Hello phill and welcome to the trust deed forum.

I thought I'd heard from our experts that this £500 requirement in connection to sequestration had gone away. Hopefully one of them will be able to confirm or reject this here soon.

The £500 would be to protect you against the loss of your home if it were to increase in value during the period of the bankruptcy. However I'm not sure that it's a necessary payment any more (it isn't in trust deeds... but some companies continue to charge it anyway).

Is it a private company that is helping you with the bankrutpcy?

hi thanks for your swift reply, the company dealing with this is Wilson Andrews in Glasgow. Its a bit of a grey area for us and very scary tbh. I think he the man said £500 each for myswlf and my wife. Also iam paying £132 a month and my wife £131 a month and the guy said 3 years. But having read the letter yesterdat it says a year. I thought we didnt have to pay the £1000 as there is around £8k negative equity in the house. its all above my head.Do we have to stay with this company or can we refuse to pay this £500 each. there is no chance the house will be out of negative equity after 1 year. aaaarrrggghhhh lol.

Whilst you are indeed usually discharged from the sequestration after one year, you have an obligation to pay whatever you can afford to contribute from your income for another 2 years after this.

It is normal for trustees to seek a nominal payment (ie the £500) in order for them to relinquish any interest in your property, though this is not necessarily so and will vary from firm to firm. If that is what is agreed with your trustee then it would be wise to pay it - though strictly speaking these funds should be coming from a third party as if you had £1000 to spare (which you don't) then that should be being collected in to the bankruptcy anyway regardless of property etc.

Have you already completed the forms and sent them off phill? If not then it is really up to you whether you nominate the IP at Wilson Andrews to be your trustee or not.

Hi thanks for the reply, yes the forms are away. The bottom line is will we loose our house. Also I understand the money has to cone from a 3rd party but tbh our family aren't well off at all and asking for a grand is a big thing. Why do we have to pay £132 and £131 for 3 years. When after a year were free from debt. Sorry if this sounds repeatative am just wary. Thanks again

Hi phill.

I cannot see any reason why you would lose your house in connection to your bankruptcy if the £500 payments are made, you comply with your Trustee and you keep up your mortgage payments.

If you do not make the £500 payments the risk is that the property appreciates in value. This could result in you having a liability to pay over the value of any equity that is created. If the money cannot be found by other means a sale of the property might have to happen in those circumstances.

The reason for having to make a payment towards the debts for three years is simply that this is how it works for anyone going into bankruptcy that can afford to contribute monthly towards their debts. I do understand how the different one year and three year periods can be confusing in connection to this.

Were on a rete where if mortgage interests rates go up so does our mortgage payments. Are the monthly payments that myself and wife paying towards bankruptcy £131 and £132 stay the same. What I mean is how flexabil are they. Can they be lowered if required because if mortgage goes up were in trouble.

Hi phill.

They're based upon affordability (income minus reasonable expenditure) and should be reviewed from time to time.

Accordingly any major increase in essential expenditure that hasn't been offset by an increase in income should normally mean that your payment reduces.

Hi Phill

Your income and expenditure will be assessed on a regular basis, however if there are any changes to your expenditure in between the reviews let your Trustee know.

Julie

thanks for your advice, its just a scary time.Setting up sequestration. how long does this appear on our credit file? My wife is a stay at home wife who looks after our 2 year old. She gets nothing from the government except child tax credits , its gona be a hard 3 years but worth it am sure. Its the 1k that bothers us our families are not well off and am dreading asking them. We have had no direct contact with Wilson Andrews other than letters as our debt managment team put us forward, we were with them for 3 years i wish i applied for sequestration then.

Hi Phill

Like a Trust Deed, the bankrupty will remain on your credit rating for a period of six years. Have a look over the 'Life after a Trust Deed' which will give you some additional information.

I'm slightly concerned that your wife is paying a contribution considering she isn't working. The Accountant in Bankruptcy's guidance states that the trustee will not take a contribution from social security benefits or tax credits.

Have you ever spoken to anyone from Wilson Andrews?

Julie

hi julie,
not ever spoken to anyone from Wilson Andrews only contact through letters. Do you think that my wife should be making a payment every month or £500 payment, even though some are joint debts
cheers

Hi phill.

Joint debts effectively make each of you liable for the full amount owed.
By way of example, if you have a £5000 joint loan the lender can chase either (or both) of you for the full £5000.

It does seem unusual that your wife is being asked to make a contribution each month to the bankruptcy when she has no income.

I think you should be speaking with Wilson Andrews directly to ensure you fully understand everything that is happening at their end and what the implications for you will be.

Hi, I have spoke to my ip today and he suggests that because we own a home my wife needs to pay a contribution something to do with lila, low income low something. As for a reduction if mortgage goes up, the minimum payment is £125 so my wifes would only drop to that , she's is £131 at the momment. Does any of this make sense.
Thanks

Hi phill.

If your wife qualifies for LILA (low income low asset) sequestration it can be applied for directly with the Accountant in Bankruptcy for a one-off fee of £100. However I don't think she does qualify as LILA excludes homeowners, I think perhaps you were told today that that's why another route to bankrupcy is needed.

You might want to read the "Certificate for Sequestration" page on this site which you can access from the main menu on the left (towards the bottom). I wonder if this might be a more appropriate way forwards (depending upon how far things have progressed already).

I think the minimum payment of £125 probably relates to the criteria applied by this company itself rather than any general requirement of bankruptcy.