After Effects of Bankruptcy

jesster_2

My OH is considering bankruptcy. He doesn't own a house or anything like that, so he's probably in a fairly straightforward position.

But what we're really scared of is how long the after-effects will go on for? In terms of his credit rating, getting a mortgage a couple of years down the line, etc.

Does anyone have any words of wisdom? I know he'd be so relieved to be free of the debt and work his butt off to get himself straight again, but just want to be fully warned about what could come up to bite us later...? :eek:

Addicted2Chocolate

i replied on the other thread, but it will affect credit rating for 6 years.

Conor_3

I was discharged from Bankruptcy three years ago. I've managed to set up a business account OK, get a mobile phone contract without any problem and as a test, I applied for a credit card and was accepted although I didn't take them up on the offer. I also remortgaged the house18 months ago to reduce it from the 21 years it had to run to a 10 year one as I could afford the increased payments due to not paying out 3/4 of my income on debts.

As you can get a mortgage whilst a bankrupt, getting one a couple of years after isn't an issue. He may have to pay a higher rate of interest but he can remortgage after a couple of years.

jesster_2

Thanks loads for the info, Addicted2Chocolate and Conor. it makes a real difference to hear it from real people, as the advisors - while they've been great - do seem to vary what they say and hedge their bets a bit about what the fallout might be. Thank you! :-)

Addicted2Chocolate

can you really get a mortgage whilst bankrupt? I am surprised.

Conor wrote:

I was discharged from Bankruptcy three years ago. I've managed to set up a business account OK, get a mobile phone contract without any problem and as a test, I applied for a credit card and was accepted although I didn't take them up on the offer. I also remortgaged the house18 months ago to reduce it from the 21 years it had to run to a 10 year one as I could afford the increased payments due to not paying out 3/4 of my income on debts.

As you can get a mortgage whilst a bankrupt, getting one a couple of years after isn't an issue. He may have to pay a higher rate of interest but he can remortgage after a couple of years.

Conor_3

Addicted2Chocolate wrote:

can you really get a mortgage whilst bankrupt? I am surprised.

Yep. When I was thinking about bankruptcy, I got in touch with Gill Hankey at the Bankruptcy Advisory Service - https://www.bankruptcyadvisoryservice.co.uk . She sits on the govts advisory panel regarding credit and bankruptcy and really knows her stuff. When I used her, she used to have a couple of mortgage brokers who can help a bankrupt get a mortgage to either buy a house or secure theirs from the Official Receiver without any interest rate penalties.

I think mortgage companies are more forgiving because the last thing people want to do is lose their home and with the house market as it is, they're not likely to make a loss if the lender defaults.

dudleyboy

Hi... This really does raise the question as to why don't we all just declare bankruptcy?

What's the point in existing on a tight budget and pumping all your hard earned salary into paying off debts when I can just live the life I'd rather lead, have a riot, then declare bankruptcy / hit the reset button at the end of it and still be in the same position I am now (or even, dare i say, better off?!) having not done any of that?

I'm not trying to be facetious or make light of other people's debt problems (I have enough of my own) but it sounds to me that the after effects of bankruptcy aren't that bad. You can get a mortgage whilst bankrupt?? I can't afford to raise one now (due to house prices, not my financial situation)!

Seriously, where's the incentive to pay off debt yourself (or not generate it in the first place!)? I can think of a million other things i'd rather spend my money on than paying off (unavoidable) debt.

I know one thing - *I* won't be debt and mortgage free (that's if i can ever raise one) by the time i'm 40(!)

As you can probably tell i'm having a bad day. (forgive my rant, but seriously... where's the incentive?)

lottie26_2

Can you get a mortgage if you have an IVA?

Conor_3

dudleyboy wrote:

Hi... This really does raise the question as to why don't we all just declare bankruptcy?

What's the point in existing on a tight budget and pumping all your hard earned salary into paying off debts when I can just live the life I'd rather lead, have a riot, then declare bankruptcy / hit the reset button at the end of it and still be in the same position I am now (or even, dare i say, better off?!) having not done any of that?

I'm not trying to be facetious or make light of other people's debt problems (I have enough of my own) but it sounds to me that the after effects of bankruptcy aren't that bad. You can get a mortgage whilst bankrupt?? I can't afford to raise one now (due to house prices, not my financial situation)!

Seriously, where's the incentive to pay off debt yourself (or not generate it in the first place!)? I can think of a million other things i'd rather spend my money on than paying off (unavoidable) debt.

When I went bankrupt it was just before they were introducing the 12 month period, down from 2 years - Gill had been on the advisory panel.

When I went to see Gill, she had a good long moan about irresponsible lending and said that because bankruptcy isn't as severe as it used to be 10 years ago and with the 12 month period, it would see more people declaring. She saw it generally as a good thing as the only way to hit loan/credit card companies was in the pocket. Also as the number of bankrupts increased with more and more "Joe Averages" declaring, the stigma of being bankrupt would be greatly diminished.

Conor_3

lottie26 wrote:

Can you get a mortgage if you have an IVA?

I think this would actually be harder as you're still paying your debts so have less free income. Also the person running your IVA would get a say in it which is something a bankrupt doesn't have to worry about.

Tootsie_Roll

Conor wrote:

When I went to see Gill, she had a good long moan about irresponsible lending and said that because bankruptcy isn't as severe as it used to be 10 years ago and with the 12 month period, it would see more people declaring. She saw it generally as a good thing as the only way to hit loan/credit card companies was in the pocket. Also as the number of bankrupts increased with more and more "Joe Averages" declaring, the stigma of being bankrupt would be greatly diminished.

Wow - shocking !!

It seems the only people surprised by the massive increase in bankruptcies is the goverment - a blind fool could have seen that they were going to be abused in the way they are. I forget the exact details but there is some legislation around the corner that will make things a little bit more even again.