Life after bankruptcy

NekoZombie

Hi

I was advised a couple of weeks ago to go bankrupt. I am going to the CAB tomorrow morning to find out about declaring myself bankrupt, although I have done a lot of research and think it is probably the best thing to do. I currently owe:

HSBC Credit Card: £5000
Barclaycard:£613
Store Cards (across 5 cards):5000

This totals 10,613, which would be manageable, but spirals out of control when I add:

Student Loan Company:8000
HSBC Pro Studies Loan:14024
HSBC Overdraft:2000
Natwest Overdraft:1570

All that education, and I only earn 22k a year. I was horrified when I realised just how much debt I was in, and immediately sought advice from Payplan. I'd assumed I could get an IVA, but apparently this is unlikely because HSBC is my main creditor and I also have a student loan. A DMP would take 10 years, with implications (i.e. the DMP being on my file) for a further six years. Because all my debt is unsecured, and I have no mortgage or a car, I was advised to go bankrupt. This was a shock, but I am slowly coming to terms with this.

On paper, it seems like I would recover from bankruptcy far quicker (7 years) than any other option. I would like to know if anyone has any experience of what its like after being discharged of bankrupty. Is it possible to get a mortgage for example? I would also like to know more about what its like in the first year of bankruptcy.

A final question; is it a good idea to stop making payments if I'm planning bankruptcy. All my accounts are up to date (though I can only ever manage the minimum payments).

skylight

Student loans are not included in Bankruptcy, so will still have to be re-paid.


So - with £28k to go BR with, plus £8k still to pay back on an income of £22pa I can see why you were advised BR.

There is a support thread (old and new one) in this Bankruptcy forum - lots of different perspectives from people and lots of info (like BRO's etc).


Also try http://www.debtquestions.co.uk/debt_forum/ tons of advice there - National Debtline and try http://www.piggybankrupt.co.uk/ a Blog (but better laid out!)

NekoZombie

I have already come across piggybankrupt - which I think I found out about on here. It was incredibly useful. I've also read most of the posts on here - but I suppose I just want to find out as much as I can before I do the inevitable. What I have realised though, is that bankruptcy doesn't need to be a disaster as long as I learn from the mistakes I've made.

piggeh

With no assets, bankruptcy is the best way out. As you've said, your credit record will improve far quicker cutting your losses, than trying to pay it back (assuming no increase in wage in the meantime, which is a safer thing to assume than thinking you're going to be on more). I've been bankrupt for 3 years. Havent tried for a mortgage yet but from what I've read you will be on a high interest mortgage for a few years then can switch to something much nearer the normal rate once you've shown you can make payments. It's also a lot easier to get finance when it's secured on property, than anything else.

NekoZombie

Having just come back from the CAB, I have been advised not to go bankrupt if I can avoid it. I am a bit confused now, as Payplan suggested thai was really the only option...

The adviser at the CAB seemed to think I'd find it very difficult to buy a house...even in 10 years time

plumduff-2

It is not impossibale to get a mortgage and there are some lenders who specialise in mortgages for those with adverse credit files... DHUK has a list of lenders on the gen info section..

BR can have far reaching implications and only you can decide if it is in your interests to file...

Have a look at the post I started which has a link to the Insolvency Service BR info pack... read as much as you can and ask as many questions as you can think of...

skylight

CAB are anti-bankruptcy (from the feeling of most posts on this board).

BR drops off your credit history after 6 years, although some applications ask if you have EVER been made BR and some ask if you have been made BR within a certain period of time.

You will find the same with house/car/life insurances etc if you take BR. This is what makes it difficult as the EVER question will affect you for the rest of your life - you must always answer honestly.

It isn't impossible for insurances and mortgages though. A DMP will be on your credit file (because of the defaults that will be issued as you are not sticking to the original payments), CCJ's, IVA's and BR will also appear for 6 years - so whatever plan you want to take, life will be difficult for 6 years anyway for credit purposes.

CAB and Payplan can only advise you, they cannot tell you what to do. Have either places formulated a plan of action? Did CAB offer you alternatives to BR or just tell you it was bad??

plumduff-2

I used to volunteer at a CAB and we were always told to refer people on to an Insolvency Practitioner when they presented asking about BR - this was because CAB did not want to take responsibility if for any reason some time later you decided it was not the right option for you...

So, I would agree that they dont really get involved with BR - as they are covering their own backs...

Just out of interest.. a friend of mine, has recently set up his own blog / info site.. he is an IP.. maybe worthwhile reading up on it..

http://insolvencyviews.wordpress.com/

NekoZombie

They recommended a DMP or an IVA. Despite what Payplan advised, I've managed to find somewhere that will try to get me an IVA. I'm struck by how little I have to buy anything...after everything, I'm left with £35 contingency. I wonder if this is a realiistic level for 5 years of my life - I suppose it might be worth it if I don't become bankrupt, but it seems incredibly tight.

jgem1011

I have been discharged from bankruptcy since 2005. I have been able to get a mortgage..the only reason I was in a rush was because I wanted to get my RTB before the discount period was reduced again. I got my mortgage with who I think is the only lender who will touch you straight after discharge, Platform Homeloans (owned by Brittania Building Soc or the other way around). Brittania have told me that I can transfer my mortgage to them after 3 years discharge otherwise I'll be stuck because Platforms fixed rate ends and the new rate is about 3% above the average! My own building soc, Nationwide told me they wouldn't touch me until 6 years after discharge. I was told by Experian that your discharge is wiped from the register automatically after 6 years from discharge date.

I think everybody has to look at their case individually. I accepted advice but looking back I think it wasn't the right way to go. My husband died and I had a young child. I'd just finished at uni as a mature student only to find I couldn't get the kind of job I wanted as they'd only take on youngsters. Anyway I took bankruptcy. If I'd just ploughed on and waited another 2/3 months I'd have found I had a job and I could have purchased my council flat under the RTB scheme. Back then in 2002 I'd have got my place for £24,000 and been able to sell it in 2 years and probably have paid of my debts of £22,000. As it stands I went bankrupt.

In 2005, 1 year after discharge I took up my council right to buy which I pay a higher mortgage rate for at 6.5% on a loan of £70,300. Oh, and the new rules say I can't sell before 5 years or I'll lose a proportionate amount of the discount for each year. Bang goes my dream of moving my boy from a council estate before he reaches secondary school. The flat's value is around £130,000 now so work it out for yourself.....sometimes you just have to bite the bullet and realise that things will get better if you just buckle down. I realise that my situation might not fit with yours but do think carefully and do seek professional advice, not just that of your friends...I don't always think CAB have all the answers either...you need to do a bit of legwork and then weigh up all the evidence. Good luck.