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Hi,
When we go bankrupt, and they apply a nil tax code to our wages, will our employers know that we have gone bankrupt? It says on the bankruptcy website that there are other reasons a nil tax code may be applied - does anyone know what any of these other reasons are?
Also, we have a loan secured on our house, so we know our house will be sold. Can we go and start renting somewhere now so that we have somewhere to live when the bankruptcy goes through? Where do we stand legally with this?

A nil tax code is applied when you don't owe any tax. This could arise as a result of earlier overpayments or a significant change in circumstances.

I assume from your post above that you are in negative equity because you have a second loan secured on your home. There is no reason why you should not give up possession now (if you are sure there is negative equity) unless you are hoping to be housed by the council.

If you are intending to do this I would suggest that you do this in consultation with your mortgage company rather than simply abandoning the house. You might be suprised how generous the building society will be in the run up to handing over possession and petitioning for bankruptcy.

And to add that so long as you agree to co-operate with the mortgage company in terms of assisting with the property agents appointed to sell the property you could buy yourself a rent free period whilst the property is being marketed and sold. You will also have to agree to move out on the sale day without fuss - but I am sure that you will be prepared to do that, as the saved mortgage payments will fund a rental deposit in a new property.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk