Important Bankruptcy Questions Answered
If you are looking at the option of bankruptcy to deal with your debt problem we answer more of the questions that you may have.
Bankruptcy sounds like a very scary process to go through. It is true that a decision to declare yourself bankrupt should not be taken lightly.
However once you understand more about the bankruptcy procedures and get the relevant bankruptcy advice you will find that bankruptcy can often be the best debt management option to solve your debt problem.
Will I have to sell my household goods in bankruptcy?
One of the major worries that people have about bankruptcy is that you will be forced to sell all of your worldly processions.
This is simply not the case. If you declare yourself bankrupt you will almost certainly be able to keep all of your household goods including your fridge freezer, washing machine, furniture, clothes, TV, DVD player and computer.
You are allowed to keep all of your reasonable household items.
The
bankruptcy procedures mean that you would only ever be at risk of having to sell any of your goods if you have something of significant value which you do not need or could be reasonably replaced with something cheaper such as expensive antiques.
What happens to overtime income in bankruptcy?
Once you are bankrupt the official receiver will review your income and living expenditure and expect you to pay towards your debt each month if you can afford to do so.
Normally your income will be based on your basic and guaranteed earnings and potential overtime will not be taken into account.
If you then earn overtime the bankruptcy procedures will state that you have to tell the official receiver about it as and when it happens.
If the overtime you earn means that you have more money than you need to live on that month you may be obliged to pay these extra earnings towards your debts.
There may be certain circumstances when you are allowed to keep the extra overtime you earn to pay for unexpected expenses such as an unusually large car repair bill. However this is not a given and must be agreed with the official receiver before the money is spent.
Can I keep my car on HP in bankruptcy?
If you have a vehicle that is on a hire purchase (HP) agreement you may well be able to keep it if you declare yourself bankrupt. However you will need to be aware of a few things.
First you need to check the HP Companys policy on bankruptcy. Many HP companies will be happy to keep your agreement running once you are bankruptcy as long as the monthly payments are maintained. However some will not so you need to confirm where your stand.
Then you need to consider the net value of the car. This is the market value less the outstanding finance. If this figure is less than 2000 you should be allowed to keep the car as long as it is required.
If your car is worth more than 2000 you should get additional bankruptcy help from an expert as you may have to consider giving it up and getting a cheaper vehicle.
You also have to consider the amount you are paying for the HP. This must be reasonable within the context of your other bankruptcy living expenses.
Can I make a PPI claim in bankruptcy?
If you feel that you have been miss-sold PPI then there is nothing to stop you making a claim for miss-selling when you are bankrupt.
However you need to understand they if your claim is successful you will not benefit personally from any compensation received.
Any compensation will be paid to the official receiver to be shared out between your creditors.
Even if your bankruptcy has ended and you have been discharged, if you are subsequently awarded miss-selling compensation for one of your debts, it is likely that this will still be paid to the official receiver and you will not see any of it. You should take bankruptcy advice before doing this.
Can I include smoking expenses in bankruptcy?
If you are a smoker, whether or not you can include a budget to cover the cost of smoking in your bankruptcy living expenses budget is an important question.
Unfortunately there are no official guidelines for smoking expenditure.
The best advice is always to include a smoking budget in the living expenses section of your bankruptcy application form and then be prepared to discuss it with the official receiver.
More often than not you will be able to include a moderate smoking budget. However heavier smokers will probably not be able to claim for the full cost of their habit and it will have to be funded from other allowable budgets.
Make sure you have the facts
The idea of bankruptcy is extremely worrying for many people generally because they do not understand the process.
By understanding how the bankruptcy procedures will affect you and getting the right bankruptcy advice, you will be able to weigh up the advantages and disadvantages of the solution.
You can then compare the affects of bankruptcy to those of other solutions such as individual voluntary arrangements and debt management plans.
Only then will you be sure that bankruptcy is the best debt management solution for you.
by: James Falla
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