Bankruptcy again?

bloomsberg78 · 18 July 2007 at 5:45PM

Hi all, I seem to spend my life on these boards trying to sort my wife's finances out, so please bear with me....

Quick Summary: In Late 2005 (before we were married), she admitted she had debt problems and discovered near on 30k of debt, so after taking advice she went down the bankruptcy route, which was perfect as she had no assets and was issued with an IPA for £150 for 3 years. Fine (or so I thought)

Fast forward to June 2006 and she was discharged (Yipee I hear you say). All sqaure for the first time in her adult life. Unfortunately LTSB had other ideas and prompty "upgraded" her account and gave her a credit card with a 3k limit(!) - she only earns 14.5k a year. All unbeknown to me.

In Feb we had our first baby and April we married and all going well until she confessed that her wedding dress and various other promised items ended up on her credit card (2k+). Her mum had promised to buy it for her and then backed out at the last minute (:mad: ), pleading financial problems, leaving her with the debt and this happened on a few other things too. She then gets a loan (again unbeknown to me) through LTSB for 3K and pays some of the CC off. Anyway to cut a long story short she now has over 5k of debt, her IPA has been frozen and i've dragged her off to CCCS who were brill in helping her out last time.

She's currently off work on maternity leave, but now with no money coming in and the debts spiraling, she's having to go back to work, but only p/t (child care costs even split 2 ways make it a waste of time her going back fulltime), so she will be earning £600pm which just about covers her rent, bills, basic spends and the IPA. I don't see how she can even think about paying anything but a token payment to LTSB until the IPA is paid off (another 1.5 year)

I know this sounds mercenary (and immoral?), but given that we live in rented furnished accommadation and she has litterly nothing of notable value, a credit rating already shot to pieces (and given her track record I have no intention of ever being financially connected with her, so don't need to worry about getting a mortgage together), is it worth putting up with "those" persistant phone calls and letters (which have already started) chasing her for money she doesn't have, for the next year or 2 or should she (and can she) go down the bankruptcy route again, so soon?

I know people keep saying that bankruptcy isn't easy and should never be taken lightly, etc. But quite honestly I viewed the whole process last time and it was litterly too easy (probably way too easy, given the fact she's back in the hole), it was a straightforward and painless process (maybe that was due to her personel circumstances, am sure it's not always like that). Even if she has to wait 3 years to be discharged, I don't really see that as a negative, in my opinion she needs the time to learn to manage with the money she has. and not rely on credit.

What does she have to lose?

PS:before we were married, we agreed everything finance would be split 50%/50%, however given our different financial situations I do pay more than my share, I will also make sure she has enough to get by, but I won't bail her out by paying off chunks of the debt, I helped her get back on her feet last time on the understanding she wouldn't touch credit again. I know it sounds harsh, but once bitten, twice shy.

backontheup · 18 July 2007 at 6:27PM

Bankruptcy does seem a bit extreme for the amount of debt she is in. What about an IVA? I am no expert, but I am sure that someone will be along soon to help.

Poor you though. What a terrible strain this must be, on top of having a new baby to cope with. Please dont take this the wrong way, but your wife needs to see the doctor to get some counselling about her spending habits. She clearly has a problem with money and has no sense of control over it. However, I must say, I am disgusted with your bank for giving a credit card to someone who has only just been discharged from bankruptcy.

NekoZombie · 19 July 2007 at 10:04AM

An IVA won't be suitable as you need to be debt by over 15k and have a full time job. The other possibilty is an administration order, but for that you need a CCJ. The only advice I can really give is to PM CCCS_Emily on here.

bloomsberg78 · 19 July 2007 at 11:48AM

I take your point about BR seeming extreme for the amount owed, but the point is she owes 5k+ and will be increasing as LTSB have kindly rejected the token payment(advised by CCCS) and I guess they will not be freezing the charges or interest rates.

Which means, (unless I pick up the tab) she is insolvant, and even when she goes back to work her salary will only just about cover her current IPA and living expenses (IPA has another 1.5 years to run). It won't leave anything meaningful over to cover the debt. So I suspect she is just going to get hassled for the next couple of years.

I believe that an IVA would run for 5 years and there would be no room for any error in missing payments and given the relatively low amount of income, and the amount of spare cash she will have each month to pay her creditiors (which would be close to 0), I don't think they would agree to an IVA.

I agree with you about LTSB (and am drafting a complaint to them), they are a disgrace giving her 5k of debt. They pushed her off her LTSB basic current account and "upgraded" it, and gave her a credit card, which she maxed out within 3 months and was only making min repayments. Surely alarm bells should been ringing, when a recently discharged B/R max's out a CC so quickly and only makes min repayment? - but that's banks for you, not really well known for their policies of social responsibility.

bloomsberg78 · 19 July 2007 at 11:53AM

NekoZombie wrote: »

An IVA won't be suitable as you need to be debt by over 15k and have a full time job. The other possibilty is an administration order, but for that you need a CCJ. The only advice I can really give is to PM CCCS_Emily on here.

Thanks, I will. The only thing with an administration order is that I thought the total debt had to be under 5k or is that for a completion order? I'm not sure.

Also, if an administration order is open ended, I suspect that means she will end up having this tied round her neck for the rest of her life, even if she is paying just a few pounds a month. Surely given the fact she has no assets of value, and an already destroyed credit rating, what would she lose through a second bankrupcy?

NekoZombie · 19 July 2007 at 11:58AM

bloomsberg78 wrote: »

Thanks, I will. The only thing with an administration order is that I thought the total debt had to be under 5k or is that for a completion order? I'm not sure.

Also, if an administration order is open ended, I suspect that means she will end up having this tied round her neck for the rest of her life, even if she is paying just a few pounds a month. Surely given the fact she has no assets of value, and an already destroyed credit rating, what would she lose through a second bankrupcy?

A second bankruptcy could be subject to longer terms, i.e. longer befire discharge. Fermi will know this one.

wherediditallgo · 19 July 2007 at 12:10PM

What is a Bankruptcy Restrictions Order
If the official receiver considers that the conduct of a bankrupt has been dishonest or blameworthy in some other way, he (or she) will report the facts to court and ask for a BRO to be made. The court will consider this report and any other evidence put before it, and decide whether it should make a BRO. If it does, you will be subject to certain restrictions for the period stated in the order. This can be from 2 to 15 years.

You can read the rest of the info about BROs here. They're not often imposed, especially when compared to the number of people who go BR each year, but they're not to be totally ignored either. As I understand it, it's not so much that there's longer before discharge, it's that the restrictions that normally apply to BRs (some of which are given on that page) will be held in place for a longer period of time.

Tr@cker · 19 July 2007 at 12:23PM

' Blameworthy' in bankruptcy is a big grey area but dishonest as in fraud is a very different kettle of fish.
One of my neighbours has been bankrupted TWICE first time 39k second time 50k both times for being a compulsive shopper. They are generally said to take a dim view of you on a second occasion but all the magistrate said to my neighbour was: ' Oh its you again ' told her to get some counselling and stamped the order.

Next.

fermi · 19 July 2007 at 12:25PM

Prior to the EA2002 the term for a second or subsequent bankruptcy within 15 years of the previous one was longer.

Now it is just the 12 months as normal, unless the OR sees fit to suspend automatic discharge. However, if spending or use of credit resulting in a second bankruptcy is considered to be reckless, then this could very well be grounds for a BRU/BRO as WDIAG says.

NekoZombie · 19 July 2007 at 12:29PM

I knew some people would come alon and clear it up!

bloomsberg78 · 19 July 2007 at 2:56PM

Thanks all, appreciate your help.

If I am to summarise the above it appears that potentially the BRO could be longer, which i don't believe would be a bad thing. As I said in my original post I think she needs some help in learning to deal with money and to live within her means without the distraction of banks constantly pushing more credit on to her. I tells me that the CC, Loan, Debit Card and Overdraft were never actively asked for. They kept pushing these products everytime she called up for a general banking enquiry (eg setting up a standing order), eventually she caved in. To me it's akin to offering a reformed alcohol a drink everytime you see them, if you do it enough times and on a bad day, eventually they may give in.

It's not something I really understand, as I tend to go the otherway if I feel someone is trying to force something on me, I get very irritated and would point blank refuse to purchase even if it happened to be a good product. I just refuse to be bullied, but as I have seen with my wife people are different and obviously the banks wouldn't do it if it didn't pay dividends.

Bankruptcy again?

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