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My BR Experiance
money_fool
Posts: 36 Forumite
I have not posted on the forum before but, as I suspect of many others, I have been reading the posts and absorbing the advice for many months now. I have even figured out what all the abbreviations mean!
I would like to give a big ‘thank you’ to everyone who contributes as this really is a place where folks considering or going through BR can gain valuable help and guidance.
Anyhow, as I have recently been AD after my year in BR I thought I would share my story. Obviously everyone’s circumstances are different but if you are reading this I guess we have shared the same thoughts….
I am approaching fifty and have an OH and three school age children. I live in a mortgaged property in a fairly nice area and I am self employed.
Having not used any new credit for 20 months or so, I now realise that the cause of my debt was really very simple. We spent more than we earned and did not really budget.
The debt was all on unsecured loans, CC etc and was built up over years. It’s the same story that you will read on the forum; using one loan to pay off another, swapping CC debits to lower interest alternatives. Putting the big bills on a CC with the full intention of paying them off – but something else always came along…
I earn around the £60k mark (and have for sometime) and my OH was working part time selling new homes and earning around £16K. So, by many standards we had a good income. However I still found that at the end of each month I would be using an overdraft to live on or taking cash out on a CC.
I do not think we have/had a lavish lifestyle. We have the occasional meal out as a family (every two months or so). Holidays are typically camping in the UK. Neither of us spends time in the pub, gambles or has expensive hobbies. The debt just built up over time.
Around the summer of 2008 it all started to get too much. The newspapers were full of stories about the subprime mortgage issues in the US, banks were starting to get stricter about lending and I went over my overdraft limit a few times (always cleared within a week or so) and First Direct decided to close my account. I still owed them about 2k.
This was more of an annoyance for me rather than anything else as I had another account I used for my SE business that acted just like a current account. I arranged to payoff the debt with FD at £100 per month and everyone was happy. However the effect of not having the overdraft meant that I started to miss payments on other CC’s, loans etc and was always trying to catch up – which then caused me a problem for the next month and so on etc. What I really needed was a £10k windfall……
And one turned up in the form or a CC from Virgin. I had had an account with them in the past and they sent me a shiny new card – with a £15k limit. Now I had every intention of only using the CC to help me through the rough period – but you guessed it – it was soon full and any space I had created on my existing cards was soon used up. Again, this was on day to day stuff – I am still waiting to get that new telly I have been promising myself for a few years now.
A few months later and the penny started to drop. I was in the dodo and with another tax bill due in January; things were only going to get worse. I missed a couple of mortgage repayments and everything was starting to spiral.
From a financial point of view, life was grim. And then my OH got laid-off as the new homes market started to suffer. Just something else to deal with I guess..
So I started to look at the situation and see what could be done. I started to trawl the internet for advice (I imagine that everyone else who is reading this has done the same thing).
An IVA appeared attractive; wipe out 75% of your debts, manageable monthly payments and avoid the stigma of going bankrupt – well that’s what they tell you. However I did apply at one of the companies that were bombarding me with advertising and was told all would be OK. But I also kept looking for more information.
I called the CCCS and had an interview and complete the expenditure forms. This really showed me that I simply did not earn enough. I could say that maybe it showed I was spending too much – but nothing appeared to be excessive or out of place. This difference between income and expenditure should have been obvious to me but for whatever reason I had just been carrying on and, I guess, avoiding the issue.
The CCCS told me to contact all my creditors, offer them a £1 a month and then try and sort out my expenditure – which I did. I tried to get the CCCS to set up a repayment plan – but they said no. Not until my expenditure form showed I could afford it. This really did start to get me thinking.
By now I was receiving lots (and I do mean lots) of phone calls and letters threaten all sorts of things. I even had some hand-delivered ‘calling cards’ saying they would be back. Now I know all the advice is to stay calm, state the fact that you have no spare money and offer an affordable payment alternative – but it starts to grind you down when you are doing this every day.
So I thought the IVA would be a way out of this mess and looked into it some more. It’s around this time I started to read the posts on this forum and realised that BR was a realistic option.
I think the one thing that really helped me make up my mind on what to do (apart from being broke!) was speaking to an accountant I knew. I was really honest with her and she said that BR was the best option. Her reasoning was roughly:
Having decided that BR was for me I checked into a few things, basically if I was going BR I might as well plan it as much as I could.
The property is in joint names. About 12 months prior I had a valuation done as I thought about increasing the mortgage to payoff some of the debt. They put a value of £330k on the house. I had a current mortgage of £245k – so a lot of equity that would be taken by the OR.
I explained my situation to a local Chartered Surveyor and had a professional red-book valuation performed (£150). House prices had started to fall in recent months and he placed a ‘quick sale’ price of £220k on the house – negative equity. This was £30k less than a couple of local estate agents had valued it at for a quick sale.
Loans and CCs etc. All of these were just in my name so no need for my OH to join me in the BR.
Expenditure and a possible IPA. If you are reading this then I am assuming you know that the OR will require you to pay an IPA for three years to help recover some of the debt. However the value of your IPA will be calculated after reasonable living expenses have been deducted from your salary. The big problem I had was ‘what is reasonable’, what can you claim for and how much can that claim be for? This is where this forum really helped. There is a lot of advice and assistance on completing your SOA. If you are planning on going BR you really need to work on your SOA.
I already had a £6k tax debt and this was going to get worse in January when the next instalment was due. One thing I found out was that you are not required to pay any tax during the year of your BR. So if I could delay going BR until April it would be the next tax year and I would not have to pay any tax in that year.
I had a car on HP and knew the chances of keeping it were going to be slim and it was an outgoing every month I could do without. So I stopped paying the HP agreement (this is where I got the court fees) and waited for them to come around and collect it. Any money owed on the HP agreement would fall into the BR. I then purchased a £1,300 car that would be under the OR’s limit.
I went BR in March last year and like many folks in this forum I was very nervous of what the process was and what would happen. In the end it’s all a bit of a let down to tell the truth.
I turned up at the court, handed over the fee and the paperwork at a counter. Then I waited around for an hour for the clerk to take the paperwork to the judge. I waited around a bit more and was then told I was BR, given a certificate and told that the OR would contact me the next day via phone. It took about 2 hours and no one asked me a single thing – except when I handed over the fees.
Once I got home I had the strange pleasure of phoning up all the companies that had been giving me grief for the past months and told them about the BR. Since this time I have never received another phone call – but I do get the odd letter, which I just ignore.
Next day I waited nervously for the OR to call and expected to be grilled over how I had built up such a debt (about £75k), about the SOA I had completed and told that I had a year to get out of the house and would have to hand over everything I owned.
But the call never came, or on the next day. So I called them: “sorry we have been busy” was the reply from a nice lady. We setup a telephone interview to happen in a few days time.
I will admit that I was not looking forward to the interview and felt that this was going to be the moment when I would be punished for my foolishness. But no, the OR called and we had a chat, it really was just that. He asked where the debt had come from, I said over time. He asked how work was looking; I said it was a tough time. He said his job was not to make my life worse, he just need to establish the facts. And that was basically it – 20 mins top.
He asked to see my accounts for the past 2 or 3 years. This was just the summary balance sheets and not the bank account statements or real detail etc. He also asked if I would send him a life policy we held and that was mentioned in my SOA. Outside of these I never had to produce any further documentation and my SOA was not discussed.
A short while later I was able to have the policy returned after paying a £50 fee to the OR.
Time passed and my case was transferred to the RTLU.
When asked by them I sent them the valuation I had for our house. I had provided this to the OR’s office already but it had become lost when the files were transferred to the RTLU. Within a few days I received the offer of buying back the BI for £1, which I did (£212 in total with solicitors costs).
I had setup a co-op bank account which provides everything I really need, full online access etc. Not having a cheque book can be a bit of a pain when paying for school trips etc as the children have to take cash into school – but I think we can live with that.
So it is now one year on from going BR and I think there are positives areas that have come out of the whole situation:
In a few months time my name will disappear from the Insolvency Register and I’ll start the process of rebuilding my credit rating. I will be returning to this forum for more help and guidance on how to do that.
I hope my post will help someone who is thinking about going BR – it does not have to be as bad an experience that you think it maybe.
I would like to give a big ‘thank you’ to everyone who contributes as this really is a place where folks considering or going through BR can gain valuable help and guidance.
Anyhow, as I have recently been AD after my year in BR I thought I would share my story. Obviously everyone’s circumstances are different but if you are reading this I guess we have shared the same thoughts….
I am approaching fifty and have an OH and three school age children. I live in a mortgaged property in a fairly nice area and I am self employed.
Having not used any new credit for 20 months or so, I now realise that the cause of my debt was really very simple. We spent more than we earned and did not really budget.
The debt was all on unsecured loans, CC etc and was built up over years. It’s the same story that you will read on the forum; using one loan to pay off another, swapping CC debits to lower interest alternatives. Putting the big bills on a CC with the full intention of paying them off – but something else always came along…
I earn around the £60k mark (and have for sometime) and my OH was working part time selling new homes and earning around £16K. So, by many standards we had a good income. However I still found that at the end of each month I would be using an overdraft to live on or taking cash out on a CC.
I do not think we have/had a lavish lifestyle. We have the occasional meal out as a family (every two months or so). Holidays are typically camping in the UK. Neither of us spends time in the pub, gambles or has expensive hobbies. The debt just built up over time.
Around the summer of 2008 it all started to get too much. The newspapers were full of stories about the subprime mortgage issues in the US, banks were starting to get stricter about lending and I went over my overdraft limit a few times (always cleared within a week or so) and First Direct decided to close my account. I still owed them about 2k.
This was more of an annoyance for me rather than anything else as I had another account I used for my SE business that acted just like a current account. I arranged to payoff the debt with FD at £100 per month and everyone was happy. However the effect of not having the overdraft meant that I started to miss payments on other CC’s, loans etc and was always trying to catch up – which then caused me a problem for the next month and so on etc. What I really needed was a £10k windfall……
And one turned up in the form or a CC from Virgin. I had had an account with them in the past and they sent me a shiny new card – with a £15k limit. Now I had every intention of only using the CC to help me through the rough period – but you guessed it – it was soon full and any space I had created on my existing cards was soon used up. Again, this was on day to day stuff – I am still waiting to get that new telly I have been promising myself for a few years now.
A few months later and the penny started to drop. I was in the dodo and with another tax bill due in January; things were only going to get worse. I missed a couple of mortgage repayments and everything was starting to spiral.
From a financial point of view, life was grim. And then my OH got laid-off as the new homes market started to suffer. Just something else to deal with I guess..
So I started to look at the situation and see what could be done. I started to trawl the internet for advice (I imagine that everyone else who is reading this has done the same thing).
An IVA appeared attractive; wipe out 75% of your debts, manageable monthly payments and avoid the stigma of going bankrupt – well that’s what they tell you. However I did apply at one of the companies that were bombarding me with advertising and was told all would be OK. But I also kept looking for more information.
I called the CCCS and had an interview and complete the expenditure forms. This really showed me that I simply did not earn enough. I could say that maybe it showed I was spending too much – but nothing appeared to be excessive or out of place. This difference between income and expenditure should have been obvious to me but for whatever reason I had just been carrying on and, I guess, avoiding the issue.
The CCCS told me to contact all my creditors, offer them a £1 a month and then try and sort out my expenditure – which I did. I tried to get the CCCS to set up a repayment plan – but they said no. Not until my expenditure form showed I could afford it. This really did start to get me thinking.
By now I was receiving lots (and I do mean lots) of phone calls and letters threaten all sorts of things. I even had some hand-delivered ‘calling cards’ saying they would be back. Now I know all the advice is to stay calm, state the fact that you have no spare money and offer an affordable payment alternative – but it starts to grind you down when you are doing this every day.
So I thought the IVA would be a way out of this mess and looked into it some more. It’s around this time I started to read the posts on this forum and realised that BR was a realistic option.
I think the one thing that really helped me make up my mind on what to do (apart from being broke!) was speaking to an accountant I knew. I was really honest with her and she said that BR was the best option. Her reasoning was roughly:
- Both IVA and BR get advertised on the Insolvency Register. Ok, so as a BR you also get to appear in the Gazette but both are in the public domain.
- Your credit score gets hammered which ever option you chose
- IVA will take 100% of any ‘spare’ money you have and lasts five years. If you run into further difficulties you still face the prospect of going BR
- BR lasts a year and will take 50 to 70% of any ‘spare’ money for 3 years – if you have to pay anything at all that is.
- Both will want to take the equity in your house. OK, with an IVA it is approached differently – but you really need to understand this if you are trying to hang on to your property
Having decided that BR was for me I checked into a few things, basically if I was going BR I might as well plan it as much as I could.
The property is in joint names. About 12 months prior I had a valuation done as I thought about increasing the mortgage to payoff some of the debt. They put a value of £330k on the house. I had a current mortgage of £245k – so a lot of equity that would be taken by the OR.
I explained my situation to a local Chartered Surveyor and had a professional red-book valuation performed (£150). House prices had started to fall in recent months and he placed a ‘quick sale’ price of £220k on the house – negative equity. This was £30k less than a couple of local estate agents had valued it at for a quick sale.
Loans and CCs etc. All of these were just in my name so no need for my OH to join me in the BR.
Expenditure and a possible IPA. If you are reading this then I am assuming you know that the OR will require you to pay an IPA for three years to help recover some of the debt. However the value of your IPA will be calculated after reasonable living expenses have been deducted from your salary. The big problem I had was ‘what is reasonable’, what can you claim for and how much can that claim be for? This is where this forum really helped. There is a lot of advice and assistance on completing your SOA. If you are planning on going BR you really need to work on your SOA.
I already had a £6k tax debt and this was going to get worse in January when the next instalment was due. One thing I found out was that you are not required to pay any tax during the year of your BR. So if I could delay going BR until April it would be the next tax year and I would not have to pay any tax in that year.
I had a car on HP and knew the chances of keeping it were going to be slim and it was an outgoing every month I could do without. So I stopped paying the HP agreement (this is where I got the court fees) and waited for them to come around and collect it. Any money owed on the HP agreement would fall into the BR. I then purchased a £1,300 car that would be under the OR’s limit.
I went BR in March last year and like many folks in this forum I was very nervous of what the process was and what would happen. In the end it’s all a bit of a let down to tell the truth.
I turned up at the court, handed over the fee and the paperwork at a counter. Then I waited around for an hour for the clerk to take the paperwork to the judge. I waited around a bit more and was then told I was BR, given a certificate and told that the OR would contact me the next day via phone. It took about 2 hours and no one asked me a single thing – except when I handed over the fees.
Once I got home I had the strange pleasure of phoning up all the companies that had been giving me grief for the past months and told them about the BR. Since this time I have never received another phone call – but I do get the odd letter, which I just ignore.
Next day I waited nervously for the OR to call and expected to be grilled over how I had built up such a debt (about £75k), about the SOA I had completed and told that I had a year to get out of the house and would have to hand over everything I owned.
But the call never came, or on the next day. So I called them: “sorry we have been busy” was the reply from a nice lady. We setup a telephone interview to happen in a few days time.
I will admit that I was not looking forward to the interview and felt that this was going to be the moment when I would be punished for my foolishness. But no, the OR called and we had a chat, it really was just that. He asked where the debt had come from, I said over time. He asked how work was looking; I said it was a tough time. He said his job was not to make my life worse, he just need to establish the facts. And that was basically it – 20 mins top.
He asked to see my accounts for the past 2 or 3 years. This was just the summary balance sheets and not the bank account statements or real detail etc. He also asked if I would send him a life policy we held and that was mentioned in my SOA. Outside of these I never had to produce any further documentation and my SOA was not discussed.
A short while later I was able to have the policy returned after paying a £50 fee to the OR.
Time passed and my case was transferred to the RTLU.
When asked by them I sent them the valuation I had for our house. I had provided this to the OR’s office already but it had become lost when the files were transferred to the RTLU. Within a few days I received the offer of buying back the BI for £1, which I did (£212 in total with solicitors costs).
I had setup a co-op bank account which provides everything I really need, full online access etc. Not having a cheque book can be a bit of a pain when paying for school trips etc as the children have to take cash into school – but I think we can live with that.
So it is now one year on from going BR and I think there are positives areas that have come out of the whole situation:
- Having the pressure of swimming in debt has gone – I am sure this has made our household a happier place
- My children attend the same school and did not get disrupted in anyway
- We own the same house and, with a rising market, it has some equity
- We have no personal debt, apart from the mortgage, and that actually feels quite good.
- We never had to pay for an IPA
- We live within our income – not always easy, but that’s how it is
- Phone calls are now mainly from friends and family
- Letters tend to be nicer to open – apart from the standard bills of course
- I still have my £1,300 car that I quite enjoy having to fix every 5 seconds
In a few months time my name will disappear from the Insolvency Register and I’ll start the process of rebuilding my credit rating. I will be returning to this forum for more help and guidance on how to do that.
I hope my post will help someone who is thinking about going BR – it does not have to be as bad an experience that you think it maybe.
0
Comments
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Thank you so much for sharing with us and I am really pleased that you are back on your feet.
Good luck for the futureThe worst cliques are those which consist of one man ~ George Bernard Shaw
Holiday Saving fund 2010 = £25.00
WeightLoss 2010 = +6lbs 
BSC 292
June NSD 11 :TJuly NSD 15:TAugust NSD 14:TSeptember 9:T October 19:jNovember 15/110 -
Wow. Thank you so much for sharing your whole experience. I have to admit your situation mirrors mine in many ways and as I read through my stomach was doing flip flops as I recognised echoes of my situation. I have my court date on 7th April (nothing available before the fees go up!!) and so your story has been helpful and given me a bit more confidence - as has all the advice I have received on this forum - but I'm sure I will still be p*ssing myself on the day. Something is still lingering in the back of my mind saying that it will all go wrong somehow, and I wake up in a true panic sometimes about my house (I have a surveryors report that says it is worth basically what we owe on it but I can't believe the fates will let me get off that easy). Reading your post has really helped me though. Thanks again."I got food in my belly
And a license for my telly
And nothin's gonna bring me down"
Paulo Nutini
0 -
Thank you so much for that information, a lot of that rings true especially the credit card stuff; I'm going BR today and the reasons for Bankruptcy bit is a bit 'sketchy' to say the least ! The reason is I've been in debt for over 20 years and swapped, added CC's so much so that I can't remember dates when I changed/consolidated etc the CC's so will have to cross that bridge with the OR when I come to it. Cheers.0
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Brilliant post and well done for sharing the story.:cheesy: K2nga :cheesy:
BSC Member 176
BR 23/06/08
ED 22/01/09
Credit file BR fall off date: 24/06/14 :beer:0 -
Hi Money Fool,
Thank you so much for sharing your story. Can I just ask, how long was it after you went BR, to you receiving the BI details request from the RTLU?
Thank again,
David0 -
how did you buyback the ben interest in your home when BR and so much equity in house,did they lose all your files.lol.?0
-
Hello MF, Thanks for posting your story of bankcruptcy. I don't think you know how much help and strength your post will give people here!
It's so lovely to hear good news. I hope you stay with us and give advice about your experience.
Thank you once again.
If...x"If wishes were horses, then beggars would ride"
0 -
Thanks for sharing your story, I am going BR end April and I am so gratefull for the support people give each other on here it saves me typing loads of questions. I started to lose faith in people in this country towards the end of last year for various reasons but people like you and the other forum members are steadily restoring it.
Good luck in all you do in the future.0 -
Thanks you so much, i was reading your story and i was waiting for the but..... it never came it shows all of us who are struggling with making the decision at the moment that there is light at the end of the tunnel.
Please hang around and help us out, i have a feeling that you can help many.
x0 -
Great post and like the others have said thanks for taking the time to share your BR experience with us.,:T:pB&SC No. 298
Life`s Tragedy is that we get OLD too soon
and WISE too late!0
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