Question about bankruptcy

[Skippy]

Please can someone help me?

If someone is made bankrupt, is it true that the OR can seize an inheritance or windfall AFTER the bankruptcy has been discharged and 3 years of disposable income payments have been made?

Someone told me that this was the case, and this was the main reason I didn't want to be made bankrupt.

Thanks in advance

Three down, fifty seven to go until freedom!

[MelanieGiles]

Skippy

After-acquired assets cannot be captured once a bankrupt has received his/her discharge (usually after one year), but three years of disposable income payments may be made by either Court order or mutual agreement.

I think you made the right choice!

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Skippy]

Thanks Melanie. I agree that I made the right choice, but I wanted to know in case things went pear-shaped with the IVA. Hopefully that won't happen though! I read in the paper again yesterday that the chancellor might have to put taxes up by and extortionate amount which made me think about bankruptcy again! Hopefully it was just the papers scare-mongering!

Can I ask another question - if taxes were hiked up by a large amount, what would happen with my IVA? I have a clause that states there must be no variations in the first 24 months but obviously I my disposable income would be much lower. Would I have to find the money somehow, or is there a way round it?

Sorry to keep asking questions, but you all give such good advice on this website!

Three down, fifty seven to go until freedom!

[MelanieGiles]

Skippy

I think if we were to see a general rate rise on income tax (difficult to see that in the short-term - especially with change of power within the Labour party and an ever strengthening Opposition party), then creditors generally would have to accept that contributions would need adjusting across the board.

Let's face it this would have global implications for all banks and their customers, and with the amount of IVA's we have at the moment, compared to the number which were in existence the last time income tax rises were effected (even I'm too old to remember that!!!)HMG would probably have to step in an provide us all with some form of guidance note.

What is more likely to happen are increases in indirect taxes - council tax, consumer goods, petrol - and of course these need to also be borne in mind when calculating budgets. This is why I always put a contingency expense of £50 per month into all of my IVA proposals, to take into account budgeted increases. I am aware that this is not the case with other practitioners, but I have an extremely low failure rate of IVA's once they have been accepted by creditors so I believe this policy is proven.

Hope this helps to reassure you - and keep asking the questions as we love answering them.


Regards, Melanie Giles, Insolvency Practitioner for over 20 years.
View my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[Skippy]

Thanks for that Melanie. Unfortunately I don't have a contingency fund, so I've got to hope that Gordon doesn't decide to squeeze any more out of me!

Three down, fifty seven to go until freedom!

[Oliver]

Even if you don't have a contingency fund you may have expense funds that you do not use your entire allocation of funds on, i.e. you could have a medical and dental fund, clothing fund or car maintenance fund which you do not use your entire budget on each month. Try to be prudent and put this money to one side. This wouldn't necessarily help offset any tax increase but could help you out on a rainy day.

Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[Skippy]

That's what I'm trying to do Oliver. Now that Christmas is out of the way hopefully I'll be able to put a little bit aside!

Thanks for your advice everyone!

Three down, fifty seven to go until freedom!

[Oliver]

Your welcome.

I think that Christmas is one of the toughest months to get through on a budget so well done and good luck with the rest of your IVA.



Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[jamesfalla]

One of the benefits of going through the IVA process is that it forces you to live within a budget. This is going to be hard at first but you will get used to it and once learned, its a skill thats going to pay dividends for the rest of your life.

Oliver has made a really good point. Remember, if you have expenses listed on your expenditure statement that you do not pay out each month (eg car maintenance or a budget for dental) then you need to save this money so that it is available when the bill comes round.

A little tip for saving - open a savings account and actually transfer the money into it as soon as you get paid. Then its done and you won't miss it. If you wait until the end of the month to save, I will guarantee that the money will not be there.

Just remember, once the IVA is completed, not only will you be used to living within your budget, you will also have all of your monthy disposable income to yourself. If you start saving this, you will see how quickly your savings increase!

James Falla

Expert in IVA, Bankruptcy and informal Debt Management solutions, with extensive experience of solving personal debt problems over the past 10 years. I am regularly featured on BBC News, Finance Programs and Radio.

Visit my blog at: http://jamesfalla.blogs.iva.co.uk

[Skippy]

Hi James, thanks for the advice. I didn't realise that I could have a savings account while in an IVA - I thought that if there was any extra money the creditors would want it.

Regarding my medical and car budget, unfortunately that isn't going too well at the moment as most of it seems to have been spent on living. I have cut down a lot, but I still need things like hair cuts (short so every 6 weeks) and colour (every 12 weeks) and make up (I have downgraded from Clinique!) as I need to look smart for work, so I'm going to go through my budget again at the weekend to see where else I can cut down. I'm lucky in that I have a very understanding partner and mother, who, while they couldn't help me with my debts have agreed to help me if I need anything urgently. I'll get used to budgeting soon, but it's taking a bit of getting used to.



Three down, fifty seven to go until freedom!

[Oliver]

Budgeting for such a long period of time can be extremly challenging, but it sounds like you are moving in the right direction.

All the best and please keep posting about your experiences.



Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp

[Skippy]

I must admit I like paying cash! I actually feel like whatever I have is mine as it is bought and paid for.

Three down, fifty seven to go until freedom!

[Oliver]

It's very true, I was saying to a collegue just today that it is such a different feeling, physically counting and then handing cash over in shops rather than using cards.



Best Regards
Oliver

Thomas Charles and Co Ltd.
Experts in personal debt solutions.
Read customer feedback at: www.thomascharles.com/about_us.asp