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CAB Archives - Bankruptcy UK



Should I use my pension to pay off my debts?

With the change in the pension rules, suddenly those over the age of 55 will be eligible to draw down larger sums e.g. £20,000 which could be used to settle debts. Those with long standing debts might view this as a salvation, but what are the side effects of drawing everything down and what else needs to be taken into account?

* The first thing that needs to be considered is the debt itself. How old is it and is it still enforceable? Any debt over six years old might be ‘Statute Barred’ under the Limitations Act 1980 – covered elsewhere on this website – and this needs to be investigated, perhaps by a visit to your local CAB.

* You will have to pay tax on the money you take out of your pension as though it is extra income and this might push you into a higher tax rate – again, this needs to be investigated. Although the first 25% is tax free, you will still be ‘burning away’ a good chunk of your pension in tax and we query the wisdom of doing this.

* You might be exchanging a short term problem for long term deprivation – some people are retired for three decades or more before passing away and loss of income could have a terrible effect in years to come.

* Taking a lump sum might affect your eligibility to certain benefits, especially Housing Benefit under something called ‘Deprivation of Capital’ – we recommend you investigate this thoroughly, as again, it could affect you for many years to come.

Suffice it to say, it is worth taking visiting your local CAB and taking advice before rushing headlong into something that might affect you for the rest of your life.

Bankruptcy UK offers a full bankruptcy administration service and will submit your bankruptcy application online. Court appearances are no longer required for bankruptcy. Call us for bankruptcy help on 01425 600129 or for an informal chat about your circumstances.

Bankruptcy and Social Clubs – Am I liable for the debts of the Society?

I am a member of a social club that is owned by the members. It is £73000 in debt and has to close. If the club declares bankruptcy am i liable for anything?

That really depends on the structure of the club and what category it is listed as. For example, is it a Friendly Society? And are you a Trustee? In a recent court case, the Judge declared that all members of social clubs might be personally liable, though this was not further defined. We would have preferred to have given you a black or white answer, but even a call to the Insolvency Service was inconclusive – and they have former Official Receivers working there! If you let us have a copy of the Articles of Association, we might be able to tell you more, but without further information we would be guessing.

For those considering forming social clubs at any time in the future, you might wish to consider registering the club as a limited company – consider these points:

* Form a company limited by guarantee.

* The new company would then need to register as a charity in its own right. (Registered charity status cannot be transferred

from the existing charity.)

* Transfer all assets, contracts, employees and liabilities from the organisation to the new company. This can be done at any

time, but is usually best if it coincides with the end of an accounting period, for example, year end or month end.

* The new limited company would then take over the activities and responsibilities of the old organisation.

Benefits of registering the social club as a limited company:

· criminal prosecutions are most likely to be made only against the company, not the charity’s members or trustees.

· the company is recognised as a legal entity, separate and distinct from its members, and may hold property of all kinds in its corporate name (i.e. not in the names of the individual directors/trustees)

· it avoids the expenses involved in the formal appointment of, and transfer of property to, charity trustees in the future

· the company may enter into contracts and be principally liable for losses arising from any contracts entered into, rather than the trustees

· the liability of the members of this company will normally be limited on winding up

· people may be more willing to become trustees of a company, knowing the peace of mind that comes with incorporation.

Bankruptcy UK offers bankruptcy help across the board and will submit your application online. Court appearances for bankruptcy are no longer required. Feel free to call us on 01425 600129 for a chat about your circumstances.


Bankruptcy through Citizens Advice – why am I still getting letters from my creditors?

I filed for bankruptcy in March through the CAB and paid the £100 but have still not heard anything. why is it taking so long and why am I still getting letters from my creditors?

It doesn’t sound like you have filed for bankruptcy as the CAB doesn’t charge fees and the figure of £100 doesn’t figure anywhere in the procedure. It sounds like the CAB might have recommended you for a Debt Relief Order instead, which is likely if you are out of work and have debts totalling less than £15k. The fee for this procedure is £90. If your debt level is greater than £15,000, we feel that a mistake must have been made somewhere along the line. Only the CAB can answer this.




Bankruptcy UK

Bankruptcy UK