Some questions about bankruptcy

I've been on benefits for a long time (ever since my marriage ended)
and I'm considering bankruptcy as a way of getting rid of some pretty
crippling debts. There are a couple of things that are worrying me,
though, and I'd like to hear the thoughts of people in this ng.
I've very few belongings left, but I have managed to hang onto a few
hundred pounds left by my parents (a lot less than a thousand). I
closed the account they were in and would really like to h keep this
cash for emergencies (when you've two toddlers, such emergencies can
happen all too readily). So I was wondering: do they contact every
bank and building society and ask 'has So-And-So had an account with
you?'
I'm also worried about income payment orders. I've been given to
understand that if you're on benefits, an IPO won't be made out
against you. But I'm allowed to work for a limited number of hours per
week and earn about £50 per week. Someone told me that this would be
bound to trigger the imposition of an IPO, and that this would last
for three years. Is this true? I do desperately want to have a
part-time job if I can get one.
Reply to
sally
Have you contacted your local CAB (Citizens Advice Bureau)?
Although new legislation has reduced the minimum period to 1 year (in most cases), bankruptcy still requires careful consideration.
Reply to
Doug Ramage
:
Sorry can't help much -
Dunno - it's probably best to assume so. Even if they do locate the old account can't you think of some plausible emergency expenditure ? Broken oven/heating/car - no receipt, natch ? I imagine it's illegal to hide this money from the Insolvency Practitioner / authorities but I agree with your thinking.
I believe that you can see an Insolvency Practitioner without charge if you're on benefits, so investigate this.
The best place to post (& search) for debt issues is The Motley Fool Dealing With Debt board
hth
Daytona
Reply to
Daytona
Unless you envisage acquiring substantial assets in the future (or, perhaps, getting married again) there is little point in your initiating bankruptcy. On the other hand, you can quite legitimately engage in pre-bankruptcy planning and asset protection. Thus, any funds received from the father for the benefit of the children ought to be held in trust and never commingled with your assets. That's true even if held in cash: they should be in separate envelopes, with markings on the outside showing payment in and out, and what for.
Here's what Ian Fletcher's treatise says about income payment orders (p. 203):
"Although in principle any money which constitutes the bankrupt's income is claimable as after-acquired property as and when it is paid to him, it is nevertheless the policy of the law of bankruptcy to encourage thebankrupt to continue to maintain himself and his family, both as an aspect of the desire to preserve the dignity and self-respect of the bankrupt and his dependents, and in the interests of avoiding the creation of a further burden for the resources of the state if the bankrupt's family are rendered destitute. A rule has therefore been adopted whereby the bankrupt is allowed to retain a proportion of his income to the extent deemed necessary to maintain him and his family in reasonable circumstances. [Re Graydon [1896] 1 Q.B. 417; Re Roberts [1900] 1 Q.B. 122; Re Walter [1929] 1 Ch. 647.] However, any surplus income above the figure set by the trustee would in theory be claimable, were it not for the practical difficulties of doing so in view of the bankrupt's capability to dissipate it through spending, thus rendering it unamenable to tracing. [See above, text to n. 65.] The more effective way in which to secure the receipt of the bankrupt's "surplus income" for the benefit of the state is by way of an income payments order under section 310 of the Act.
"An income payments order may be made by the court on the application of the trustee. [s. 310(1) of the Act. For procedure, including variation and review of the income payments order, see the Rules, rr. 6.189.193; Forms 6.64-6.68.] The order directs that for the period for which it is in force either the bankrupt, or the person from whom the bankrupt receives his income, must pay a specified proportion of the salary or income to the trustee. [s. 310(1), (3) of the Act.] Sums received by the trustee under an income payments order form part of the bankrupt's estate. [ibid., s. 310(5).] If the bankrupt, in violation of the terms of the order, applies the money in some other way the trustee cannot follow that payment into the hands of its recip[ient, and it is to be noted that section 307(5) of the Act provides that references to "property" within that section do not include any property which, as part of the bankrupt's income, is the subject of an income payments order under section 310. The trustee is thus prevented from establishing an alternative claimn to the sum of money in question on the premiss that it constitutes "after-acquired property" [See above.] The bankrupt's improper disposal of the money may amount to a criminal offence under s. 357: see Chapt. 13, post.] The safer course for the court to adopt wherever practicable is to require the bankrupt's employer to pay the specific proportion of income direct to the trustee, as section 310(3)(b) allows, but this needs to be tempered with a regard to the possibilities that the bankrupt may change his employment, and also that the added inconvenience caused to the employer may have a detrimental effect upon the bankrupt's employment prospects. It must be acknowledged that this more restrictive course is not open to the court in those cases where the bankrupt is self-employed.
"The definition of 'income' supplied by section 310(7) is a broad one, and includes every payment in the nature of income which is from time to [*204] time made to the bankrupt, or to which he from time to time becomes entitled. It is thus not an essential part of the concept of 'income' for the purposes of section 310 that it be produced by means of a regular or systematic course of activity or business dealing, and so the test of whether a payment constitutes 'income' is rendered largely a matter of common sense. [cf. Affleck v. Hammond [1912] 3 K.B. 162, 169, per Buckley, L.J.] A practical threshold must eventually be encountered, however, below which the bankrupt's earning activities are so infrequently performed or haphazard as to make it difficult for the court to draw up an order in the requisite manner. It has been specifically held that a bankrupt's winnings arising from gaming or wagering do not constute 'earnings' [Shoolbred v. Roberts [1900] 2 A.B. 497.] and it is also doubtful whether benefits in kind which the bankrupt may receive from an employer are properly to be treated as 'income' [Re Roberts, above, n. 81.] The concept of 'income' does however include payments received under a maintenance order made against the bankrupt's former spouse. [Re Landau [1934] 1 Ch. 549; Re Tennant's Application [1956] 2 All E.R. 753.] By contrast, where the bankrupt is in receipt of an income by virtue of the fact that he has a vested life interest in settled estate, the right to receive the income will automatically vest in the trustee following teh adjudication, beause the life interest itself, being a species of property, thereupon passes to his trustee in the ordinary way. [Re Cohen [1961] 1 Ch. 246.
"In making an income payments order, the court must adhere to the principle laid down in section 310(2), whereby the effect of the order must not be such as to reduce the income of the bankrupt below what appears to the court to be necessary for meeting the reasonable domestic needs of the bankrupt and his family, and hence what proportion of his income he should be allowed to retain in order to meet them. The term 'family' is defined in section 385(1) as meaning persons (if any) who are living with the bankrupt and are dependent on him."
The remainder of the section deals with the duration of the income payments order. These may continue for three years even though a discharge is granted after one year, and a new "income payments agreement" has been created. (See
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for descriptions of the terms of the amendments.) I would note with respect to the reference to vesting of settled property that sensible settlors and testators include a discretionary clause that allows payments to be redirected. Most private pensions vest in the trustee; public pensions do not. In real life, income payment orders imply an "excess" income which rarely exists. Even wealthy bankrupts like Ian Maxwell arrange for their income to disappear upon their being made bankrupt. Any decision you make should be based on your prospects and plans for employment and, as I mentioned, on your expectations for future assets and marriage or cohabitation.
Reply to
Tam

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