Bankruptcy woes and pro's

Entrepreneur_en_faillite · 27 November 2005 at 12:16AM

At 11:18 on Friday 25th November 2005, I was made bankrupt.

_pale_

If anyone out there thinks that bankruptcy is an easy option then think again. It may sound appealing to have all your unsecured debts written off with the stroke of a judges pen but believe me - it isn't.

My personal case is a complicated tale of woe, which I will relate to those who are interested. Please feel free to skip to the end if you get bored!

It all started in 1996 when I started a business with my close friend Terry. Terry and I were both very disenchanted with our jobs, he was a rep for a bank and I was a financial adviser for a large chain of estate agents. We decided to set up in business as an ethical mortgage broker, estate agent and letting agent.

The business started well, although we decided very quickly that the words 'ethical' and 'estate agent' were incompatible bed fellows. We tried for many months to employ staff who would not lie to prospective buyers and sellers but to no avail. So the estate agency went by the wayside within the first year, followed fairly closely by the lettings agency.

Terry put in £10,000 of his own money and I put in £15,000. The bank provided a further £30,000 as a loan, naturally covered by the obligatory personal guarantees that go along with a business loan nowadays. In the first few years we had our ups and downs, but generally speaking the ups outweighed the downs, the business grew, and in June 2000 we went limited and purchased a rival firm for the cool sum of £250,000, mostly funded by a bank loan, covered by personal guarantees and security on a property owned by an elderly relative (neither Terry nor I had enough equity in our homes to satisfy the banks greed, sorry 'need')

Terry was killed in an accident on December 1st 2000

The tale from then on gets very convoluted, but, suffice it to say, I struggled to keep the business afloat, trying to prevent the elderly relative losing their home. However in February 2004 I was finally forced to put the company into liquidation, but not before running up quite a lot of personal debt, taken on to try to keep the company going. I started a new company with the idea that I could continue trading and start to repay some of my personal debt, and make inroads into the debt secured on the property.

This business, with the help of my new business partner and some truly amazing staff, is flourishing. Sadly, I am not!

I have managed to acquire over £300,000 of debt. I have remortgaged my house so many times to raise cash to live and to keep the business going that I am now in negative equity. And, guess what - I got offered a loan yesterday, I opened the letter just before I left to go to court to petition for bankruptcy.

I get letters in the post everyday, enticing me to get another interest free credit card or low rate loan. Getting credit is far too easy, and I for one think that it's time that the system changed. Not one of the loan companies or credit card companies asked me to provide any proof that I was able to meet the monthly repayments of any of my commitments!

Are we the only country in the world who allows a person to obtain credit without seeking any proof that they ability, or even the intent, to repay this debt?

Now I would like to help anyone who is experiencing debt problems to hopefully avoid the ultimate degradation of bankruptcy, and also to relay the processes involved, places where you can go for free help, and things to avoid like the plague!

Entreprenuer en faillite

chimp_choker · 27 November 2005 at 2:12AM

There was a piece on the bbc news a few weeks ago where someone ran up 42k on cards living the high life in london then he went bankcrupt. He said he paid 40% of his disposable income for 18 months then it was all finished.

He was smiling and laughing.

It got me thinking about it but then my wife slapped me back into reallity.... I too have started a small business as a high quality candlemaker and supplier. It really is a !!!!! getting cashflow going but, to it's favour Nat West have been a pain in the bum when I've tried to get a loan. I've failed on 3 occasions for a loan of 10k

I got the money on a CC and i'll make damn sure I pay it off so I can beat the biz manager over the head with the "I told you so" story but if he had given me it as easy as a CC did would I be the stronger person in business i am now.

I'm only new to this board and I do trust far, far too many people far too much but if good words and thoughts help you, you have them in abundance from me.

TonytheJW · 27 November 2005 at 10:53AM

Bonjour Monsieur entrepreneur en faillite

Well thats my French vocabulary exhausted!

I feel for you my friend. I had a small business back in the early 90s. I was good at the selling but not as good at running the business! We had a large house, two girls in private school, snazzy sports car for my wife. I eventually got myself into £45,000 of debt, then at the end of my tether, entered into an IVA rather than bankruptsy.

The IVA eventually collapsed because I was not able to keep up the contributions. Of course the business was collapsing, as was my self esteem.

A few months I approached the main creditors and met with them, including the Inland Revenue! They all agreed to my revised offer, without accountants fees this time, we started to get our life back. Today we are pretty much financially secure and debt free, we live a much simpler life and are content with what we have.

Surprisingly, looking back, I am grateful for the experience though. I feel that I am now a much better man, husband, father and friend, I have learnt humility and the value of real friendship. I now seek and listen carefully to wise advise and don't think that I have all the answers.

The system we live in tells us that if we were only richer or more successful we would be happy...we now both know that's just not true don't we?

I agree about the easy credit card thing as well...it's madness isn't it?

With kiind regards

Tony

kevker · 27 November 2005 at 12:00PM

I feel for you. It makes me laugh when people on here keep saying that bankruptcy is the easy way out. I know that some people do just use it to get debts written off, but those of us who struggled for years to pay off debts and have only used it as a last resort are those that will be under the most stress.

I was made bankrupt in May, and all I can say to you is that it does get better from here on in. When you have your interview with the OR, you will find them to be incredibly helpful and nice. Just make sure when you are listing your expenditure, claim for absolutely everything you need. Even if it is only a couple of pounds. The OR will soon say if he won't allow it, but you will be paying money from what is left over for 3 years. So make sure you can pay what you say you have left over.

Entrepreneur_en_faillite · 27 November 2005 at 4:19PM

chimp_choker wrote:

There was a piece on the bbc news a few weeks ago where someone ran up 42k on cards living the high life in london then he went bankcrupt. He said he paid 40% of his disposable income for 18 months then it was all finished.

He was smiling and laughing.

It got me thinking about it but then my wife slapped me back into reallity.....

Good for your wife! The sad thing is that people seem to get the impression that bankruptcy is an easy way out. Well, it may be for those who do not have a conscience, but for those members of the human race who are blessed with guilt, then bankruptcy leaves you with a feeling that you have 'ripped off' the credit card and loan companies. Whilst many reading this will say that they deserve it (and I think in some ways they need to be punished for promoting a credit based society), the problem is that all they do is increase the rates for everyone else!

Entrepreneur_en_faillite · 27 November 2005 at 4:24PM

TonytheJW wrote:

Bonjour Monsieur entrepreneur en faillite

Well thats my French vocabulary exhausted!

I feel for you my friend. I had a small business back in the early 90s. I was good at the selling but not as good at running the business! We had a large house, two girls in private school, snazzy sports car for my wife. I eventually got myself into £45,000 of debt, then at the end of my tether, entered into an IVA rather than bankruptsy.

The IVA eventually collapsed because I was not able to keep up the contributions. Of course the business was collapsing, as was my self esteem.

A few months I approached the main creditors and met with them, including the Inland Revenue! They all agreed to my revised offer, without accountants fees this time, we started to get our life back. Today we are pretty much financially secure and debt free, we live a much simpler life and are content with what we have.

Surprisingly, looking back, I am grateful for the experience though. I feel that I am now a much better man, husband, father and friend, I have learnt humility and the value of real friendship. I now seek and listen carefully to wise advise and don't think that I have all the answers.

The system we live in tells us that if we were only richer or more successful we would be happy...we now both know that's just not true don't we?

I agree about the easy credit card thing as well...it's madness isn't it?

With kiind regards

Tony

I hope that once I am through the other side of my nightmare I end up like you. Already I have started paying very careful attention to those around me who are wiser than I.

I have now realised that money really is the root of all evil!

I have met many of the worlds richest people, anmd I can say with my hand on my heart that very few of them are happier now than before they met with their fortune.

Thank you for your support.

Entrepreneur_en_faillite · 27 November 2005 at 4:29PM

kevker wrote:

I feel for you. It makes me laugh when people on here keep saying that bankruptcy is the easy way out. I know that some people do just use it to get debts written off, but those of us who struggled for years to pay off debts and have only used it as a last resort are those that will be under the most stress.

I was made bankrupt in May, and all I can say to you is that it does get better from here on in. When you have your interview with the OR, you will find them to be incredibly helpful and nice. Just make sure when you are listing your expenditure, claim for absolutely everything you need. Even if it is only a couple of pounds. The OR will soon say if he won't allow it, but you will be paying money from what is left over for 3 years. So make sure you can pay what you say you have left over.

I am in the (un)fortunate position of not actually having enough money coming in to meet all the outgoings! The situation is so bad that I am faced having to get a second job to make ends meet. Not that this frightens me, the one thing taht I am not scared of is hard work!

Who knows, in a years time (assuming my bankruptcy is only a year as I have done some things that will make the OR's toes curl!) I may well restart my entrepreural talents and go back into business and make a sucess of it. One thing is for sure i will NEVER have a loan, and I will pay the entire balance on any credit cards (If I am ever allolwed to get another that is) every month.

I am not going to go through this ever again.

johannamse · 27 November 2005 at 5:43PM

Entrepreneur_en_faillite wrote:

I am in the (un)fortunate position of not actually having enough money coming in to meet all the outgoings! The situation is so bad that I am faced having to get a second job to make ends meet.

Many people on the debt free wannabee board have two jobs. There are even a couple of people who have three. It maybe more common than you realise, so you will not be alone when/if you take the plunge.

Entrepreneur_en_faillite · 27 November 2005 at 5:48PM

The only problem with getting more than one job is having the time to fit them all in. especially as I wouldn't mind getting to see the family every now and then!

I am fortunate that my "ex-business" is still going and I will continue to have a position there, but that ties up Monday to Friday from 08:30 until 22:00 each day, so that only leaves weekends.

Addicted2Chocolate · 28 November 2005 at 11:57AM

Come on, dont tease us like that, what have you done? and when? i can give you a rough idea of whether the conduct may warrant a Bankruptcy Restrictions order..... only conduct after 01st april 2004 can be considered for a BRO...
(assuming my bankruptcy is only a year as I have done some things that will make the OR's toes curl!)

copperwasher_2 · 28 November 2005 at 12:12PM

oops
wrong button
0

Bankruptcy woes and pro's

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