Bankruptcy / IVA and pregnancy...

bumpy1

Hi there! I'm completly new to this, so forgive me if I waffle, but my husband and I seem to be in an impossible situation and I wondered if anyone could share their views.

We've been in a DMP for the last 3 years and managed to pay off 22k, leaving us with approx 80k debt to pay off. We estimate its going to take us another 15 years at the current rate of pay by which time its still not guaranteed as they could charge interest. Even though we were left with not a penny after meeting all of our commitments every month, it was ok. However earlier in the year, I lost my job and weeks later found out that I was pregnant. A compromise agreement payment and family help has got us through financially up until now and three months ago I started up my own home based business so as to try and bring in an income on my part as regardless of how hard I tried, no one wants to employ a pregnant woman full time.

Although my husband earns just over 40k a year, it all goes back out pretty much straight away, our mortgage is in the region of £800 a month and we have little option to sell as we bought it in the height and best case scenario we'd break even. Business for me is slow and as it wasnt generating anything to speak of, we decided it was best to take my maternity allowance and make the most of a 6 month mortgage break. However, it became more and more evident that when the mortgage kicks back in we just wont have the money to cover it.

We feel that our only option is bankruptcy. I could go back to work full time but I'll only be a month into having the baby and frankly dont know if I'll be physically up to it / if I'd even get another job / and if I did whether it would be worthwhile versus childcare costs.

We're terrified that if we do decide to go bankrupt that we'll lose the house having just had a newborn baby. We have no family nearby to move in with. My husbands job is based from home so they may decide that we would lose an income if we lost the house and therefore might let us keep it but you just never know how they'll react. we have no other assets.

We're also thinking that if we do go bankrupt, do we just stop paying everything from the time we make the decision to proceed so as to be able to afford a deposit on a rental property.

We just dont know which way to turn. Does anyone have any experience or advice that they might be able to share with us.

Truly grateful

PippaGirl_2

A lot of people once they do decide to go BR do stop paying the essentials so they have the fees, and indeed to get a rental deposit together. If you do think at a later date that you can afford to pay the current mortgage once all the other debts are gone and there is no equity in the property it might be possible to remain there and buy out any potential interest from the OR after going BR. Do you have any other secured finance on the property apart from the mortgage or is all your debt apart from mortgage unsecured?

It sounds like you have thought this through though. Don't worry, there is light at the end of the tunnel.

sniggings

Going BR does not mean you will loose the house, if the house has no equity then you can keep it if you can afford the mortgage payments and any loans secured on the house, if there is equity then you still can keep it if you buy out the OR's interest in the house/equity.

So say your house has £20k equity and you both own the house but just one of you is going BR, the OR will have around 10k interest in the house, which is half the quity as only one of you were going BR, if both going BR then 20k, if you can afford to pay this amount to the OR you get to keep the house.

Your best bet is it ring one of the helplines as this is part of the BR process anyway and they will give you good advic,e as they will have all the details so know what will be right in your situation, CCCS CAB and debthelp line are 3 good ones to ring.

bumpy1

Thanks for your feedback PippaGirl and Sniggings. We'll certainly heed advice from you both, thank you.

There is a charge on the house for 7k, one of our original creditors came after us after we initially set up the DMP. There is a loan associated with the mortgage but its unsecured. We had to borrow more as the house cost more than they would give us for the mortgage and at the time this was something that they offered.

Last time we had it valued, back in the summer, there was no real equity to be had from it. The mortgage payments, although high, would be managable if we didnt have the other debts.

Thanks

tigerfeet2006

Hi and Welcome to the Bankruptcy (BR) Board.

The 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 you are 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.

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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 make sure you take your time and weigh up your options and read everything you can.

For ‘essential’ BR info this is Fermi’s sticky.

BR friendly home insurance thread.

BR Friendly bank accounts sticky.

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

Best wishes TFx

PippaGirl_2

It does sound like the house might well be savable bumpy

bumpy1

Thanks everyone. Ive arranged to see the CAB tomorrow. We've spoken with Payplan as these are the guys that we have the DMP with and they werent much help to be honest. They suggested that we could re-submit the budget and go back to the debtors with a reduced payment. However, if we do this, all I anticipate is the debtors getting nervy and they'll start coming after us for CCJs against the property, which I also understand they can do not just once but they can keep doing year on year, and if they dont, I'm sure they will start applying interest etc whereas at the moment they arent doing.

Something we are about to do before we make up our mind re BR, which was prompted by one of many calls regarding misold PPI was to write to each independent creditor asking for copies of our original agreements as we understand that if they dont have them or if they dont comply with our request within 12 days then the debt is unenforceable. (We arent contesting the debt I must add) but it would mean that we could go back to them suggesting a reduced amount each month and they would not be able to take us to court over it as long as we make some form of payment each month. Does anyone know if this is true?

I know that we wont get any of the debt written off by doing this, but on a monthly affordability scale, depending o how many of them dont have what we ask for, it would make things a little easier. It might even open the door for any of which that dont have the agreements, for us to claim misold PPI? I dont know.

As you can tell BR is not a dead cert for us. Ideally we'd like to avoid it. My husband's main concern is how BR would affect his job. He doesnt lend money or anything like that but he does advise on how to succesfully run businesses, which if anyone knew he was bankrupt, he'd lose all integrity.

Having paid substantially towards his company pension over the years, he was also nervous about losing that, but am I right in understanding that the law no longer sees pensions as an asset, not whilst he's still paying into it anyhow.

He also felt that we might have some form of legal right regarding BR as I'm heavily pregnant, but I cant see this being the case as I know that a lot of families are forced into the decision of BR for similar circumstances as ours. If anyone knows otherwise Id be grateful to hear.

If anyone can also advise if IVA might be an option, given the information Ive provided then Id also be incredibly grateful.

Thanks in anticipation

PippaGirl_2

I think seeing the CAB is a good idea. They are totally inbiased and have your best interests at heart, unlike payplan. CAB do free DMP's.

I had a DMP arranged by CAB for a couple of years until I was emotionally well enough to take the action I knew I needed to by going BR, gave me the breathing space and CAB were brilliant.

I'd be surprised if BR wasn't your best option given the fact that you owe £80,000 and I think there is a good chance you will keep the house too even so.

bumpy1

Thanks PippaGirl

How did you manage your bank accounts having gone BR? Am I right in thinking that ALL current bank accounts regardless of how basic have to be shut down? and only Barclays and poss co-op will let you have a BA having been made BR. Having been on a DMP for almost 4 years we already have quite a basic BA in comparison to most, ie no overdraft, cheque book etc, but we do have telephone banking and Direct Debits, I'm guessing this makes things quite tricky whilst the OR is dealing with things?

If this is the case, one of our debtors is Barclays, I dont know how favourable they'd look at a bank account. Plus another question that springs to mind, if you arent obligated to tell your employer about BR then might changing bank accounts look a little suspect? Was this something that you had to do?

Thanks again

bumpy1

Also, Ive just opened a business banking account. As this is a crucial part to the business, do you think I'd lose this too?

PippaGirl_2

You can open a Co-op cashminder current account before going BR and that won't then be frozen. It is a normal current account but does not come with a cheque book or overdraft. You get a Visa debit card and can do online banking with it. I have heard of people having two such accounts, one of which they keep for business.