Whats it really really like being bankrupt??

maggirl

My situation is quite complicated. I have 59k of debt and a mortgage of 113k. The house has been valued at offers over 200k (we live in Scotland) but I dont know if this is optimistic or not, we have not put it on the market just yet. I've been getting by by using credit cards for day to day living, but I think its time I dealt with the situation.

My husband wont tell me exactly how much debt he is in.....I think it is at least 50k too...he has been on a DMP for about 18 months.

I did the online CCCS debt remedy and it is recommending bankrupcy. I know this is more difficult in Scotland. Im at a stage where I am thinking about leaving my husband and moving back to be nearer my family in England. As part of this huge life change I could consider going bankrupt. I just feel like walking away from it all, defaulting on the mortgage, which I cant afford anyway, and just starting from scratch.

But with a POSSIBLE 80k equity in our property is bankrupcy (which we would have to divide up if we spilt and also assuming it sold!) the best option??

Does it really wreck your life being bankrupt..........I have to decide really by the end of the week what I am doing.

read this for a bit more Background:



Is there anywhere where I could quickly go for an honest opinion on what it is like living with bankrupcy and how this affects you in the subsequent years. Is there anyones diary or thread that really sums it up in a nutshell??

nervousmother

Everyone on this board as a different story, there are a few diarys mine included. With that much equity it is possible you may get a trustee even in england. I am having dealings with one at the moment and not too happy, but overall I am glad I went BR.

What effects has BR had on my life? well let me think... erm I sleep better, im no longer afraid to answer the phone and dont worry all the time about debt. My life is not wrecked, its on the mend.

Is that the real value of your house? I mean have you had it valued on a quick sale basis or by a chartered surveyor, just over a year ago my own house was valued at £220k, in february it was valued at £155k. A house near me sold in region of £130k on a quick sale basis.
Although you seem to have alot of equity do you think you own it? no because you owe more than you own so are already insolvent. (with equity split with partner)
I am sorry you are considering leaving partner, it is a hard decision to make but you know whats right for you. Make sure you have family and freinds around you, i feel divorce and BR maybe too much for one person to deal with, but we are all different.
I am glad you have taken the advice off cccs. Wish you all the best and if you have anymore questions we are here.

Tobiwan_Kenobi

I'm only a few weeks in, so I can't comment on BR long term. What I can say short term is that whilst there are still many unknowns, primarily about my house, it has allowed us to look to a debt free future.

From the small amount of info you have offered, there seems a huge amount of equity in your property that would go into your BR!

As for your relationship, who knows what is right?

maggirl

sorry i forgot to put in the extra detail...

http://forums.moneysavingexpert.com/showthread.html?t=1582245&highlight=maggirl

It seems like a drastic measure to run away and go BR but sometimes the most drastic option is the best one in the long term....

also, what IS the situation if you do have a bit of equity in your property........does this make bankrupcy easier?????

headoutofsand

How do you want to wake up in the morning?

The point is this. You carry on with the OH hiding the debt ( not good) and things just get worse .

You decide you want a new start. (good)

Going BR is not a BIG problem anymore, you don't go to jail or get stoned in the street, it is a clean break from the torture that most people in debt find themselves. It is though your decision, as others have said keep us up to date;)

nervousmother

maggirl wrote: »

sorry i forgot to put in the extra detail...

http://forums.moneysavingexpert.com/showthread.html?t=1582245&highlight=maggirl

It seems like a drastic measure to run away and go BR but sometimes the most drastic option is the best one in the long term....

also, what IS the situation if you do have a bit of equity in your property........does this make bankrupcy easier?????

BR is not running away. Its standing still, taking the bull by the horns and sorting it out, running away is hiding the bills or moving house in the hope they canf find you.

Equity does not make BR either easier or worse. If you were to leave your OH the official receiver would take control of your share of the house it would be doubtful if youheard anything else about it. Other than signing of the forms ect. The house would be sold, or your half of the equity sold to your ex if he could afford it. Then your share of equity would be put into your BR pot to go towards paying their fees the goverment and finally if anything is left it would go to the creditors.

peachyprice

I don't know if this possible but can you move back to England then go BR here, which is a much simpler process, even though you have assets in Scotland?

Bankruptcy with equity is only a problem if you want to keep the house, which it doesn't sound like you do. If you don't opt for BR and sell the house to pay your debt you'll still be left with some. If you go bankrupt you'll lose the equity to BR but won't have any debts left at the end of it.

Yorkiegirl

Hi there

Myself and my husband were declared bankrupt (our own choice) 2 days ago - 23rd March 2009.

After my husband was laid off in December and we had missed our 1st (& only) mortgage payment on the house we bought 12 months ago we sat and looked at our circumstances as our relationship was at breaking point due to the financial pressure.

Knowing we had no 'excess' money to offer a debt management plan and that things were not going to improve job wise for my husband we gave the house back to the Building Society, voluntarily, and decided bankruptcy was the best thing for us.

Although it's early days the recievers office have been very helpful and the relief of knowing that we can tell creditors (MBNA, AMEX, Building society who gave us the 125% mortgage!) that we had gone bankrupt was such a relief.

I need a car for work and the current one is on HP but it looks as though we may be able to keep it as we would owe on the finance if it was sold. We also set up basic bank accounts with Barclays and explained to them we would be filing for bankruptcy and they were happy to give us this account knowing that. You can still bank online, set up Direct debits and have a debit card just no overdraft or cheque book.

It wasn't a decision we took without looking at all other avenues, we approached Birmingham Midshires but they really didn't help and we went to CAB as well as talking to various debt management agencies and I tried to give the car back but we would have owed £1,000 and I would have had nothing to buy another with, which I need for work.

We thought the recievers would come into our house and take the TV and computer etc but that is a myth. They would only take something of worth, usually over £1,000 so a plasma TV for instance but you have to list your assets anyway.

I hope this is helpful to people considering bankruptcy, through no fault of their own, who are worrying about the implications.

Rossa_3

In my case the house wasn't sold because it was jointly owned with my mother who could still pay the mortgage (in both names) we had at the time. The OR cannot force the sale of the house without the other owner's consent as they can't deprive your OH of a home and he has a half share of the equity. And assuming the mortgage is in joint names you both have a legal liability to the mortgage company so even if you go BR they will just pursue him for the whole of the mortgage.

However with the amount of debt you think he may have then it is likely that he will be forced into the same situation eventually if he isn't managing to keep up with his DMP. If the mortgage doesn't get paid and he refuses to move or sell then you would be looking at repossession anyway which amounts to much the same thing as he would have to get out once the mortgage company got a Court Order otherwise the bailiffs would come in to evict him.

The OR will allow you to keep what you need to live i.e. bed, table, sofa, food etc and any tools you need to do your job such as a computer or mobile etc. Not sure it is even worth them taking anything worth over £1,000 as it would be put into auction and would likely cost them more to sell it than they could achieve in a forced sale.

They can't deprive you of the ability to earn a living. And any money you do earn is yours to cover your living expenses. They are only likely to get an attachment order against your earnings if you earn a considerable amount of money over what you need for day to day use.

Anything on credit that is secured such as your car is ok as well as the car finance company has the first charge on the goods so the OR can't take it into consideration. i.e. to sell and recover some money for your creditors. Same goes for anything on HP such as furniture etc. The car or other goods will only be taken from you if you don't make the repayments. Though there is a rule under the Consumer Credit Act that allows you to return the goods with no more to pay once you have paid 50% of the payments....but that's another story. I could give you or anyone else more detail on that if it is needed, which as you need the car probably is not the case.

All this relates to my BR in England 15 years ago so some may not apply in Scotland. I will assume that an IVA is out of the question if your OH is already on a DMP.

There is life after BR and it doesn't wreck your life really. More like a short sharp shock and then recovery and relief from all the worry as others have said. Mine lasted for 3 years which was the min in '94. As Yorkie Girl says you can still have a bank account though no credit. But you don't want credit anyway as that got you here in the first place. Eventually after the 6 years that it stayed on my credit file I was able to get another mortgage when we moved so life got back onto a more "normal" track.

Good luck.