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Original poster

IVA rejected now being made Bankrupt

50 replies

Blossomflowers · 11/08/2015 15:08

Can anyone please help me through this I feel totally ashamed and scared. I was advised by the Business Debt Advisory to apply for an IVA, all creditors agreed bar HMRC, sadly they had the majority. My Insolvency practice were stunned as they said it was an excellent offer, but seems not reasoning with them, So they are declaring me bankrupt, court case on the 21st. I taken some advice but am still very confused. My house in in negative equity, and I have a child under 16 so have been told they will not take my house unless things change. Also car is my only other asset but worth less than £2000. I am self employed and am told that I can carry on working to support myself and my son. Is there anything I should be doing right now, is there anyone out there who has been through something similar.

OP posts:
midnightvelvetPart2 · 11/08/2015 15:13

Sorry to hear this op Brew

The forum at moneysavingexpert has a bankruptcy section that are fabulous. As excellent as mn is in all other stuff, if you need help then go there, I can't rate them highly enough x

Original poster
Blossomflowers · 11/08/2015 15:16

Thanks midnight I will check that out. Would be nice to know how other people have coped.

OP posts:
Original poster
Blossomflowers · 19/08/2015 11:14

Since posting have really struggled to find anyone able to offer decent advice support. My court date is Friday, needless to say am really stuggling. Anyone else have experience of similar would be great to hear from you

OP posts:
PurpleBananaPie · 19/08/2015 12:43

No advice I'm afraid but have you tried Money Saving Expert website? They have a bankruptcy board on their forums and people get some great advice from the posters on there.

PurpleBananaPie · 19/08/2015 12:44

Sorry, just realised that I've posted exactly the same as midnight did last week. That will teach me to read properly Blush

emwithme · 19/08/2015 12:44

Have you been over to the MSE bankruptcy forum? They are excellent and really helped me when I had to go through bankruptcy five years ago.

AlpacaMyBags · 19/08/2015 12:51

This reply has been deleted

Message withdrawn at poster's request.

Original poster
Blossomflowers · 19/08/2015 13:03

I know about the bank account, am going to Barclays today actually. My hearing if Friday so early days. I am self employed so will be allowed to carry on with little impact. There is no equity in the house so safe for now but that could change. Is a very scary time especially when you are on your own.

OP posts:
DragonWife · 19/08/2015 13:09

OP try not to worry too much. The hearing itself will just start the ball rolling and make a bankruptcy order. You will likely be bankrupt for 12 months before you receive your discharge.

After the order is made you will need to attend an appointment with the local Official Receiver's office. You will receive a request to attend by post usually. Sometimes the meetings take place in person, sometimes they take place by telephone. You will be asked a load of information about your income & expenditure and your assets and liabilities. Try and have copies of up to date statements and/or reference numbers if you can.

After that meeting, either the Official Receiver or an Insolvency Practitioner in private practice (usually at a firm of accountants) will become your Trustee in Bankruptcy. They will liaise with your creditors and consider whether they need to realise your assets. Your home is currently in negative equity but if it is your main/only residence but the Trustee will have 3 years to realise it. If it is unlikely to rise in value in that 3 year period, you may be able to purchase it back for something like £1 plus legal fees. If you have surplus income, the Trustee may seek an income payments order, requiring you to hand over surplus income for 3 years.

Regarding a bank account, there are various banks which provide accounts for bankrupts - might be worth inquiring ahead of the hearing so it is open and ready to function so avoid any difficulties with existing accounts post-bankruptcy. As for self employment, you may want to seek specific advice, but the general rule is that if you are a director of a limited company, you will need to stand down and not act in the promotion/formation/management of a limited company whilst an undischarged bankrupt, and if you are a sole trader, you should continue to trade in the same name as the name in which you were made bankrupt.

Feel free to PM me if you have further queries.

Original poster
Blossomflowers · 19/08/2015 15:25

Thank you Dragon I am trying not to get too stressed but guess easier said than done, is a lot to take in. I have an appointment with Barclays a week on FRiday to open a basic account, I have been told they are the only ones that would touch me?? I am a sole trader so not a limited company and have been advised I will be allowed to continue to trade to allow me to pay bills and support my son, sounds like I will need to be careful. I am very confused right now if I am honest

OP posts:
AlpacaMyBags · 19/08/2015 18:47

This reply has been deleted

Message withdrawn at poster's request.

Original poster
Blossomflowers · 20/08/2015 12:13

I have an appointment with Barclays a week tomorrow, have told then what I am looking for, hope they will give me debit card as will need ti to make payments

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Original poster
Blossomflowers · 20/08/2015 12:16

I am always worried how we are going to eat when they freeze my bank account

OP posts:
User543212345 · 20/08/2015 12:27

The staff at the OR's office will be able to explain how things work (without giving advice, they have to be impartial) and honestly it won't be nearly as bad as you fear. It'll probably be a huge weight off your mind, though it won't feel like it straight away.

Re the sole trader thing - there is a provision in the insolvency act that says you need to trade either in the name you were made bankrupt, or that if you use a different trading style from the date of the bankruptcy order you need to let all the people you enter into business transactions with the name you were made bankrupt in. This is only for the period before your discharge from bankruptcy (12 months from BO). The technical manual that the Insolvency Service uses is online and describes the restrictions in bankruptcy here

Dragon is quite right about the house - you will, if it's in negative equity, be able to purchase back your interest in it for £1 plus fees. That said, if you don't want to and the mortgage is onerous you could walk away.

User543212345 · 20/08/2015 12:29

Cross post - withdraw the cash you need now (within reason) as the bank will automatically freeze your account. The OR staff can unfreeze it/release some funds to you but it's an enormous ball-ache so try to pre-empt that. If it's £thousands then it will be spotted and seen as taking the piss and they may try to claw it back, but if you withdraw enough to see you through the next few weeks and are honest about it at your interview then there's no issue.

Original poster
Blossomflowers · 20/08/2015 12:32

Thanks sweary I know I have to keep the same name for the business. I am wondering how we will live between freezing my account and new money coming in in Sept. Think there will be a couple of week with nothhing, will they make allowances fir this? I do not want to ask for help from family, they will judge me

OP posts:
User543212345 · 20/08/2015 12:35

They will make allowances - they can't seize money that is there for you to live on. Just take what you need in cash in order for it to not cause a massive headache. It can take hours to get the banks to pull their fingers out and release money - and is significantly harder if the bankrupt owes money to the same establishment due to right of offset - in order for them to live.

Bankruptcy is supposed to be a fresh start, not a punishment. How would it be just and stigma free (as it's supposed to be) if you're destitute/starving?

Original poster
Blossomflowers · 20/08/2015 12:49

Thank you again. That what I thought take some cash out, not got much left to be honest, down to my last few hundred anyway, until clients pay in Sept so guess that will go into the new account. I have been advised not to pay anything now, all seems a bit weird. Had to pay BT as could not work without phone, worried about electricity. I am finding when I speak with Business Debt advisory line I am given conflicting advice depending on which advisor I speak with

OP posts:
User543212345 · 20/08/2015 12:55

That sounds about right. Certainly once you're made bankrupt tomorrow you shouldn't pay anything. Any debts owed at that time become part of your estate and you're no longer liable for them. They cannot chase you or take action against you over them. You may have to find new energy suppliers (though I don't recall anyone ever having to do this) but there are so many of them out there I think that wouldn't be too much of a drama.

Do make sure that any money coming in is paid into the new account - once it's in a frozen account then it's really hard to get it back, even if the bank have no right to keep it.

Feel free to PM if you want.

midnightvelvetPart2 · 20/08/2015 12:59

Dont worry too much about having no money, basically put what you need into the new Barclays account. The OR will phone twice, once as a first contact & second for the interview. On the first phone call advise them you have a basic bank account & they shouldn't freeze it.

When they don't pay anything I think they are talking about creditors, not normal household bills. You're not allowed to show favour with one creditor above another, so you can pay all your domestic bills but you can't pay Creditor 1 a thousand pounds if Creditor2 is receiving nothing from you in the same timescale.

Original poster
Blossomflowers · 20/08/2015 13:00

Presumably I can continue to use the account for paying food and petrol until it is frozen, guess this is going to take a week or two?

OP posts:
midnightvelvetPart2 · 20/08/2015 13:01

They don't usually freeze your basic bank account if you tell them its for daily living

Original poster
Blossomflowers · 20/08/2015 13:04

I would have thought Electric would be considered a house hold bill but they told me not to pay that.

OP posts:
NicoleWatterson · 20/08/2015 13:17

Are you currently with Barclays? Do you owe them money?
If you are and you do, you will need to find another. I went with nationwide for a basic account if that's any help

southcoast11 · 20/08/2015 13:42

I went bankrupt a couple of years ago and had no problems opening a Barclays basic account. I had debts with Barclaycard but not Barclays Bank itself. I also had a Co-op basic account which is considered to be better as it allows full internet banking whilst bankrupt (Barclays usually don't allow internet banking although they did allow it for me for some reason). None of my basic bank accounts were frozen, just the full bank accounts (which were all in overdraft and shut down). I got debit cards for both Co-op and Barclays, not basic cash cards. I withdrew a few hundred in cash to keep me going for a few weeks but I didn't have to, as I could continue most of my everyday banking as normal.

I stopped paying almost all my creditors about a year before going bankrupt, and then all my debts were written off from the date of bankruptcy. No point paying off debts if you know you're going to be bankrupt really, as the point of it is to give you a fresh start.

I've been discharged for over a year now and have three current accounts, four savings accounts and a credit card for rebuilding credit, so it certainly is possible to get back on your feet financially afterwards.

I found the MSE forums really useful for advice and experience. There are some professional debt advisors on there who can give you accurate advice.