I have 3 questions. 1. how much is reasonable for essential outgoings. 2. My mortgage is currently Interest only – is it acceptable to change to repayment prior to Bankruptcy and 3. If i pay nil tax for 12 months but my income increases in that time, will it alter any outcome of the bankruptcy?
To answer your questions:
• The income and expenditure is the single most important part of bankruptcy, as if you can’t show nil surplus after your expenses you will be placed in a payment plan for 36 months after the bankruptcy – called an Income Payments Agreement or IPA. Expenses are decided according to the number of people in a household i.e. are there children? Do you have a spouse that is in / out of work, etc. As for the individual amounts, give us a call as there are too many to list here.
• You could change your mortgage to repayment prior to the bankruptcy, claiming that your bank was asking if you had any repayment vehicle in place e.g. endowment policy. It’s common knowledge that the banks are no longer impressed by interest only mortgages. This would have the added advantage of reducing any surplus income.
• No, an increase in income will not affect the outcome of the bankruptcy – it will still happen. However, you are duty bound to report any change in your circumstances as this might affect any IPA that is in place.
If you are considering bankruptcy, we will help you throughout the process and submit your application online. Court appearances for bankruptcy are no longer required. Feel free to call us for a chat or for bankruptcy help on 01425 600129.