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Bankruptcy advice.

Help and discussions for strategies to get out of debt
Denpot29
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Bankruptcy advice.

#220933

Postby Denpot29 » May 11th, 2019, 6:14 pm

Hi everyone,

Some advice would be appreciated, my dad is 71 retired and in some serious money trouble due to various reasons.

He’s owns his own property, a 1 bed flat (leasehold) valued at circa £225,000, he’s recently done equity release where he released £50k.

This was I thought to pay off his remaining mortgage and to clear his remaining debt.

I’ve just found out he has an IVA and debt management plan as he has around £70k of unsecured debt!

His only source of income is a state pension plus credits, he’s still paying the debt management but has now completely run out of money.

I’ve advised him his only real option is bankruptcy! Can anyone advise what the process is with the equity release, obviously this is secured on the property but the unsecured debt (huge amount) should be written off. There is no way the debt can be repaid.

Any advice would be great. I said we should visit the citizens advice for some direction.

Could he lose his home?

Thanks.

Steve.

AsleepInYorkshire
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Re: Bankruptcy advice.

#220953

Postby AsleepInYorkshire » May 11th, 2019, 7:12 pm

Denpot29 wrote:Hi everyone,

Some advice would be appreciated, my dad is 71 retired and in some serious money trouble due to various reasons.

He’s owns his own property, a 1 bed flat (leasehold) valued at circa £225,000, he’s recently done equity release where he released £50k.

This was I thought to pay off his remaining mortgage and to clear his remaining debt.

I’ve just found out he has an IVA and debt management plan as he has around £70k of unsecured debt!

His only source of income is a state pension plus credits, he’s still paying the debt management but has now completely run out of money.

I’ve advised him his only real option is bankruptcy! Can anyone advise what the process is with the equity release, obviously this is secured on the property but the unsecured debt (huge amount) should be written off. There is no way the debt can be repaid.

Any advice would be great. I said we should visit the citizens advice for some direction.

Could he lose his home?

Thanks.

Steve.


Hi Steve,

I don't wish to pry any further but may I ask for some clarity please. When you say the debt is unsecured do you mean all of the debt or some of it please? The purpose of my question is I would like to understand this particular fact very precisely. I hasten to add I am not a debt practitioner.

If all the debt is unsecured it is usually not necessary to sell assets such as the family home to repay the debt. Nor can the creditors change this in court.

AiY

johnhemming
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Re: Bankruptcy advice.

#220958

Postby johnhemming » May 11th, 2019, 7:37 pm

I wouldn't claim to be 100% on this, but my understanding is that if a property is owned by two people (say husband and wife) then the sale cannot be forced to repay debts only owed by one of them. However, a sale can be forced by bankruptcy or by a creditor if only the debtor owns the property.

This seems useful:
https://www.citizensadvice.org.uk/debt- ... ng-orders/

gryffron
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Re: Bankruptcy advice.

#221000

Postby gryffron » May 12th, 2019, 12:19 am

Denpot29 wrote:the unsecured debt (huge amount) should be written off. There is no way the debt can be repaid.

Is that true? How much equity did he give to the equity release? How much does he still own? If he still has more assets than debts then bankruptcy is unlikely to be an option. And if that is the situation, I don't think there is much chance the creditors will write off his debt. At the very least, they will want to put a second charge on his home so they get the money when it is (eventually) sold.

Whether they can force a sale is a different matter.

Equity release DURING an IVA sounds very dodgy (If that was the case?). The whole point of an IVA is that you're supposed to treat all creditors equally. So paying off the mortgage and not paying other creditors could well be a breach of his IVA terms.

[edit]just found this which says equity release can be a condition of some IVAs. Was this the case? Are you sure you know all the facts now? For example, are all his remaining debts included in the IVA?[/edit]

What to do now? First I think you need to be sure you have ALL the facts about this from your dad. Then, presumably, go to the IVA people and discuss everything honestly with them.

Gryff

Lootman
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Re: Bankruptcy advice.

#221020

Postby Lootman » May 12th, 2019, 8:58 am

gryffron wrote:
Denpot29 wrote:the unsecured debt (huge amount) should be written off. There is no way the debt can be repaid.

Is that true? How much equity did he give to the equity release? How much does he still own? If he still has more assets than debts then bankruptcy is unlikely to be an option. And if that is the situation, I don't think there is much chance the creditors will write off his debt. At the very least, they will want to put a second charge on his home so they get the money when it is (eventually) sold.

Yes, unsecured debt can and should be written off, but only if and when the assets have been run down and are inadequate to cover the debt.

So if the property equity could be reduced to zero (either through equity release, or otherwise borrowing against the property, or by selling it and spending the proceeds) and all that is left is the unsecured debt, then that unsecured debt would in effect be uncollectable. It would be written off either in a bankruptcy or simply by the creditors giving up on ever collecting.

The path to such write-offs is to first run down any existing assets and funds, whilst maintaining the debt. Bankruptcy is for those with a negative net worth only. And if you have no assets and are "judgement-proof" then you may not even need bankruptcy. You just present yourself as being a hopeless case.

Denpot29
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Re: Bankruptcy advice.

#221027

Postby Denpot29 » May 12th, 2019, 9:24 am

Thank you for your replies, I’ve only recently found out the true extent (roughly) of my dad’s debt, he constantly lies and still hasn’t fully told me the truth.

I’ll need to find out what is unsecured, I know he’s got a number of credit cards and the debt management letter states unsecured debts of just over £52k, he’s also got Credit cards/loans/overdrafts with the following companies :-

Nationwide
vanquis
Santander
Barclays

I also noticed an overdue £2k HM Revenue & customs letter which I’m not sure he’s settled.

With regards to the equity release, at the time it was roughly 25% taken out of his flat.

The current situation is his only source of income is his pension and he can’t afford all the minimum repayments per month on the debt as he’s now not working, I’m trying to at least make a plan before it gets worse.

gryffron
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Re: Bankruptcy advice.

#221033

Postby gryffron » May 12th, 2019, 9:55 am

Denpot29 wrote:With regards to the equity release, at the time it was roughly 25% taken out of his flat.

Then he still owns a big asset. Bankruptcy is unlikely to be an option. The creditors will not write off debt when he has such an asset to pursue.
Denpot29 wrote:he can’t afford all the minimum repayments per month on the debt as he’s now not working, I’m trying to at least make a plan before it gets worse.

That would/should be the point of an IVA. Creditors agree to reduced interest&repayments that the creditor can afford to allow the creditor time to recover. It should make Unmanageable debts manageable.

BUT
An IVA requires the debtor to live on very little money for many (6?) years. It is VERY hard to sustain. Most IVAs fail as the debtor cannot sustain that lifestyle for that long. And usually falls behind with other payments.
Who is his IVA with? Many IVA companies are in it for the money (for them) and create completely unsustainable plans :(

A bit of advice for you:
Try to find out the whole truth.
Is the IVA workable? Could he live on what they are allowing him? Then, has he done so? Or are there new debts not included in the IVA?
No matter how much you care for your dad, DO NOT under any circumstances, offer to pay any of his debts. You would only be helping the creditors, not him.
Talk to the IVA people. They should be sorting this. That's what they are paid to do. They should be told if there are new debts or their plan is unsustainable.

Gryff

Mike88
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Re: Bankruptcy advice.

#221085

Postby Mike88 » May 12th, 2019, 3:59 pm

I think the OP needs to investigate the reason why so much debt has been accumulated. If there is an underlying issue that needs to be tackled first.

puffster
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Re: Bankruptcy advice.

#221236

Postby puffster » May 13th, 2019, 10:31 am

I would suggest a trip to the Citizens Advice Bureau, armed with all the facts that you can find out, to get advice.

Regards, Puffster

GoSeigen
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Re: Bankruptcy advice.

#221259

Postby GoSeigen » May 13th, 2019, 11:32 am

puffster wrote:I would suggest a trip to the Citizens Advice Bureau, armed with all the facts that you can find out, to get advice.

Regards, Puffster


Puffster, the OP has actually come here for help and advice. Going to the CAB is very good general advice. However this particular board and its predecessor on The Motley Fool have a fine history of very knowledgeable people helping those in debt. e.g. there is a poster here called GoStevie who could vouch for the support given, moving from being in despair at his debt situation, to managing it, then getting out of debt and finally becoming an investor.

Perhaps some of the stalwarts have gone (Manzanilla?) but hopefully enough remain to guide the OP.

GS

dionaeamuscipula
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Re: Bankruptcy advice.

#221297

Postby dionaeamuscipula » May 13th, 2019, 1:40 pm

I believe Manzanilla's website is here:

https://debtcamel.co.uk

Manzanilla is/was a brilliant source of clear unbiased advice.

DM

GoSeigen
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Re: Bankruptcy advice.

#221328

Postby GoSeigen » May 13th, 2019, 4:10 pm

dionaeamuscipula wrote:I believe Manzanilla's website is here:

https://debtcamel.co.uk

Manzanilla is/was a brilliant source of clear unbiased advice.


Thank you DM, strongly recommend the OP to look at that site. Along with Clitheroekid [EDIT: and Carmensfella... and Mike4... and...] she was one of the gems of TMF.


GS

Denpot29
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Re: Bankruptcy advice.

#221354

Postby Denpot29 » May 13th, 2019, 5:34 pm

Thank you all again for the replies, Debts have accumulated due his failing business that he’s kept running for years, plus I’ll health over the past few years hasn’t helped.

Apparently no IVA, only a DMP and he’s contacting his debt management company tomorrow to discuss. He won’t tackle this head on so I’m limited in what I can really do.

I can’t keep lending him bits and bobs though, I have my own family to support.

Thanks.

Steve.

Denpot29
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Re: Bankruptcy advice.

#221361

Postby Denpot29 » May 13th, 2019, 6:06 pm

Denpot29 wrote:Thank you all again for the replies, Debts have accumulated due his failing business that he’s kept running for years, plus ill health over the past few years hasn’t helped.

Apparently no IVA, only a DMP and he’s contacting his debt management company tomorrow to discuss. He won’t tackle this head on so I’m limited in what I can really do.

I can’t keep lending him bits and bobs though, I have my own family to support.

Thanks.

Steve.

AsleepInYorkshire
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Re: Bankruptcy advice.

#221365

Postby AsleepInYorkshire » May 13th, 2019, 6:25 pm

Denpot29 wrote:Thank you all again for the replies, Debts have accumulated due his failing business that he’s kept running for years, plus I’ll health over the past few years hasn’t helped.

Apparently no IVA, only a DMP and he’s contacting his debt management company tomorrow to discuss. He won’t tackle this head on so I’m limited in what I can really do.

I can’t keep lending him bits and bobs though, I have my own family to support.

Thanks.

Steve.


Hi Steve,

May I ask, and only generally of course, is your fathers ill health a physical illness or an issue related to mental health? Also may I ask if he lives alone please?

AiY

Denpot29
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Re: Bankruptcy advice.

#221374

Postby Denpot29 » May 13th, 2019, 6:46 pm

It’s physical, heart condition, although I think he could he classed as a touch mental but that just my opinion!!

Lives alone, just him in his flat.

Steve.

johnhemming
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Re: Bankruptcy advice.

#221376

Postby johnhemming » May 13th, 2019, 6:50 pm

What is crucial is to get all of the facts right. He may end up in rented accommodation part funded (or all funded) by the state. However, he can have security in that situation. If he has a business which has been losing money he will have to close the business.

Lootman
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Re: Bankruptcy advice.

#221382

Postby Lootman » May 13th, 2019, 7:06 pm

GoSeigen wrote:
puffster wrote:I would suggest a trip to the Citizens Advice Bureau, armed with all the facts that you can find out, to get advice.

Puffster, the OP has actually come here for help and advice. Going to the CAB is very good general advice.

I've only been to a CAB twice in my life but on both occasions I came away with the feeling that I knew more about the topic than the well-meaning middle-aged women who volunteered there one day a week. (Most CAB staff are volunteers, not professionals).

I suppose it can't do any harm to get another opinion, but personally I'd trust the folks here far more than the volunteers at CAB.

GoSeigen wrote:However this particular board and its predecessor on The Motley Fool have a fine history of very knowledgeable people helping those in debt.

It depends who you are talking about. There was one guy on TMF (can't recall his name now but I don't think he made it over to TLF) who was a former bank officer (before he got laid off) and he had insane opinions. For instance he advised that fully discharged bankrupts should pay off their debts anyway if they later came into money. Nuts.

And he was not corrected by the other regulars there. It was probably the most cliquey board on TMF and there was a good amount of groupthink there, which I have good reasons to believe was aided and abetted by TMF management, for reasons I could speculate about but won't.

Denpot29
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Re: Bankruptcy advice.

#221391

Postby Denpot29 » May 13th, 2019, 7:32 pm

My dad’s business has been closed, only source of income is state pension topped up with credits.

I expect he needs to sell his flat to release some funds to clear the debt, I’ll also check the T’s & C’s with his equity release company, he’ll need to settle that and he could still come away with some funds.

Trouble is he’s so inept and in denial of it all. Ostrich syndrome.

paulnumbers
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Re: Bankruptcy advice.

#221408

Postby paulnumbers » May 13th, 2019, 8:59 pm

dionaeamuscipula wrote:I believe Manzanilla's website is here:

https://debtcamel.co.uk

Manzanilla is/was a brilliant source of clear unbiased advice.

DM


Still is occasionally in another place. Get ready to walk through a wormhole...

https://old.reddit.com/user/manzalily/


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