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 bankruptcy postbag for july
 Being investigated for possible BRO

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mattdjuk Posted - 31 July 2008 : 12:11:13
Hi all,

I went BR on May 29th based on personal debt of 80K. I have just been told that I am being investigated for a BRO based on my taking credit without ability to pay it back - I can categorically state thats not true but I'm now concerned.

Is this a normal process that the OR carries out or have a Ibeen targetted specifically based on some information I may have given?

and also will it have any effect on my wife buying my share of BI?

I'm quite worried now.

14   L A T E S T    R E P L I E S    (Newest First)
mattdjuk Posted - 01 August 2008 : 10:25:57
My wife got pregnant a little unexpectedly hence the financial problems coming to a head but before that she had her yearly wage reduced when she had to change job, she then lost overtime pay which we had cme to rely on. I was carrying too much debt for sure but I was paying everything in full each month (credit cards paying the minimum) but I was having barely enough left to live on. As soon as I saw the problem I contacted Payplan and tried to sort the mess out.

If I got a BRO what happens? Will it have any effect on a 3rd party buying my share of the flat we live in?
jane.m Posted - 31 July 2008 : 16:40:16
Hi suzanne

How far do they generallty go back when deciding upon a bru or bro I was under the understanding it was 2 years and you only have to provide statements up to a year old. If you discovered that you could not pay your debts and then went on a dmp would this not prove to the receiver that you have taken resonsibility in trying to pay your creditors back and if they were going to issue you with a bru/bro would they take the fact that you have undertaken a dmp into consideration when deciding how long to give you a bru or bro for.

many thanks
Suzanne Posted - 31 July 2008 : 15:04:33
If it was only £1,000 and you had total debts of £80K, I don't think this would be enough to warrant a BRO. They usually look at 15-20%.

Did you anticipate losing your wife's contribution to the household?

Suzanne Stocker
Bankruptcy Manager
Jones Giles Ltd
mattdjuk Posted - 31 July 2008 : 14:49:46
I used my credit card after Oct 2007 to pay some bills etc, probably spent around £1000. Would that be enough for them to go for a BRO? Certainly didn't obtain any credit.
Suzanne Posted - 31 July 2008 : 14:37:05

They will ask you how you came to enter an IVA and part of your answer would cover the use of credit cards for general living expenses. Initially they may only ask for 6-12 months, and would expect the IVA supervisor to have done some research into your activities prior to entering the IVA.

Suzanne Stocker
Bankruptcy Manager
Jones Giles Ltd
Suzanne Posted - 31 July 2008 : 14:34:22
They have been trained to look at levels of debt and repayment patterns and make an initial judgement. They then make basic further enquiries before it is passed to an investigating examiner for more indepth research. They would only look at bank statements in terms of what repayments were being made and when etc. The initial examiner appears to have found a pattern that they think needs further investigation. I wouldn't worry too much about it, it may get nowhere. They would probably only be looking at the period after October 2007, if that is when your household income dropped, and any credit taken out after that.

Suzanne Stocker
Bankruptcy Manager
Jones Giles Ltd
mattdjuk Posted - 31 July 2008 : 14:23:47
Would they base that affordability on details from bank statements at each of the times?

Is this a normal process for the bankrupt? I mean is it thats they haven't singled me out specifically, its something they do for all cases or is it just where they have a sneaking suspicion you might have borrowed without means to repay?
maizie Posted - 31 July 2008 : 14:03:39
Hi Suzanne

Sorry to interrupt this conversation. I have been in an IVA for a year and going bankrupt on the 15th August. They will have to request my credit card statements from the companies themselves as this was a while ago and do not have copies myself. Will they look at more than 12 months ago as at that time I was borrowing money from my credit cards in order to live.

Suzanne Posted - 31 July 2008 : 13:57:12
Hi Matt

What they do is break down your income and expenditure at every point you obtained credit to find out whether at the time you took on the credit you had sufficient income to service it. They would be relying on the fact that at some point along the line you did not have sufficent income to service your debt, but continued to obtain further credit. It usually gets plotted out on a huge spreadsheet covering several years.

Suzanne Stocker
Bankruptcy Manager
Jones Giles Ltd
mattdjuk Posted - 31 July 2008 : 13:45:38
At the time I obtained the credit I had enough to pay it.

I mentioned that I'd been making full payment to all my loans and at least minimums to credit cards. My wife was contributing 50% to household costs up until October 2007. I had trouble paying so I entered into a DMP with Payplan offering half the monthly cost of the debt, then I reduced this again to 1/4 in Jan 2008 because my wife went on maternity leave and could only contribute minimum amounts. Can that be construed as taking credit without the ability to pay it back?

Certainly if they looked at outgoings now there wouldn't be enough left hence why I declared bankrupt and didn't try for an IVA, but surely thats not how they make this decision - some of these loans date back 5 years and at the time there was plenty left to pay them with.

How would they make this decision? Anyone with experiences to share?


Suzanne Posted - 31 July 2008 : 13:24:39
Hi Mattkjuk

What they look at is whether you were able to pay for the credit as well as your other outgoings. In the past BRU's for this have been worked out on income and expenditure and minimum payments to all creditors. If your income less expenditure meant you were unable to pay all your creditors they beleive you obtained credit with no reasonable prospect of repayment.

Suzanne Stocker
Bankruptcy Manager
Jones Giles Ltd
John Posted - 31 July 2008 : 13:12:37
A BRU means you will continue, for it's full term, 2 to 15 years, to be under the restrictions of BR even though you will still be discharged after 12 months.
I.E. you cannot be a director of a company, hold certain public offices be a judge, barrister, church warden and you must inform any potential lender if you try to borrow more than £500.
And you are unlikely to get further credit of any description in truth.

Assisting where I can.
mattdjuk Posted - 31 July 2008 : 12:29:10
What would a BRU consist of?

I did overextend on Credit but always made full payments until 6 months before my bankruptcy. I tried a DMP at reduced payment levels and tried to get an IVA. How would they decide if I had no real prospect of paying - seems extemely subjective to me, I was employed, I was earning a decent living...
John Posted - 31 July 2008 : 12:24:20
whilst it may have always been your intention to pay your debt, if the OR deems that you extended your credit levels with no real prospect of repayment then he will consider a BRO.
Remember, if the OR comes to you with a BRU first, which saves going to court,do not agree or sign immediately to the undertaking, consider the reasons and take advice before acceptance.

Assisting where I can.

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