Self Employed Sole Trader possibly going bankrupt...

bangersnmash

Possibly it's a bit different in Scotland to England where I am but as I understand it all a credit card normally does is get a CCJ, ie a County Court Judgement, against you then sell the debt to debt collectors who don't have any right to come in your house.

Although they're available I've not heard of credit cards getting court orders to get an attachment to earnings which is supposed to force you to pay. Quite why they don't do this is a bit of mystery to me. Maybe in fact they do sometimes. But I've not seen it mentioned on these boards so if it is ever done for credit cards then it's probably fairly rare.

Several people I've known in England have just ignored their credit card debts and also loans for that matter as well. Sometimes into five figures like yours eg £12k and probably a load more that I don't know about as that person was at it quite persistently. Plus several for £6k or so. Basically there's nothing the lenders can do about it. They can write and phone a bit but you can just ignore that. If anyone comes round they don't have any right of entry. Bailiffs aren't allowed in either and you don't have to answer them, you can just ignore them.

As you're about to default that will spoil your credit record for the next 6 years or so therefore it won't make much difference to you to have some CCJs or whatever the equivalent in Scotland is.

As you're renting you don't have any property that they can get, in England, a charging order on.

So therefore there wouldn't appear to be any need or advantage in going for sequestration. Unless perhaps I'm missing something here.

Don't worry about it. It's only credit cards so in effect it's free money. No probs. The card companies build losses into their margins so everyone is charged a bit extra to make it up. But that doesn't really matter or make much or even any difference to anyone. So it doesn't matter, except to you. So take a deep breath, shrug your shoulders, and get on with the rest of your life. Seriously, don't stress about it, that's not going to do you any good or your girlfriend. And it won't achieve anything either. Plus it could harm your health if you get too wound up about it.

Just try not to do it again. Which probably won't be an option for you for another 6 years or so anyway.

Re your tax, well, you can negotiate sometimes but also they're hopelessly incompetent all the time everywhere. Have a read of the cutting tax board on this forum, about half way down the list, to see lots of accounts of the huge numbers of mistakes they make and various ways of dealing with them.

There are some accountants on the board who explain all sorts of stuff including quite interesting and possibly useful stuff as simple as that it often takes four or five goes at making them see sense but then sometimes finally the penny drops and they will admit their mistakes. But only if you stand firm and harass them into doing so.

So don't give up easily, keep repeatedly hitting them up with your position and don't back down. That is, of course, if you do want to reduce the bill and challenge their notions. If you believe that you've got grounds. Which you might have so it might be worth reading the cutting tax board and learning more about it then going through your records again in detail. Might be able to shave some off and or claim for expenses that you didn't realise that you were eligible for. And such like. And so on and so forth, forever and a day.

Hope this helps, good luck.

Musicjazz

Hi bangersnmash.

Thanks for all the info.

Just had a quick question about what you meant re: credit cards...

You said: "As you're about to default that will spoil your credit record for the next 6 years or so therefore it won't make much difference to you to have some CCJs or whatever the equivalent in Scotland is.

As you're renting you don't have any property that they can get, in England, a charging order on.

So therefore there wouldn't appear to be any need or advantage in going for sequestration. Unless perhaps I'm missing something here.

Don't worry about it. It's only credit cards so in effect it's free money. No probs. The card companies build losses into their margins so everyone is charged a bit extra to make it up. But that doesn't really matter or make much or even any difference to anyone. So it doesn't matter, except to you. So take a deep breath, shrug your shoulders, and get on with the rest of your life. Seriously, don't stress about it, that's not going to do you any good or your girlfriend. And it won't achieve anything either. Plus it could harm your health if you get too wound up about it.

Just try not to do it again. Which probably won't be an option for you for another 6 years or so anyway."

1. Am I to understand that if I default on my credit card payments this month (i.e. not pay, or pay a "token amount"), that this will stay on my credit report for 6 years?

2. If this is so, then bankcruptcy also lasts on report for 6 years too, so am I not better off declaring BR and have all my debts cleared and off my credit report in 6 years time?

3. You said "dont do it again"... What do you mean by this? If I do nothing about my debt, and ignore it, I will still have it around my neck in 6 years time, or are you suggesting it will just somehow disappear?...

Many thanks.

Barbeduk

bangersnmash wrote: »

Don't worry about it. It's only credit cards so in effect it's free money. No probs. The card companies build losses into their margins so everyone is charged a bit extra to make it up. But that doesn't really matter or make much or even any difference to anyone. So it doesn't matter, except to you. So take a deep breath, shrug your shoulders, and get on with the rest of your life. Seriously, don't stress about it, that's not going to do you any good or your girlfriend. And it won't achieve anything either. Plus it could harm your health if you get too wound up about it.

Just try not to do it again. Which probably won't be an option for you for another 6 years or so anyway.

But surely the whole point of being a grown up is to be responsible for our actions. Of course it's not free money, that's a terrible attitude to have! If this guy has a business, the last thing he needs is a CCJ.

IMHO (as a very grown up with wrinkles and everything) I would ring the credit card companies, tell them you're making a token payment only until you've had debt counselling, tell them you can't discuss it any further and end the call.

You really have to protect your future, you don't know what's going to happen further down the line. Things might pick up, you might want to get a mortgage in 10 years or so, you might have kids. It's going to make it a lot easier if you sort this all out now.

bangersnmash

Musicjazz wrote: »

Hi bangersnmash.

Thanks for all the info.

You're welcome. I hope it's of some use. To you and maybe possibly some other bods reading as well.

Musicjazz wrote: »

Just had a quick question about what you meant re: credit cards...

You said: "As you're about to default that will spoil your credit record for the next 6 years or so therefore it won't make much difference to you to have some CCJs or whatever the equivalent in Scotland is.

As you're renting you don't have any property that they can get, in England, a charging order on.

So therefore there wouldn't appear to be any need or advantage in going for sequestration. Unless perhaps I'm missing something here.

Don't worry about it. It's only credit cards so in effect it's free money. No probs. The card companies build losses into their margins so everyone is charged a bit extra to make it up. But that doesn't really matter or make much or even any difference to anyone. So it doesn't matter, except to you. So take a deep breath, shrug your shoulders, and get on with the rest of your life. Seriously, don't stress about it, that's not going to do you any good or your girlfriend. And it won't achieve anything either. Plus it could harm your health if you get too wound up about it.

Just try not to do it again. Which probably won't be an option for you for another 6 years or so anyway."

1. Am I to understand that if I default on my credit card payments this month (i.e. not pay, or pay a "token amount"), that this will stay on my credit report for 6 years?

It does in England but I'm not sure if it's the same in Scotland, it might be different.

Musicjazz wrote: »

2. If this is so, then bankcruptcy also lasts on report for 6 years too, so am I not better off declaring BR and have all my debts cleared and off my credit report in 6 years time?

No, with bankruptcy in England, and I'd guess probably the same with sequestration in Scotland, you're permanently marked with it, forever. The 6 year drop off is for credit files regarding defaults but bankruptcy is a different kettle of fish, a whole quantum level more serious.

In England you can get discharged after a year for most people and sometimes in just 6 or 9 months. But it remains on your file and legally you're supposed to disclose it in various situations and it's an offence not to do so when required. Though how often there's actually any penalty for non disclosure is a question - probably not much and only rarely.

However for some people such as people who have been reckless or done gambling or fraud and such like it the discharge can take years, sometimes not for 5 or 10 years for serious cases. Your £17k would likely count as a simple non serious one, as long as there isn't any gambling or fraud or such like. If it's just the usual overspending and not budgetting properly then they don't care about that, they see it all the time, huge numbers of people come through the door doing it. Especially now with recession and credit crunch.

Musicjazz wrote: »

3. You said "dont do it again"... What do you mean by this?

Don't over borrow and don't overspend. Change your spending habits and learn to live within your means. Learn to budget. If you can.

For instance, get the reduced food bargains at the supermarkets. I save £20 a week doing this, that's a grand a year and £10k over the last 10 years. If you'd been doing this then your debt could now be £10k less. So over the next 10 years and ongoing apply some cost cutting measures to your lifestyle.

It soon mounts up and it makes sense. If you look after the pennies then the pounds will look after themselves. Have a look at the old style money saving board, about half way down the list of boards, and learn to meal plan and look at all the other hundreds of good tips for making your money go further.

Otherwise you may get in the same pickle again and repeat your past mistakes. Basically just stop spending, only spend if you absolutely have to. Always look for free and ultra cheap bargains and buy second hand rather than new. This is what I do and it's made a big difference to my survival. For sure. You can too. You just need to concentrate on doing so.

Musicjazz wrote: »

If I do nothing about my debt, and ignore it, I will still have it around my neck in 6 years time, or are you suggesting it will just somehow disappear?...

Many thanks.

Technically you'll still owe it but in practise they'll have written it off. They'll likely sell it on at 10% or 5% or whatever it is to debt collectors who will make some half hearted attempts at recovery. But it's legal for you to ignore them.

Count your lucky stars that you're in UK, in France, Dubai and all sorts of countries you can be hauled off to nick and do years in prison. But not in Britain, no debtors prison in UK. Aren't we lucky!

bangersnmash

Barbeduk wrote: »

But surely the whole point of being a grown up is to be responsible for our actions.

Yes, I agree. I don't support people reneging on their borrowing. But nevertheless I do have sympathy for those who do it mindlessly and inadvertently. Not meaning to. And feel bad about it.

But, no, I don't have any sympathy for fraudsters on the rob. Nooo! They should be put in the stocks so that we can all throw stones and rotten fruit at them and then hung drawn and quartered. And their heads put on sticks in all the high streets as warning to others not to rip it off.

Barbeduk wrote: »

Of course it's not free money, that's a terrible attitude to have!

Yes, agreed, robbing credit is a terrible attitude. But a long time ago the UK government stopped debtors' prison and made it legal to knock as much credit as you want. A bad decision, in my opinion.

The Americans being similarly slack is what then led to credit crunch which happened on 9 August 2007 when the first American lenders collapsed which then set off the chain reaction around the world. Which has affected all of us.

Yes, I agree with you, it's a terrible attitude. But that is part of the British malaise, it's allowed and encouraged. As you can see on this board and a number of others on this site. If I had my way I'd clamp down on it. But I'm not in charge, so that's it, fill yer boots, it's free money!

Barbeduk wrote: »

If this guy has a business, the last thing he needs is a CCJ.

That'll only affect him if he wants to get business credit or open up trading accounts with other businesses. But we don't know what line of business he's in so if it's music teaching, as another poster guesses, then it probably won't affect him much or at all.

Barbeduk wrote: »

IMHO (as a very grown up with wrinkles and everything)

I'm nearly an old wrinkly as well! It happens to the best of us. If we're lucky and last as long as that.

Barbeduk wrote: »

I would ring the credit card companies, tell them you're making a token payment only until you've had debt counselling, tell them you can't discuss it any further and end the call.

No, bad advice, it should only be done in writing as they often renege on anything agreed over the phone. As you can see being highlighted in dozens of threads here.

Barbeduk wrote: »

You really have to protect your future, you don't know what's going to happen further down the line. Things might pick up, you might want to get a mortgage in 10 years or so, you might have kids. It's going to make it a lot easier if you sort this all out now.

Yes, he should protect his future but, no, he can't just pull £17k out of a hat and pay it off. So, as he's asking, he's got to now decide how to deal with this. His credit file will be shot in the next couple of weeks when he defaults and really that's all there is about it. No, I don't think there's any purpose or gain to going bankrupt/sequestration and if he does do that then it'll follow him around for the rest of his life. To be avoided.

Like I say, there's no need for it, either pay what you can to your debts or just ignore them, which is perfectly legal to do and there's hardly anything that they can do about it. Especially as he's renting and doesn't have a property that they can slap a charge on. All they can do is some phone calls and letters and maybe a visit or two, all of which you can legally ignore. Bingo, job done!

So enjoy, tomorrow is the first day of the rest of your life. Just stop overspending and stop over borrowing. If you can rein yourself in. Otherwise you'll get up the junction again one day. As many people who can't control themselves do repeatedly. Oh well.

Musicjazz

Hi Bangers

Thanks for your post...

But am I correct in thinking that your advice on my best course of action is to just completely ignore my debts???...

You're telling me if I just stop paying now, then apart from some letters and phonecalls, I will have a perfectly normal credit report in 6 years time, perfectly acceptable for mortgage applications etc with no reenforcement or come back to my debt at all???

Totally confused now...

Does that include the ccj's that the creditors may apply for (i.e. Off in 6 years time)?

Does this tactic also work for the hmrc tax arrears I'm due too? I find this hard to believe, as I have read that any default on a debt due to hmrc will result very quickly with them making you bankcrupt... Or is this a wives tail too?

I'm finding all the conflicted info I've recieved very confusing... I just want to know what course to take so I know what I'm doing, and can finally look forward to my future without all this stress... Can't wait for case worker to finally get in touch re meeting...

As for feeling guilty, bad, and generally silly about getting into this mess, then I feel all of these and more... I am completely remorseful.

If I ever get out of this mess, then I will never use credit again (other than one day to hopefully get a mortgage with my partner... Which I know is probably a pipe dream anyway...but one can dream...)

bangersnmash

Musicjazz wrote: »

Hi Bangers

Thanks for your post...

But am I correct in thinking that your advice on my best course of action is to just completely ignore my debts???...

You're telling me if I just stop paying now, then apart from some letters and phonecalls, I will have a perfectly normal credit report in 6 years time, perfectly acceptable for mortgage applications etc with no reenforcement or come back to my debt at all???

Totally confused now...

Does that include the ccj's that the creditors may apply for (i.e. Off in 6 years time)?

Does this tactic also work for the hmrc tax arrears I'm due too? I find this hard to believe, as I have read that any default on a debt due to hmrc will result very quickly with them making you bankcrupt... Or is this a wives tail too?

I'm finding all the conflicted info I've recieved very confusing... I just want to know what course to take so I know what I'm doing, and can finally look forward to my future without all this stress... Can't wait for case worker to finally get in touch re meeting...

As for feeling guilty, bad, and generally silly about getting into this mess, then I feel all of these and more... I am completely remorseful.

If I ever get out of this mess, then I will never use credit again (other than one day to hopefully get a mortgage with my partner... Which I know is probably a pipe dream anyway...but one can dream...)

No, you should repay your debts, if you can. That is the correct moral thing to do. If possible.

But if you can't - or don't want to - in UK the law says that it's ok not to bother. Hence there's no debtors prison.

No, HMRC can go after you forever, without limit of time. There are two things that you can be sure of in life, death and taxes.

Well, you're a good person if you're beating yourself up about it. Well done you.

However, as I've already said, that won't do you or anyone around you any good. And it could harm your health and your productivity if you do indulge in too much crying over spilt milk. The damage has been done. So move on now, don't just wallow in self loathing and angst. Pull yourself together, dust yourself off and then onwards, forwards, upwards!

Learn from this debacle and change your behaviour for the future.

So stop spending!!!

Plus earn some more. In your slack summer months do some ebay, amazon and loot. Run a market stall or car boot pitch on Saturdays and Sundays. Pull pints in the pub three nights a week. Do some cabbying if you've got a car.

There's a thousand and one ways of making money so try ten or twenty of them and then normally hopefully one or two or three of them will come good for you. If you put the effort in. The work and hard slog.

Have a look at the up your income board for some ideas. How about wedding photography? How about teaching or is that what you already do. How about anything and everything.

If you do music or know people who do then put lots of tracks out for sale on itunes and youtube and all the hundred other mp3 download sites. Then market them and yourself on twitter and facebook. If you put some graft in then it's possible to generate an income.

With youtube you start to get paid, off the advertising, at about 50,000 views so you have to do a lot and be good to get up to that level. But lots of people do, so why not you as well. You only live once so give it a whirl, if you go viral you'll be quids in. Laughing all the way to the bank. Nice. Just for doing that, flinging up tunes off your computer.

Amazing way to make money if you can crack it, what a laugh. And once you've done the initial work and it kicks in then it just does it itself, look no hands. Earning more money while you sleep at night! Incredible! Well worth a shot.

If you can get that going then you can be set up for life. Fantastic. People do, they really do. So hows about you too.

How about making cakes, biscuits, jams, sauces, pickles and chocolates then flogging them. Lots of people do these, some of them do very well. You can get started at home with not much outlay to start with. Put the word out that you've got some lovely goodies available and people will be beating a path to your door. Give it a go. Might as well. Unless you can think of something better to do to make money.