That is great that your mum has loaned you the funds for your bankruptcy! However it does lead to a problem. Your mum has now become an unsecured creditor in your bankruptcies and should be mentioned in your Statement of Affairs. She will be treated like any other unsecured creditor. You can not show repayments to her on your I & E and legally you are not allowed to pay her back as you are breaching a section of the Bankruptcy Act which states that you are not allowed to pay one unsecured creditor in preference to the others. I would suggest that you wait until the bankruptcy is complete before repaying her!
It certainly does sound as if you are insolvent as you have more going out than coming in. You can also not afford to pay your debts as and when they fall due. Your I & E shows that you have £400 each month spare to spend on housekeeping, petrol etc. You are allowed housekeeping of approximately £500 in your scenario and therefore it will show that the OR can not make an Income Payment Agreement as there is no Disposable Income.
I know what you are thinking! The OR will not monitor your expenditure. Yes, of course, you could spend less on shopping and use the balance to help repay your mother. However you must bear in mind what I have previosly stated and the onus is on you. I am sorry that this is not what you want to hear but see this from the creditor's point of view. They are not going to be too happy if they learn that you are repaying your mother but not them.
Decided that bankruptcy is the best option
Posted - 21 October 2010 : 11:44:50
