year

misdee · 03/03/2006 08:33

i take it he is threatening it to get out of paying her some cash? he will lose assest like his car, and anything of any worth. Peter went bankrupt a few years back and had to give up his car.

heavenis · 03/03/2006 11:09

He can make himself bankrupt The cost is £310.00 a deposit towards the cost of admistering the bankrupcy. £150.00 Court fee.
The court could decide that an Individual Voluntary Arrangement would be better if he has assets of £4,000 and unsecure debts of less than £40,000 and has not been bankrupt before or had an IVA in the last 5yrs.
If he has a decent car then he will be made to sell it. If he has his own house then that could be sold too. Some life insurance policies can be made part of the bankrupcy.
He would find it hard to get a bank account while not discharged.
He can not have credit for more than £500 without prior agreement with the Offical receiver.
He cannot be a director and it may affect his current job depending what it is.
Bankrupcy is not an easy option and shouldn't be taken as so.
Sorry for the long post but we've just gone through this ourselves. So if I can answer any more questions just ask.

Original poster
Kayleigh · 04/03/2006 09:46

Thanks so much for this info - it wasn't what we wanted to hear but at least my friend now has all the facts. Without giving to much away yes, basically he is threatening her with this as he wants the house to be sold so he can get at the equity. He doesn't have a car - he drives a company car - so I guess that wouldn't be a problem for him. My friend has two young children who have been very shaken up by the whole separation and wants desperately to stay in the house for their sakes.

It all seems so unfair.

OP posts:
misdee · 04/03/2006 09:54

if he sells the house to get the equity then his creditors will get the cash!

sorry for your friend. he seems like he is being an arse!

Original poster
Kayleigh · 04/03/2006 10:54

misdee, he is THE biggest arse. If he gets his equity his debts will be paid off and he will have cash left over which is what he wants.

OP posts:
zippitippitoes · 04/03/2006 11:01

is she in the process of divorce proceedings?

she should see a solicitor for financial advice as I doubt a court would uphold this course of action

NotQuiteCockney · 04/03/2006 11:04

I thought your debts had to be greater than your assets, to claim bankruptcy? Or am I missing something ...

Original poster
Kayleigh · 04/03/2006 11:12

ahhh that's interesting NQC - anyone know if that's true ?

zippitippitoes, she is in the process of divorce, so she does have a solicitor who knows that he has threatened this. The solicitor thinks he is just bluffing - and maybe he is - but he is scaring the hell out of my friend.

OP posts:
zippitippitoes · 04/03/2006 11:15

if they are his debts and he files for bankruptcy then she still retains a legal title in their home, the title of the house is indivisible from them jointly I think, but his share of equity could be vested in the trustee for bankruptcy..she would be able to argue for however much of the equity she felt was her own.

I think the ploy fails on several counts

But I don't think he could make himself bankrupt in this case

zippitippitoes · 04/03/2006 11:25

she can also put off the sale of the house for up to a year following the date of his bankruptcy

if the official receiver was to sell the house then she would be offered the opportunity to buy the beneficial interest

bankruptcy is for overwhelming debts and it doesn't sound as though he has those

Original poster
Kayleigh · 04/03/2006 11:32

thanks zippitippitoes, that helps.
The more info she has the less power he has over her.

OP posts:
NotQuiteCockney · 04/03/2006 12:42

Hmm, I've had a wee dig, and nothing seems to say you can't declare yourself bankrupt if your assets are greater than your debts, largely because no sane person would.

But it does say that you give up all assets. You don't get to keep leftover cash after your debts are paid, as the assumption is, there wouldn't be any cash left.

zippitippitoes · 04/03/2006 12:46

is he paying his debts/loans/fines at the moment or is he in default
I'm sure if his finances are not badly managed then the court wouldn't grant the bankruptcy?

his pension would aslo be included in his assets

heavenis · 05/03/2006 08:52

He could apply for bankrupcy but if his debts are manageable by his current salary then they would not make him bankrupt. If he did make himself bankrupt they ask if your involved in any other legal proceeding.
If you apply for bankrupcy after May 2000 your pension is not involved in the bankrupcy.
You have to provide salary details. You also have to give details as to why you are filing for bankrupcy.
Have a look at National debt line they have a number you can ring they may be able to give your friend some advice.

Original poster
Kayleigh · 05/03/2006 10:14

thanks heavenis, i am sure given all the figures that a court would not make him bankrupt. Will see if my friend wants to call the helpline - she has all the figures and they mught be able to put her mind at rest.

Thanks for all your help

OP posts:
heavenis · 06/03/2006 08:15

That's no problem. He might think that bankrucy is easy but he wouldn't be able to get another mortage and private renting may be a problem for him too.

SheilaBlige · 06/03/2006 08:39

heavenis, what is the first step in making oneself bankrupt? I'm in this situation myself (substantial debts and no means of paying since redundancy and ill health ended my career) - would the CAB be my first port of call? Or do you just go to a solicitor?

heavenis · 06/03/2006 08:53

Hi SheilaBlige
You can have a look on the National Debt Line web site,they have a number you can phone for advice as well as fact sheets on the site. You could contact the CAB they maybe able to help with the form filling.
You can get the application form from your County Court ask for the exemption form too. If your on some types of benefit you don't have the £150.00 to pay in court costs.It'll cost you £310.
The form askes for Personel Details/Business details (if your working etc)/Assets (house's carsNational sacings)/List of secured debt/list of unsecured debt/Bank accounts and credit cards/employment and present income/outgoings/current property/property disposed of in the last 5 years/memembers of you house hold and dependants/causes of bankruptcy.
I hope this helps I'll help as much as I can.

SheilaBlige · 06/03/2006 09:23

Thanks heavenis Smile

I'll give National Debt Line a call as a first step and see if I can get an appointment with the CAB.

At the moment the stress is unendurable - I'm waiting for court summonses to start dropping through my letterbox. I've looked up info about IVAs but frankly as I'm living on benefits at the moment I can't see any way of paying even a minimal amount back.

I have no property or even a car, so I feel I have very little to lose by doing it. Of course I don't exactly like the idea of the stigma that goes with bankruptcy, but it is a last resort isn't it?!

heavenis · 06/03/2006 09:31

I'll start another thread for you and help you anyway I can.

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