The diary of the bankrupt

MyMoneyTime

The following post I have already posted but after reading Scarletts diary as recommended by Lensman, I think it would be really helpful to me to have all the details in one place and to get some good advice from fellow MSE members along the way. Some of you have read this post before but it feels like a good place to start.

I will probably give up after three entries but my intentions are good at the moment!
.................................................

Ok, where to start.......

Going wayback, I have always had debt - I got my first credit card when I was 18 to pay my parents mortgage arrears so that just shows I was never going to be taught very well how to handle debt problems.

I am now 36, married with two children aged 8 and 5.

We have gone through the cycle of running up debt, consolidating and running it up all over again. If I knew then what I know now, I would have looked after our cash when we moved into a house that cost 38,000 (no pound sign on keyboard!) in 1997 (not that long ago is it?). I am only now beginning to realise what debt actually is and get my head out of the sand. I have found that you always think you are broke until you reach the next level of being broke if you see what I mean.

I wouldn't say we have flash cars and flash holidays, the debt is a combination of maternity leave and the cost of babies alongside lack of wages, general problems like car breakdowns, etc etc. For the latter part of last year even the food was going on credit cards.

We have made a real effort to cut back over the last few months and haven't used our credit cards for more than 50 pound this year. Low and behold, hubby loses his job. No payment care on the mortgage because we always thought he could get agency work (lorry driver) and anyway, to be honest, which I will be, he lost his job through smoking a cigarette in his lorry cab (yes he is giving up now as he hangs his head in shame).

We had our chins in the water as far as coping with each month was concerned and are not and never have been at the stage of phone calls chasing money or bailiffs, we always pay our bills and pay them on time.

As you can imagine, losing his wage is a kick up the bum to say the least. I had the usual maternity leave (well 6 months) with our kids but worked the rest of the time, 30 hrs a week at present. He has picked up a couple of agency days and is 80% sure of getting a job next week which is 10,000 pound a year less than what he was on. That's 700 pound less a month on average.

Doing a few calculations it is completely obvious we will not be able to manage. I adore my house but am really having to weigh up the benefits of struggling like mad, talking to creditors etc etc for many years or going bankrupt.

Take a look at my SOA below if you have time and you will see my problem!

Having watched my parents suffer (by the way after all those years, they lost their house at 60 years old anyway by selling it and renting it back to pay off their debts) I really want to choose life (you can tell I'm an 80s girl) rather than debt problems, being able to afford minimum payments is one thing but our finances look extremely bleak for the future.

I spoke to a lady at work today who went bankrupt in January to see if she regretted it and clearly she doesn't, she has money left and its pay day next week - wow!

Time flies by so quickly and if we do this now, next year we will be in a different place in our lives - quite literally. If we do nothing, it may all be taken away from us and I want to make the decision, not have it made for me.

I read some posts on here last night and my eyes filled with tears, not with the sadness that people seemed to have but with the relief they were feeling and the optimism that they would enjoy time with their children in the future and be able to do things with them again.

Sounds like I have made my mind up already really doesn't it?

I have many questions but after this diary entry I will see if any of you kind people will comment on my post first - are you sleeping yet??!!

PS - We are going to see a financial advisor tomorrow - a suggestion by my inlaws accountant who is coming with us. I thought that was so lovely of him because he doesn't really know us that well but its nice that people help you out when you are trouble isn't it?

Can I just ask one question - are families looked at differently to individuals when it comes to losing your home? I have read some articles that say if an OR thinks you could still afford your mortgage once the debts have gone, they may let you stay...?

With regard to the SOA, the partners income is based on him getting the job - so if he doesn't it will look a lot more gloomy and renting a house would pretty much be impossible.

Statement of Affairs and Personal Balance Sheet
Household Information
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 884
Partners monthly income after tax....... 1040
Benefits................................ 174
Other income............................ 0
Total monthly income.................... 2098
Monthly Expense Details
Mortgage................................ 841
Secured/HP loan repayments.............. 188
Rent.................................... 0
Management charge (leasehold property).. 0
Council tax............................. 107
Electricity............................. 27
Gas..................................... 84
Oil..................................... 0
Water rates............................. 46
Telephone (land line)................... 14
Mobile phone............................ 36
TV Licence.............................. 11
Satellite/Cable TV...................... 38
Internet Services....................... 17
Groceries etc. ......................... 260
Clothing................................ 25
Petrol/diesel........................... 150
Road tax................................ 25
Car Insurance........................... 45
Car maintenance (including MOT)......... 30
Car parking............................. 0
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 40
Medical (prescriptions, dentist etc).... 5
Pet insurance/vet bills................. 0
Buildings insurance..................... 10
Contents insurance...................... 10
Life assurance ......................... 114
Other insurance......................... 40
Presents (birthday, christmas etc)...... 10
Haircuts................................ 10
Entertainment........................... 10
Holiday................................. 10
Emergency fund.......................... 10
Total monthly expenses.................. 2213

Assets
Cash.................................... 0
House value (Gross)..................... 130000
Shares and bonds........................ 0
Car(s).................................. 1500
Other assets............................ 0
Total Assets............................ 131500

Secured & HP Debts
Description....................Debt......Monthly.. .APR
Mortgage...................... 124900...(841)......5.98
Secured Debt.................. 22000....(188)......7.7
Total secured & HP debts...... 146900....-.........-
Unsecured Debts
Description....................Debt......Monthly.. .APR
Overdraft......................4280......46....... .16.6
CC MBNA........................7917......40........0
CC Halifax.....................2041......21........0
Student Loan...................990.......54........3.8
Next Store Account.............402.......40........26.4
CC Barclaycard.................300.......10........17 .9
CC Tesco.......................1982......32........0
CC Mint........................1429......32........0
Total unsecured debts..........19341.....275.......-

Monthly Budget Summary
Total monthly income.................... 2,098
Expenses (including HP & secured debts). 2,213
Available for debt repayments........... -115
Monthly UNsecured debt repayments....... 275
Amount short for making debt repayments. -390
Personal Balance Sheet Summary
Total assets (things you own)........... 131,500
Total HP & Secured debt................. -146,900
Total Unsecured debt.................... -19,341
Net Assets.............................. -34,741
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.



Please see my next post if you have any comments on my SOA.

MyMoneyTime

Since posting this last message, I have had many comments about the SOA and am starting to get to grips with what you can put down and what you can't.

I was very confident about going BR a week ago but its all becoming a little too real now. However hubby has had a change of heart too in that he wasn't too sure and now is certain he wants to go BR!

The next step is to visit CAB on Monday morning as my questions are a little more definite now and hopefully I can pay attention and ask my questions and make much more sense of the whole situation.

One thing I am understanding more is the timing issue. I had concerns that as soon as you were declared BR a fanfare or something happened and the whole world would know and two large tattooed men would rip my family from their home.

After reading a few posts here, it seems quite clear that you can almost be discharged before your house gets repossessed. Not sure how I will deal with this as I like things 'just so' and sorted out.

We have made enquiries about viewing a rental property on Monday also - I thought it may help me. If I can view a property and get excited about living there then it will make me feel better about leaving my own home. If however the whole thing fills me with dread, I shall have some work to do on my emotions!

The creditors ringing up is also something concerning me but I suppose if you know you have no intention of paying them then their threats are wasted and you just have to be strong.

My topic of the day is rental.

I have never rented a property so do not know anything about it. Is it purely rent that you have to think about in terms of cost or are there fees popping up left, right and centre?

I am considering moving to rented after we are BR as it seems quite obvious from this site that you have a lot more time than I had imagined.

Do you tell an estate agent your situation - best to be honest? I think I would live in fear if I skirted around the truth - I'd be worried the LL or EA would find out and have us evicted.

I have read about 6 months rent up front as a way of getting around the problem. Do they treat you differently or is money money at the end of the day and as long as they are getting rent - in this case, a whole lot of it in one go, why should they care?

What about letters and phonecalls from creditors. I assume you keep going back to your property to collect post or having it redirected would probably be less heartbreaking.

Is this too simple or would it be easy to avoid creditors calls if you cancel your landline once BR? we could then just use our mobiles although I suppose a lot of phonecalls may be necessary and that would be costly on a mobile. They do have plugs though so I guess I could pull the plugs out so we don't get disturbed in the evenings or the weekends.

When you move into your rented and have to contact utility companies and the like, can you set up monthly DDs or do you end up having to pay quarterly bills? What about your mobile contract, do you just tell them you have moved, I guess they don't need to know why.

Stop rambling, start sleeping........... :hello:

Lensman_2

Let me be the first to welcome you on the start of your diary.

I know that you are still thinking on it. So please keep us posted as you go through the decisions - what ever way they go. More than one member has had the same problem deciding whether to keep their loved house or let it go.

So Sad Angel posted this in her reply to my first thread.

Anyway...welcome to the `rollercoaster`...try & enjoy the ride!!!!!

Wise words indeed and they have stuck with me. She was spot on.

Good luck on the rollercoaster then MyMoneyTime. I wish you the very best outcome possible.

Jim

So_Sad_Angel

Oh Jim Honey.....I did`nt realise my words had such meaning!! My aim always is to reassure & help people realise that there is a way to get through debt crisis....thankyou again for your reference to my comments. xx

Hi MMT (hope the abbrieviation is acceptable).....thankyou for your very informative posts....if anything your confidence to get this debt thing sorted is definately growning....its amazing what a little knowledge, & speaking through your situation with those who have experienced similar, can do.

If the house has to go then so be it. I rented for the first time ever in 30 years since leaving school & realise that its so liberating....if you don`t like one place then you are free to look around & there is plenty out there ...especially near good schools etc.

In my case the last renovation project was the final straw & that property has been empty since June08 & arrears growing....still un-repossessed!!! & as you say its a long process. I have now set up a mail redirection to cover all mail.

Rental utilities etc are same as if you own a property....choose your provider & set up DDR monthly has been no problem at all...done! Sometimes LL will need guarantor or 6 mths up front ....additionally you will need a bond (which is generally one off pmt of one mth rent + £100 usually).

I will also amend the quote I gave to Jim/lensman all those months ago to.....
......yes debt IS a `rollercoaster`....but one where YOU can decide when to get off !!!

Its late now Sweetie but hope you can see the light,

Angexx

Waldir

Hi,

I'm not sure this is good advice, as I don't have any opinion or experience about bankruptcy, but your SOA doesn't seem too critical...

Can't you reduce your mortage payments to £623/month (£124900@5.95%APR=£623/month interest-only)? I know it's good to repay some capital, but you'd rather use the extra £218 to repay the other debts first (those with higher interest rate (26.4%!)).

Switch mobile phone to PAYG, stop satellite... gas will be cheaper during summer... it seems possible to fight for it.
And for £114 I think life insurance is killing you

dalip

Hi and welcome.

I have to disagree slightly with so sad:o in that you can get off the ride when ever you want. BC is like the big dipper once you are on there's no stopping it! There will be high points and low points and there may be some suprises along the way,depends on what fair you go to:D as to how good the ride will be.

Anyway you are right to get as much info as possible as bc is life changing and will affect you for many years to come.

Some of your allowances may be altered either by yourself and the knowledgable on here;) (highered) or by the OR(lowered usually:rolleyes: )if you decide to go bc.The OR may also have an interest in your life insurance but they do normally allow you to buy it back at £50.

Might be worth you looking at whether you could afford the mortgage and SL if all others debts where gone,even if your OH does not get the job.You mortgage and SL are quite low so check out rental for your needs, for your area and see if there is a marked difference. If your home is in negative equity you may be able to keep it.

Cab are extreemly busy at the moment so if you get no joy on monday(not sure if you have an actual appointment)then there are a couple of numbers in my sig you could try but again they are very busy too.

Good luck you sound positive so keep those thoughts.Dx

startagain_2

Hello and Welcome from me .............

There have been a couple of times on this "ride" where I have wanted to shout "Stop, I wan't to get off" but looking at the big picture, I know that what I have done is right and that eventually life will take on a whole new meaning as the years of debt become a deep and distant memory rather than a way of life!

Best wishes
SA

bluebird36

Hello MMT,

:T

thank you for sharing your ups and downs with us. I will be following your journey and hope that all will turn out well for you, no matter what you decide to do.

best wishes,

MyMoneyTime

I have taken on board comments regarding an SOA.

Just to get things straight - does the OR see this or is it just a guide so that you know where you are and you complete forms with this information? I suppose the form filling with be a combination of where we are now with the debts all listed and where we will be financially in rented accommodation so that they can decide how much we would pay on an IPA.

The following SOA I have based on achieving bankruptcy and what our life would be like in rented accommodation - so really I guess the figures are leading into the IPA question.

Have I completed it correctly this time?

I have left the high life insurance in as I do not intend to cancel that until I have a new policy that isn't mortgage related and I have no idea how much this would cost a month.

I also have a problem with 'partners' income because at the moment he is unemployed but does get the odd agency day (by the way, does it matter to bankruptcy if you were sacked from your job?).

If he gets a job which he is going for next week he will get around 1,040 a month net.

If I put zero for partners income, it will clearly put us in dire straits which I guess will help with an IPA!

How can they sort an IPA when you are an agency worker because one month you could be skint and the next quids in!

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 884
Partners monthly income after tax....... 1040
Benefits................................ 174
Other income............................ 0
Total monthly income.................... 2098
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 650
Management charge (leasehold property).. 0
Council tax............................. 110
Electricity............................. 60
Gas..................................... 60
Oil..................................... 0
Water rates............................. 46
Telephone (land line)................... 50
Mobile phone............................ 0
TV Licence.............................. 11
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 300
Clothing................................ 20
Petrol/diesel........................... 150
Road tax................................ 25
Car Insurance........................... 45
Car maintenance (including MOT)......... 30
Car parking............................. 6
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 40
Medical (prescriptions, dentist etc).... 5
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 20
Life assurance ......................... 114
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 20
Entertainment........................... 0
Holiday................................. 25
Emergency fund.......................... 25
Total monthly expenses.................. 1812

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1500
Other assets............................ 0
Total Assets............................ 1500

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-

Monthly Budget Summary
Total monthly income.................... 2,098
Expenses (including HP & secured debts). 1,812
Available for debt repayments........... 286
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 286
Personal Balance Sheet Summary
Total assets (things you own)........... 1,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -0
Net Assets.............................. 1,500
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.[/font]

fiveyearplan

MyMoneyTime wrote: »

I have taken on board comments regarding an SOA.

Just to get things straight - does the OR see this YES or is it just a guide so that you know where you are and you complete forms with this information? I suppose the form filling with be a combination of where we are now with the debts all listed and where we will be financially in rented accommodation so that they can decide how much we would pay on an IPA. leave off the debts and just put your living expenses.

The following SOA I have based on achieving bankruptcy and what our life would be like in rented accommodation - so really I guess the figures are leading into the IPA question. If you are still in your mortgaged home when you go BR you need to put those expenses - SOA must be as of the date of BR.

Have I completed it correctly this time?

I have left the high life insurance in as I do not intend to cancel that until I have a new policy that isn't mortgage related and I have no idea how much this would cost a month. OR will have an interest in any life policy that isn't mortgage related so best to wait until discharged

I also have a problem with 'partners' income because at the moment he is unemployed but does get the odd agency day (by the way, does it matter to bankruptcy if you were sacked from your job?). No being sacked has no relevance.

If he gets a job which he is going for next week he will get around 1,040 a month net. Good luck to him!

If I put zero for partners income, it will clearly put us in dire straits which I guess will help with an IPA!

How can they sort an IPA when you are an agency worker because one month you could be skint and the next quids in!

Household Information[/b]
Number of adults in household........... 2
Number of children in household......... 2
Number of cars owned.................... 2
Monthly Income Details
Monthly income after tax................ 884
Partners monthly income after tax....... 1040
Benefits................................ 174
Other income............................ 0
Total monthly income.................... 2098
Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 650
Management charge (leasehold property).. 0
Council tax............................. 110
Electricity............................. 60
Gas..................................... 60
Oil..................................... 0
Water rates............................. 46
Telephone (land line)................... 50
Mobile phone............................ 0
TV Licence.............................. 11 12
Satellite/Cable TV...................... 0
Internet Services....................... 0
Groceries etc. ......................... 300 450-500
Clothing................................ 20 80
Petrol/diesel........................... 150
Road tax................................ 25
Car Insurance........................... 45
Car maintenance (including MOT)......... 30
Car parking............................. 6
Other travel............................ 0
Childcare/nursery....................... 0
Other child related expenses............ 40
Medical (prescriptions, dentist etc).... 5
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 20
Life assurance ......................... 114
Other insurance......................... 0
Presents (birthday, christmas etc)...... 0
Haircuts................................ 20
Entertainment........................... 0
Holiday................................. 25
Emergency fund.......................... 25 not usually allowed but leave in
Total monthly expenses.................. 1812

Assets
Cash.................................... 0
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 1500
Other assets............................ 0
Total Assets............................ 1500

No Secured nor Hire Purchase Debts
Unsecured Debts
Description....................Debt......Monthly...APR
Total unsecured debts..........0.........0.........-

Monthly Budget Summary
Total monthly income.................... 2,098
Expenses (including HP & secured debts). 1,812
Available for debt repayments........... 286
Monthly UNsecured debt repayments....... 0
Amount left after debt repayments....... 286
Personal Balance Sheet Summary
Total assets (things you own)........... 1,500
Total HP & Secured debt................. -0
Total Unsecured debt.................... -0
Net Assets.............................. 1,500
Created using the SOA calculator at www.makesenseofcards.com.
Reproduced on Moneysavingexpert with permission, using IE browser.[/font]

I've made a few comments - is it just you going BR or both of you?

Lensman_2

MMT - it is usual to put the mortgage and secured loans in and the value of mortgaged house in the "assets" unless you plan to wait (for maybe 18 months) for that house to be repossesed sold before you go BR. (This is what my strategy is).

If you do this, the OR will take responsibility for both the secured debt (mortgage and loan) and the money in the house if you go BR now.

All that assumes that you are definately going in to rented.