Bankruptcy Advice

caleo

Go for a DMP first and see if it will suit you!

Bankruptcy is pretty serious business.

Caleo

Carrie1980

By going on a DMP I understand that all my creditors will default me because I'm not making the minimum monthly payments on my debts - therefore it take me much longer to pay off so the defaults on my record - about 6 - will be on there much longer because they are on there from when the account is settled - so if my loan takes me another 5 years to pay off, the default will show up another 6 years after that? Whereas if I was to go bankrupt now it would only be 6 years. Have I made sense?! That is how I understood the default/6 yr rule to work????

MABLE

It seems to be the in thing going bankrupt. A friend of mine owes about 30k on credit cards and said he is not bothered because he lives in a rented flat and has no assets. Personally speaking you have had use of the money and you should make every effort to honour your debts. I would certainly negoiate with your creditors. Bankruptsy is not an easy option.

Carrie1980

No I completely agree - I don't want to get out of paying for money that I have spent - I'm just trying to look at the options I have. I don't really know how a DMP works but if that is what would be best for me then I would appreciate some advice. I have tried to negotiate with HSBC and Cahoot - HSBC have basically offered me another loan over nearly 12 years?????

Its not that I'm not bothered because I live with my parents and have no assets - I know that bankruptcy is a HUGE step - which is why I'm asking for the facts.

thanks

fatbelly

Hi Carrie

Have you seen the National debtline factsheet?

You can sort out the pros and cons and see which apply to you. From what you've said so far, you haven't given any reason not to declare bankruptcy.

I take it your employment/career path wouldn't be affected and you're OK with the (minimal) publicity involved in bankruptcy. And you can raise the OR and court fees.

sparkle84

Carrie1980 wrote:

By going on a DMP I understand that all my creditors will default me because I'm not making the minimum monthly payments on my debts - therefore it take me much longer to pay off so the defaults on my record - about 6 - will be on there much longer because they are on there from when the account is settled - so if my loan takes me another 5 years to pay off, the default will show up another 6 years after that? Whereas if I was to go bankrupt now it would only be 6 years. Have I made sense?! That is how I understood the default/6 yr rule to work????

No this is incorrect, the default drops off 6 years after the default is issued not when it is satisfied so if issued 1/8/2006 it will drop off on 2/8/2012.

I also feel that there is a misconception about bankrupcy "falling off" after six years, this is true to some extent - however you will constantly be asked if you have ever been declared bankrupt especially on mortgage forms, once you have been declared bankrupt even when discharged you will have to disclose this in 6, 16, 26 years. Being a discharged bankrupt doesn't dissappear in six years it is with you for life and you will have to pay over the odds for any form of credit.

It is up to you what to do but it is important that people understand the consequences.

Addicted2Chocolate

1) I live with my parents – how will my bankruptcy affect their credit history?

It will not effect their credit rating unless yiu have a financial association: eg a joint bank account or loan

2) I do not have any assets – will the OR have right to my parents assets?

No!

3) How are the payments you make for 3 years calculated? If I get a better paid / second job, are these payments increased? What if I lose my job?

The OR will look at your assessable income (wages plus beneits but not child benefit plus any other income including regular overtime) less your essential outogings (eg if you live at home you would need to proove what rent / housekeeping you pay, we see a lot of young people living at home who claim to be paying say £500pcm but no evidence of actiually paying it. cigarettes/socialising are examples of not essential outgoings) then they calculate the surplus and seek between 50% and 70% of the surplus under a Income Payments Agreement. Further info from the insolvency service technical manual:
Chapter 31.7 of the technical manual
http://www.insolvency.gov.uk/freedomofinformation/index.htm

If your income went up BEFORE DISCHARGE you have to notify the OR within 21 days and then payments would be re-assessed

4) Are discharged bankrupts ever likely to get a mortgage in the future?

it wil be on your credit file for 6 years. after this most morgtage appliations ask 'have you ever been bankrupt' so the truthful answer is yes, and the interest rate may be higher if you do get offered a mortgage

5) I have read that the OR will want to know exactly what you spent the money on and to have all your paperwork – well I couldn’t tell you what I spent it on really – as my Dad said to me ‘I basically p*ssed it up the wall.’ And also, don’t have every single credit card bill / statement etc. How will that affect me?

If the OR thinks your explanation of hte cause of your bankruptcy is not sufficient, one reason can be no supporting paperwork, then the OR may identify your case for further investigation, and they would make enquiries of third parties including obtaining copy statements, and then consider re-interviewing you if there are questions as a result of the info on the statements. Further investigation would mean that will the enquries are ongoing your case would not go forward for early discharge.

Addicted2Chocolate

oh and i would not worry about ordering copy statements unless you can get them for free. Dont pay something silly like £5 per copy statement.

EllieB_2

Hi Carrie
Whilst I agree bankruptcy is a serious step - it is there to help people who are so indebted they have no realistic prospect of repaying the debt - your post listed the monthly outgoings but not the balances although I gather you are at least £22,000 in debt? I agree with fatbelly that I cannot see anything in your posts so far to suggest that bankruptcy would not be the best option for you. Yes you could get an income payment agreement to pay for 36 months but you would still only pay a fraction of the amount you would pay on a DMP. Unless your employment precludes bankruptcy I would seriously consider this as an option. Don't take too much notice of people who say you should pay your way - I am sure you have learned your lesson about easy credit and you could as easily ask whether the banks have learned their lesson about free and easy credit - take the best option for you and ignore the guilt peddlars. Good luck. x

Carrie1980

Thank you all so much for your replies, I really appreciate the advice you've given me. I have a lot to think about!!!! I think I will wait for my CCCS interview and see what they say and how it goes and then come to a decision.

I've got a job starting in September as a Teaching Assistant - will the bankruptcy affect this? I also intend to do a Lecturing course and private tutoring to bring in some extra income.