Should I go bankrupt?

Bumbelina

Apologies if this is not the right forum but I really need some advice from people who have dealt with what I'm going through. Basically, I have a lot debt (approx 42,000), a small amount of which is joint with my DH but most in my name. DH also owes his parents around 30,000. All the debt is unsecured, but I have a mortgage (in my name only) of about 155,000 on our house which is worth about 180,000 at a rough guess in today's market. About 18 months ago we went to the CAB and they wrote to all the creditors so that I'm currently paying £9 a month in total. Up until that point I'd never had an unpaid debt or even a late payment on anything in my life and my credit record was excellent. All the creditors have been brilliant and accepted the payments. We're still struggling, even with the low repayments, because DH is trying to get a business off the ground and my self-employed income has reduced for various reasons, some of which are health-related.

I just can't see any way forward at the moment and am wondering whether bankruptcy might be the best option. I've read the stickies and (shame) used to be a solicitor so I'm pretty clued up. I realise that we would probably lose the house, although we have 2 children aged 14 and 11 so I suppose it would be postponed for a year or so.

I can't bear the idea of asking parents to buy out the equity as we've borrowed so much from them already. My parents are in their 80s and I'm aware that I would have to ask them to exclude me from their wills in favour of my kids if I went bankrupt, so that their estates would bypass me and not disappear into the bankruptcy if they should die during that time.

The idea of struggling on like this forever is horrendous. I can't see how we're ever going to repay it all. We're keeping up with the mortgage payments and bills etc at the moment but I don't think we'll be able to do that much longer. Can anyone advise me what I should do?

IF

Hi Bumbelina and Welcome to the Bankruptcy (BR) Board. First step is to make a list of all your creditors, debts and assets. Secondly and most important is contact one of the following debt charities. Please try these they don't charge and are impartial. They will go through all your options with you and if they suggest bankruptcy then come back to this board and we will help you all we can. Also if your not ‘clicking’ with one of the Debt charities do try another. We advise you to try at least two for your own piece of mind. Your BR could be refused if you have not sought advice.

* Blue text on this forum usually signifies hyperlinks, click on the blue links below *

Main recommended sources of help:

• National Debtline - Website: National Debtline Telephone: 0808 808 4000
• Citizens Advice Bureau - Website: Citizens Advice or visit your local CAB centre (find nearest)
• Consumer Credit Counselling Service - Website: CCCS Telephone: 0800 138 1111

Others:

• Business Debtline
  - Website: Business Debtline Telephone: 0800 197 6026
• Christians Against Poverty
• PayPlan
• TaxAid - Help with tax debts.

Please don’t do anything rash take your time and weigh up your options and read everything you can.

For ‘essential’ BR info the ‘Look here first’ sticky by Fermi.

BR friendly home insurance thread.

BR Friendly bank accounts sticky.

BR Abbreviations.

If you are new/old to this board and receive/see a comment that is not helpful or insensitive please don’t let it put you off posting, often these comments are made by people who don’t normally contribute to this board and don’t speak for us.

What to do if you get an insensitive or hurtful comment.


And do remember we’ve all been through this and anything you don’t understand don’t be afraid to ask.


Best wishes
If...x

Bumbelina

Thanks, I think I will make an appointment to go back to the CAB as the adviser we saw there last time was really good and very experienced. I already have my list of debts and assets from when we saw them before and it hasn't changed in that time.

I did contact the CCCS once and didn't find them helpful at all. The interview had to be contacted over the phone instead of face to face, and the woman I spoke to was really judgmental. And they don't contact the creditors for you either.

I just wondered whether there was anything about my situation that would "leap out" at people and suggest an obvious course of action, but I suppose everyone's case is very much an individual matter and there are lots of different things to take into consideration.

I think at the moment I'm leaning towards the idea of banktuptcy because I just want it all to go away, even if I have to go through a difficult year to get there.

IF

I am sorry not sure of your best course of action, hopefully some more posters will advise further. Do ring National debtline too.

If...x

Bumbelina

Although I'm attracted by the idea of getting rid of all my debts in 12 months (and I don't know how I will ever pay them off otherwise) I've worked out that I wouldn't actually be any better off on a day-to-day basis if I went bankrupt. I'm already on a plan where I pay £1 a month to each creditor (total £9 a month) and none of them are contacting me to increase that, even though it's been 18 months now since it was set up.

Also, I have about £25,000 equity in my house so would lose my home if I went BR.

The problem is that we're still only just meeting the monthly bills (and mortgage) even with the credit agreement in place and my DH might have to stop taking money out of his business soon in order to have a chance of keeping it going. The mortgage is on interest only at the moment but in a year's time that will go up from around 438 to probably over 1000 a month and then unless our income has increased considerably we definitely won't be able to pay it.

So the situation is that we're struggling to get by as we are, with the prospect of our income reducing very soon and our mortgage more than doubling, and BR wouldn't bring any relief because we're already paying effectively nothing off our debts. On the other hand, the creditors are going to demand an increase in the payments sooner or later and the debts are going to be there for the rest of our lives unless we get some kind of windfall.

I feel like I'm stuck between a rock and a hard place and can't see any way clear out of the situation.

Does anyone know where I can find the figures that the government say we can live on for food, clothes, children's needs etc? If I can re-work our budget to bring it down to minimum level that should make a difference.

Any advice and support would be much appreciated, as always.

Mortgage_Reduction_Novice

Bumbelina wrote: »

If I can re-work our budget to bring it down to minimum level that should make a difference.

Any advice and support would be much appreciated, as always.

I think you've hit the nail on the head here. Some great advice about food shopping on the "old style" board - you'd be surprised how little some people on that board can feed their families for.

I supplement my income quite a lot with mystery shopping, selling on ebay, car boot sales etc. So perhaps you could up your income a little through these alternative routes too.

IF

Hi Bumbelina, all the answers are on the 'look here first' sticky.


Your home/property.

• Dealing with property interests from 1st Jan 2011 ---> Discussion thread
  
• What will happen to my home? (IS)
  
• If my house is sold sometime after the bankruptcy order is any shortfall on the mortgage still a debt in my bankruptcy?
• Charging orders in the county court - National Debtline factsheet (useful if a creditor is trying for a CO before your bankruptcy)

Right these are the HES figures just for the OR really and please please don't copy these as the OR will then scrutinize every bit of your SOA and BR with a fine tooth comb!! Use your own figures as the OR will ask for receipts (the OR will see your bank statements as well and remember some of your expenses may be higher too).

The new HES figures - Click here

Best wishes
If...x

Maizy

Bumbelina

At the end of the day, only you know how you feel about your debt and how you can see your future with this.

We had around 30k debt between us on a dmp which wasnt costing that much but it was the thought of 20 years in debt on top of a house we couldnt afford the repairs on. Even thinking about the debt for another year was hard enough let alone 20 years, we just couldnt seem to move forward. BR has taught us so much. Our house has just sold for a negative equity of £30k, once you are in lots of debt it is hard to get out of. No matter how low the payments are the debt is still there.

BR has to be seen as a last resort, it is no easy thing to go through so weigh up all your options but if it becomes your only sensible option then just gather as much info as possible.

Its easier said than done living on a very tight budget for years to come when you have large debts and children. But during the BR period, it somehow seems manageable as there is light at the end of the tunnel. I have learned to cut back so much and somehow make ends meet and the kids do not go without. I can do this for a short while but if it was forever? I doubt it as it only takes one thing to make you fall behind. BR has given me the chance to improve lots of areas in my life. Good luck.