Considering Bankruptcy need advice.

michelle984

Hi everyone i'm quite new to this just registered today so bare with me if i mess anything up!!! ha ha ha.
I have a question relating to bankruptcy that i'm hoping someone could maybe give me some advice on. My personal circumstances and changed quite a bit over the last six months. i am now receiving state benefit and i am no loner in a position to mean my monthly credit commitments. i have tried coming to an informal arrangement with my creditors some have been great others not so. Anyway the upshot is i was a little ambitious with my financial statement and looking at it realistically i have no disposable income. therefore i feel bankruptcy is my only option at present.

My question is i have a particular loan that my friend very kindly garantored for me, i have not missed one payment on this loan as i do not wish to have any effect on my friends credit rating. If i was to save up to money and pay this loan off before going down the bankruptcy route would the OR pick up on this and will is cause me any problems with the bankruptcy.

Sorry to babble on like i say my first post thanks everyone :rolleyes:

maxmycardagain

firstly you MUST get PROPER advice off the help lines/places/sites lice CCCS, national debt line and the CAB.

if your mate stood official guarantor for the loan they will get chased by the lender id guess, thats what standing guarantor means, the OR probably wont even know about it (the guarantor bit, not the loan) paying the loan off could be seen as giving a creditor prefferential payment but i doubt they will hand it back!, i sold a vehicle (at market value) and paid the HP off, and the OR wasnt bothered.

sieve

Hi Michelle, firstly welcome to the forum

Your first steps to deal with this should really be to speak to some of the debt charities to see what they suggest. It may be that there are other options as an alternative as BR is really something to avoid if you can. However of course if it proves to be your only valid option, we will give you all the support you might need on here too.

With regards to the loan that your friend guarantored, I don't think it is good news as the company is likely to chase your friend for payment rather than you - think of it as a loan in joint names. If you paid it off now, knowing that you were going to go bankrupt, I have a feeling the OR will look at it as giving one of your creditors preferential treatment, which is likely to end up with you getting a bankruptcy restriction order/undertaking which will likely last a lot longer than your bankruptcy itself.

But call some of these guys and see what they say. Also if you post your SOA on here, it will help us get a better picture of your situation.

SOA link: http://makesenseofcards.co.uk/soacalc.html

Advice:

www.cccs.co.uk
www.nationaldebtline.co.uk
www.payplan.com

All the best,

Sieve

michelle984

Thankyou both for your reply's
I did speak to cccs a few months back and at the time i had no desposable income according to them. Ironically before i left my job i worked for an Insolvency Practitioner preparing IVA's for 3 years so kinda have a good idea of my options.

I have attatched (Hopefully!!!) my income and expenditure but think it is a little optomistic this houskeeping is for me and 2 children.
INCOME AND EXPENDITURE AS AT 22ND NOVEMBER 2008
Monthly Income£
Income Support262
Child Tax Credits358
Child Benefit136
756
Monthly Expenditure
Water Rates32
Electricity41
Gas80
Telephone & Internet21
Mobile20
Housekeeping250
TV Licence12
Clothes30
Traveling Expenses100
Car Servicing/MOT40
Sundries30
656
Monthly Surplus Available to Creditors
100
(please excuse the state of the I/E not sure how to attatched documents)

I just do not want to involve my friend in this at all it's not her fault and i don't want anything to come back on her. If she was to pay the loan off before i proceed then i'm maybe thinking this shouldn't cause any problems. I mean if the money for paying this loan off came out of her bank account then as far as anyone is concerned she has paid the loan not me if you get what i'm saying???

My debt level is around £12,000 my main creditor being welcome finance at around £6,000. There calling me all the time and i just won't speak to them as there's nothing i can say to them they want £400 to bring account up to date then they will accept a redued payment of £96 per month but i don't have £400!! It's so different when this is you, when i was doing my job i was so confident and understanding with people and didn't let creditors phase me at all but i just feel in limbo i just want to draw a line thorugh it all and start again i do not want anymore credit my ex partner left me in such a mess.

I have no asset's i rent my property i do have a car it's a banger worth £100 if i'm lucky!!! ha ha ha If the OR want's me to get rid then no problem.

It's just this blooming loan looming over me preventing me from doing what i know i need to do.

Thanks again for listening to my nonsence!!!

sieve

michelle984 wrote: »

I just do not want to involve my friend in this at all it's not her fault and i don't want anything to come back on her. If she was to pay the loan off before i proceed then i'm maybe thinking this shouldn't cause any problems. I mean if the money for paying this loan off came out of her bank account then as far as anyone is concerned she has paid the loan not me if you get what i'm saying???

This may be a stupid question but how would you then repay your friend? Your OR will want to see bank statements going back 1-2 years and if there's big withdrawals that you can't explain, he is going to get suspicious

michelle984

I'm thinking maybe save a little and borrow some of mi mum so nothing showing in my bank account.

sieve

michelle984 wrote: »

I'm thinking maybe save a little and borrow some of mi mum so nothing showing in my bank account.

If you're paying out of your surplus, fine. But if you are saving fairly hefty amounts and do not declare them to the OR, or you borrow off your mum, I think you are actually breaking the law.

Also I fear that if you go BR and then start borrowing from peter to pay paul again, you will end up in the same situation further down the line.

Sorry to scare but what you are saying is worring me, for your sake

Let us know what the charities I mentioned earlier are saying - they will help paint the bigger picture and advise on what your options are.

skylight

The loan to your friend. You defaulting on it will not (on its own) affect her own credit file. Its the association with you that will affect that. She would get defaults if she then fails to pay back the loan. The assocation can only be taken off once the loan has gone.

You cannot pay it off before BR - its showing preferential treat over other creditors and ORs can reverse this if they want to. How much is owing? and how long have you got left to pay?? From her point of view, its risky for her to pay back the loan and for you to then pay back her (in case you don't pay) - regardless of how good friends you are, nothing is guaranteed in life. But you could always ask. You have £100 surplus from your SOA. Being on benefits will mean that you will NOT have an IPA to pay, so you could use that surplus to pay her back.

I know that this is not "right", but I also understand how difficult it can be to avoid leaving friends and relatives dumped with stuff because of our mistakes.

michelle984

Thank's sieve
Yea the debt is for around £1,200 not got any ccj's or anything like that at mo on anything been issued with a couple of default notices i've come to arrangements with most of the creditors so paying around a fiver a month on most. God i don't wanna be breaking the law!!! crikey. you've given me some food for thought so i will definatley call the numbers you have provided and seek their advice. My main concern is that if i did go bankrupt still owning money on this loan i know the company will seek the full amount off my friend but will it affect HER credit rating if she continues to pay the loan. my point been will my bankruptcy have any effect on her been associated with my via the loan.

Thank again sieve