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T O P I C R E V I E W
Thehitman1977
Posted - 28 September 2008 : 21:50:59 Hi - just 2 questions for you if thats OK?
Firstly I just wanted to know about the situation with your car when you are made bankrupt. I currently own a 1.6l car (02 plate) that i need to travel to work and back every day (approx. 60 miles daily). As this car is modest and i need it to get around for my job, would the official receiver consider letting me keep the vehicle? (approx value of the car is between 4-5k). There is no equity in the house.
The second question was around the Income payment order to the court. I assumed that bankruptcy would clear all debt - if this is so, why is there an arrangement to pay of creditors even after a bankruptcy order? Surely this defeats the whole point?
Thanks for any help you can offer.
1 L A T E S T R E P L I E S (Newest First)
John
Posted - 29 September 2008 : 00:14:54 Hi Q1. If your car is worth £3K or less (current auction value) you should be able to keep the vehicle as long as the OR agrees that the vehicle is required for travel to and from work. The 2nd hand car market is very stagnant at the moment so you may be surprised how low the auction value of your car may be.
Depending on the make & model most 1.6 02 plates would be worth less than £3K now. Obviously sports and executive cars still retain a little more value. You would need to ascertain the true auction value of your car.
Q2. To be declared bankrupt you have to be insolvent. This means you cannot pay your debts when they become due. If you have a disposable monthly income of £100 or more after all reasonable expenditure costs are met then you will be required, for a maximum 36 months, to pay a percentage of your monthly DI into an IPA.
So if you had £100 disposable income per month you would pay £50 X 36months. Obviously this equals a total repayment over 3 years of £1800. The IPA repayment is determined by the DI and not the level of debt. So if your total debt were £10K or £100K it's irrelevant, the balance would be written off.
By this you can see that the law requires you to pay something to your creditors after bankruptcy only if it is deemed you can afford to do so. And even then only up to a maximum of 36months.
If you do not have any DI at the end of the month then you would not be expected to contribute.
Otherwise you could be earning £20K a month with a total debt of £1Million, declare bankruptcy and pay nothing. Anyone and everyone in debt would use this tool if this were the case.
