Help needed!

t0mm

Hi all. New to the forum and need some advice on what to do from here.

Basically, i'm in about £16,000 worth of unsecured debts. These are comprised of two overdrafts (£2k and £1250), three loans (£8k, £3k and £1k) and a credit card (£1500). Most of these debts can be attributed to gambling and just general dumb over-spending during the last few years. Also have about £4,000 worth of student loan repayment still to make. My take-home pay at the end of each month is £1250, give or take a few quid.

After all of my mandatory outgoings, including rent, food, petrol to get back and forth to work, rent, gym membership (which i'm tied into for a year and costs me £60 a month), mobile phone (again still tied into a contract), car insurance etc, I have got hardly anything to live on. So far, i've never missed a payment on any of my debt, but i've been taking out more and more credit to keep up repayments and it's getting out of control. If it weren't for my overdraft, i'd already have CCJ's all over my name.

Just to compound matters even more, I have found out (was a bit confused before about the rules) that because I started working about 6 months ago and had previously been on carers allowance due to caring for my disabled mother, if I earn over £90 a week - I am not eligable to recieve this allowance... So I also owe the DWP about £1500 in overpaid CA, which I am trying to arrange a payment plan for with them directly.

So, i'm after a bit of advice on what my best route would be to get out of this situation... I am open to all ideas, but worry about the consequenses of declaring myself bankrupt - I do have a few assets that I don't mind losing - and they probably total about £3000... but would they be able to take away my car? It's only probably worth about a grand and without that i'd not be able to get to work etc, nor to get back to my mum's house to provide her care. It may well be the best option though, as i'm only 23, have very few assets and have no desire to take out further credit, purchase a house, become a managing director or get elected to public office! I just want a clean start!

Have attached a Statement of Affairs so you can see exactly what's going on.

Any help would be most appreciated! Thanks

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1250
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1250

Monthly Expense Details
Mortgage................................ 0
Secured loan repayments................. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 40
TV Licence.............................. 0
Satellite/Cable TV...................... 10
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 50
Petrol/diesel........................... 160
Road tax................................ 10
Car Insurance........................... 35
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 10
Holiday................................. 10
Emergency fund.......................... 0
Gym Membership.......................... 65
Total monthly expenses.................. 940

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 2000
Total Assets............................ 3000

No Secured Debt

Unsecured Debts
Description....................Debt......Monthly...APR
RBS Loan.......................8000......180.......10.4
RBS Loan.......................1000......25........21.9
Lloyds TSB CreditCard..........1300......30........15.9
RBS Overdraft..................2000......60........16.9
Natwest Overdraft..............1200......50........0
Black Horse Loan...............3000......100.......41.9
Total unsecured debts..........16500.....445.......-

Monthly Budget Summary
Total monthly income.................... 1,250
Expenses (including secured debts)....... 940
Available for debt repayments........... 310
Monthly UNsecured debt repayments....... 445
Surplus(deficit if negative)............ -135

Personal Balance Sheet Summary
Total assets (things you own)........... 3,000
Total Secured debt...................... -0
Total Unsecured debt.................... -16,500
Net Assets.............................. -13,500

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission.

RAS

Hi The first thing to do is for you to talk to one of the debt charities - they will advise you of your options and can discuss what is most appropriate. http://www.moneysavingexpert.com/loans/debt-help-plan#help

You need to be aware that you would not be allowed a mobile or gym membership if you went bankrupt and that you might be expected to reduce your groceries, petrol and clothing alowances as well, so you would probably end up paying quite a bit of money each month towards your debt.

t0mm

Thanks for your quick reply

I have already been on the phone to the National Debt Line and the guy was very helpful, gave me an overview of all my options but did seem to hint that bankruptcy may be appropriate.

To be honest, I wish I had never signed up to the gym - I am now tied in for a year, same goes for my mobile phone, tied into my contract until May. I'd be quite happy to lose both.

There is no possible way of me decreasing my fuel costs, that is the basic cost of me getting to work and back and to do essential care work for my disabled mother. Food and sundries cost me about £40 a week give or take, so groceries may be able to be reduced by £20? What do you think a reasonable amount to budget for clothing is? £30?

Thanks again for your help

Dunpayin

Hi Tom

I just went BR for 16K (05th Nov), and had my OR interview today, and everything's bloomin marvellous. So that's the good news. A few points:

Student loan doesn't count in BR. No dodging that one.
Gambling is a funny one. Can you avoid stating debts as from gambling? Someone more experienced will know...
Include the gym in your creditors and write it off.
Your car should be allowed.
Don't you pay any bills?
I've got to disagree with RAS. My Clothing was ok at 50, Groceries at 200, and no query on Mobile.
Entertainment aint allowed.
Put Holiday up to 30.

Good Luck

t0mm

Thanks for your message, D! Congratulations on getting through the BR process unscathed

No, I don't pay any bills - i'm living in a shared house with two other people and my rent covers all the bills.

I don't think that it'd be possible to declare my debts as having not come from gambling, but gambling is probably only about 40% of the debt - the rest is from me being an idiot and allowing myself to slip into overdrafts, then take out loans to clear the overdraft, then go back into overdraft again... you can see where this is going!!

Does the OR not take a good look at your bank statements though? My gambling has been on fruit machines in arcades etc - i'd imagine that the OR would question withdrawls of £100 made in arcades and motorway service stations...

Anyway - yeah I knew about the Student Loan thing, that's not a problem - they can continue to take the small amounts out of my salary. I'll be 100 years old before that gets paid off at this rate! Glad to hear that you think my car should be allowed That's a relief, was really worried about that one!

New SoA below:

Statement of Affairs and Personal Balance Sheet

Monthly Income Details
Monthly income after tax................ 1250
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 0
Total monthly income.................... 1250

Monthly Expense Details
Mortgage................................ 0
Secured loan repayments................. 0
Rent.................................... 300
Management charge (leasehold property).. 0
Council tax............................. 0
Electricity............................. 0
Gas..................................... 0
Oil..................................... 0
Water rates............................. 0
Telephone (land line)................... 0
Mobile phone............................ 40
TV Licence.............................. 0
Satellite/Cable TV...................... 10
Internet Services....................... 0
Groceries etc. ......................... 200
Clothing................................ 50
Petrol/diesel........................... 160
Road tax................................ 10
Car Insurance........................... 35
Car maintenance (including MOT)......... 10
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 20
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 30
Emergency fund.......................... 0
Gym Membership.......................... 65
Total monthly expenses.................. 950

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1000
Other assets............................ 2000
Total Assets............................ 3000

No Secured Debt

Unsecured Debts
Description....................Debt......Monthly...APR
RBS Loan.......................8000......180.......10.4
RBS Loan.......................1000......25........21.9
Lloyds TSB CreditCard..........1300......30........15.9
RBS Overdraft..................2000......60........16.9
Natwest Overdraft..............1200......50........0
Black Horse Loan...............3000......100.......41.9
Total unsecured debts..........16500.....445.......-

Monthly Budget Summary
Total monthly income.................... 1,250
Expenses (including secured debts)....... 950
Available for debt repayments........... 300
Monthly UNsecured debt repayments....... 445
Surplus(deficit if negative)............ -145

Personal Balance Sheet Summary
Total assets (things you own)........... 3,000
Total Secured debt...................... -0
Total Unsecured debt.................... -16,500
Net Assets.............................. -13,500

Created using the SOA calculator at https://www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission.

peachyprice

Hi Tomm,

Nothing much more to add, other than if you do decide on bankruptcy you are allowed all essential living expenses but if your surplus is over £99 you will have to pay a percentage towards your debts, this is called an IPA.

If you want to carry on with the gym you can't include it on your SoA but it can be paid from your surplus, but if you want to be shot of it you can include the remainder of the contract in your BR.

You will most likely be able to keep your mobile, especially as you are a carer for your mother, although again if you want shot of the contract and change to PAYG you can include it in your BR.

You'll have to continue with your student loan repayments so add that to your SoA. Also I'm not sure what will happen to your DWP overpayment, you may have to continue with that too.

t0mm

Hi Peachy,

Thanks for your reply. I've been told by a couple of people that my DWP overpayment will have to be paid out of my own pocket and won't be able to be a part of my BR, but the person at the National Debt Line said the opposite - he said that it would be allowed to be a part of my BR, however in the event that I ever needed to claim again, the DWP would just take money off what I owe them. I thought that advice sounded a bit suspect, but didn't question him!

I think i'll work on the assumption that I can't, but I can always ask the OR. I'm 99.9% sure that i'll be going with bankruptcy, but i've got to wait until the DWP get back to me about a repayment plan - i'd imagine that'll take a few days still.

Would you suggest to continue making payments towards my debts now? All of my loans etc get taken out between the 26th and the 1st - if I don't pay them, I should be able to get my £495 BR fee together... Actually I get my annual bonus of about £400 in this month's pay packet - that'll be helpful!

A couple more questions have come up though, hopefully someone can answer:

If I were to end up bankrupt and got an IPA, how long would that last - would it be just the one year? Or does it vary with each individual's personal circumstances?

Also, would getting a BRU/BRO (which with some gambling debts, I understand may be a possibility) affect the length of an IPA?

And finally (for now)... How long does the bankruptcy process take from intial application to the Judge banging his gavel?

Thanks everyone for your help, it is REALLY appreciated!

custard_cream_3

I'll soon find out if it's true, but the Bankruptcy Advisory Service told me that if you need to keep your mobile contract, you're normally allowed to. If you don't, however, you get include it. Basically they said the ORs nowadays weren't fussed by them. My contract is £65/month so I hope they're a bit bothered!

Waspeze

An IPA lasts for 36 months .. it won't be increased in length if you get a BRO.

If you want an SoA guide i've just had to redo mine to get a re-evaluation as they wanted to increase it but had my amounts accepted.. take a look in my thread "SoA ?" if you want some pointers

t0mm

Thanks I'll take a look at your SoA post!

So, if I were to get an IPA, would I not be discharged from the bankruptcy for 3 years instead of one? Or does the BR only last for one year, but I still need to pay for an additional 2 years?

What if my situation changed after the first year, would they want to increase my IPA payments in the event of me getting a pay rise? And on the flipside of the coin, what if I lost my job and was unable to keep up the IPA payments?

Regarding my phone, i'm not particularly bothered about keeping the contract - i'd probably be quite happy on PAYG. Probably be cheaper too as i'd be tempted to use it less, knowing that i'm paying for every minute rather than getting 1000 "free" every month... I'd like to keep the handset itself though, it has built-in Satnav, which is a godsend in my job (field-based IT engineer)

Sorry, I feel like a huge burden on this forum - so many questions to ask!

Thanks all for your help so far, it has been invaluable!

Waspeze

t0mm wrote: »

Thanks I'll take a look at your SoA post!

So, if I were to get an IPA, would I not be discharged from the bankruptcy for 3 years instead of one? Or does the BR only last for one year, but I still need to pay for an additional 2 years?

you would be discharged after one year but pay for a further two years.

t0mm wrote: »

What if my situation changed after the first year, would they want to increase my IPA payments in the event of me getting a pay rise? And on the flipside of the coin, what if I lost my job and was unable to keep up the IPA payments?

You still have to notify the OR of any changes in circumstance until the 36 months are up, an increase in pay may result in an increase in your IPA, likewise a decrease in salary may result in a reduction in your IPA.

I'vr had an increase in pay and they wanted to increase my IPA but I pointed out that everything had gone up so redid my forms and actually had a reduction in my IPA!

HTH