Ask a StepChange (formerly CCCS) counsellor a bankruptcy question

System

anxioussister wrote: »

I'm looking for advice for my brother and family who are busy sticking their head in the sand! The bought a house back in 2006/7- a hundred % morgage and a further 10% was offered on top which they took. Since that date they have had 2 kids and my brother has suffered a couple periods of long term illness and being self employed hardly any income. My mum has helped them out with the morgage the last 2 yrs but can no longer do this.

My brother is now working but still self employed so any time off means no money and his wife works p/t which barely covers the nursery. He recently asked me for a loan to pay back a payday loan now £1500!!
Currently he has a £176k morgage, £8k credit card, £10k finance on 2 cars and his payday loan. His house is probably currently worth 150-160k. It looks like a slippery slop to me- Is bankruptsy an option and what would it mean to them!!

I'm trying to give him the best advice I can and would even consider buying a buy to let to house him if he loses the house.

Hi and welcome to the forum.

I’d recommend that you direct your brother to our online debt advice tool Debt Remedy.

Debt Remedy will help him put a budget together and will look at all the available debt solutions. Debt Remedy takes about 20 minutes to complete and he’ll receive a personal action plan on what he should do next.

Bankruptcy could be an option depending on his budget. It is possible that he would retain the house in bankruptcy if the property is in negative equity (he also needs to be able to afford the mortgage payments).

Bankruptcy is often the quickest way to get debt free, if this is the best advice for his situation we have a team that can assist him with this free of charge.

I hope this helps.

Kind regards,

Mat

rdcox

Hi,

My new partner is struggling with outstanding debts of around 20k jointly with her estranged husband, including a CCJ and credit cards/bank loans etc. They are likely to start divorce proceeding soon as he has just got engaged. However, they are both burying their heads in the sand about this and I am trying to get her to deal with it sooner rather than later.

They separated 2.5 years ago and within the first year their house was repossessed as he stopped paying the mortgage despite he and their 2 children continuing to live there and my ex having to cough up 20% of her salary in CSA payments.

He earns about 38k a year, she about 35k a year and up to now had joint custody of 1 child each though it is now looking likely that both children will end up with their father and she will go back to the 20% CSA payment.

Just wondering what her best course of action would be - would any debts be divided up so each of them would be responsible for 50% each or would she now be better off going down the bankruptcy route herself and let her ex then sort out the debt?

We are also looking at her coming to live with me, at least in the short term. I have my own home and a good credit history. Would her being there affect anything?

Thanks.

me36

Hi, I have been bankrupt for 15 months now and this was with my ex husband due to financial difficulties. iam trying to sort out my credit rating as I need to move fairly soon and I know my credit wont help if estate agents do a check.
I have been told if I get a credit card and use it wisely it will help my credit, I have done a check on your bad credit card help section and it said I couldn't apply for any because of my age or bank. At the time of my bankruptcy I went with the only bank that would accept me, I am in part time employment and i am also self employed to help with my income. I have been trying to sort my situation out but having no luck, hope someone can help.

StepChange_Private_Messages

me36 wrote: »

Hi, I have been bankrupt for 15 months now and this was with my ex husband due to financial difficulties. iam trying to sort out my credit rating as I need to move fairly soon and I know my credit wont help if estate agents do a check.
I have been told if I get a credit card and use it wisely it will help my credit, I have done a check on your bad credit card help section and it said I couldn't apply for any because of my age or bank. At the time of my bankruptcy I went with the only bank that would accept me, I am in part time employment and i am also self employed to help with my income. I have been trying to sort my situation out but having no luck, hope someone can help.

Hi,

You need to be ‘discharged’ from bankruptcy before you can apply for credit. If you have not been you shouldn't attempt to get credit.

When you do you are likely to be offered credit cards with high interest rates. This is why it is important to put a very small amount on each month and clear it in full every month.

If you were to apply for credit and be declined it would be best not to keep applying as this would damage your credit score. Too many applications in a short space of time can be seen to be ‘desperate’.

The bad credit check tool is owned by MSE – it doesn’t say you can’t apply but merely acts as an indication of whether you’ll be accepted.

You may have already seen it but MSE have an excellent article in ways to repair your credit file here – http://www.moneysavingexpert.com/loans/credit-rating-credit-score

It will tell you everything you need to know to improve your score.

Hope this helps.

Thanks,
Jess

me36

Hi Jess,
Thankyou for your reply. So im unable to do anything untill my bankruptcy is finished which takes 6 years I think, in order to get my credit report back to normal.
This is a pain as I need to move and most estate agents do credit check these days.

ive been reading the threads and some people have not been bankrupt for 6 years. How would I find out if my bankruptcy is finished, its been over 2 years now, a bit confused as when I done mine I was told I would be bankcrupt for 6 years.

emachew

Hi,
I'm looking at possible bankruptsy due to ex leaving me and kids in right mess.
Long storybut i continued clear his debt and he repaid it by getting in more =
Got 8grand loan to pay off his debters, he left 6 months later, (3mont old and 20month old, crippling mortgage and existing debt payments) hed not paid towards house for ages anyway.

So £585 a month repayments than I was earning and juggling diff credit to stay afloat. Reached out to all debters and told coz always paid and not in arrears couldn't help. So I stopped. Told by mortgage company (bank who also have loan, od and cc with) to find somewhere to rent and voluntary hand back house. So all done. No however I'm possibly goin to have to go bankrupt when the bank sell house for less than I owe. Mortgage is in both names but he's in wind. Bank said irrelevant as ill get billed for full amount as will he they don't split it.

So if seel for 85 I owe 93 that's another 8grand on top of outstanding £5500 loan
£12500 cc debt, £3000 catalogue/store card, and y£3000 overdrafts.
Plus I owe 3000 on either car finance or loan.....but I really need the car for work and with two kids 1 and 2 I'd be lost without it.

Guess my questions are.......
Bankruptsy best option? Can I keep the car? Is the bank right in charging me full amount? In theory both parties could pay the debt and as not talking bank get paid twice (unlikely as he aint oaid towards kids and has lied to csa to avoid paying)

I had a very good credit score and always psid in full and mortgage I overpaid each month. I hsd platinum cc and and very upset I've lost our home and am facing financial ruin due to ex but weve got lovely rented property with nice landlords, just hard to face people now.

alastairq

Thankyou for your reply. So im unable to do anything untill my bankruptcy is finished which takes 6 years I think, in order to get my credit report back to normal.
This is a pain as I need to move and most estate agents do credit check these days.

I think you misunderstood the advice?

Your bankruptcy 'finished' once you achieved Automatic Discharge. This occurs 12 months from date-of-petition. [unless special circumstances applied?}

The clean-up of credit files ideally should commence after 3 to 6 months later, to allow former creditors to get their act together.
This clean-up is to ensure default information is correctly recorded, especially date-of-default. [see sticky on main board?}

Applying for a [sub-prime] credit card for credit building purposes should not be timed too close to AD.....recommended is one to two years from AD.
[some have successfully applied earlier..will depend I suspect on whether employed, etc?}

One such credit card is Vanquis. [operated by good ol' Provident]

Use for small, regular payments [eg petrol?} and pay off before Due Date, or humungus interest is attracted.


If needing to move , the presence of the BR on your credit records is the big black mark anyway,,so it has been suggested making any letting agent [or, approach a Landlord directly?] aware of the BR at the outset.
{Having been BR doesn't make one a bad payer....quite the opposite actually.]

Militaryman1pswich

My wife has debts of about £20000 and is struggling to pay them. She does work although is self employed and her pay does vary. On average she earns about £1300 a month from which she uses £800 to pay for the food shopping. I earn and my wage pays for housing and fuel as well as other small debts which I am clearing quite quickly, about £20000. My credit rating is good although suffers due to my wife's debt's Whilst we have a joint bank account she does not put any money into it.

In order to get a fresh start and worry free life we are considering declaring bankruptcy for her. Any help would be appreciated on how this would affect us in the future, ie should we remove her name from the joint account and is this legal.. We don't have a mortgage as we rent.

Thanks in advance

skintlad

Hi following a messy divorce I have been left with the financial after effects. All of the family debt is in my name. The house got sold which just paid off the mortgage and left no surplus. The ex took everything we owned, all I have is my clothes and my car. I currently owe several lenders which I am paying £1 per month:

Littlewoods £400
Santander cc £2354
Aktiv Kapital for mbna cc’s £3443 & £5523
Natwest cc £4318
Natwest Bank OD £150
Water, gas, elec, sky unpaid bills £400
Solicitor for divorce £1400

Income is £1780
Monthly outgoings are:
Rent/lodging £500
Fuel £250 commuting to work and visiting children
Car ins £45
Gas £33 (share of half bill)
Elec £26
Water £12
Laundry £10
Optician £10
Dentist £10
Prescriptions £8
Haircut £12
Clothing £30 (includes work clothes)
Holiday £40 – this is one of the ways I spend time with kids
Union £17
Pension £145
Car Tax £10
MOT £3.50
Car Maintenance £60 (estimateto include tyres, service and repair)

I have these questions if you can help?
Is bankruptcy the best option?
I am not currently paying into my pension, can I start doings o before I go bankrupt?
Will I get to keep my car its valued approx £2000-£2500 and is a fairly economical diesel hatch?
I am staying with a friend and have no formal rent agreement;will the OR accept this is the case?
I really need a place of my own so kids can stay, will OR take into account that I need to save for deposit, furniture etc?
Is there anything else I can put on the statement of affairs as a living cost that I might not have included in my list above?

Many thanks

System

rdcox wrote: »

Hi,

My new partner is struggling with outstanding debts of around 20k jointly with her estranged husband, including a CCJ and credit cards/bank loans etc. They are likely to start divorce proceeding soon as he has just got engaged. However, they are both burying their heads in the sand about this and I am trying to get her to deal with it sooner rather than later.

They separated 2.5 years ago and within the first year their house was repossessed as he stopped paying the mortgage despite he and their 2 children continuing to live there and my ex having to cough up 20% of her salary in CSA payments.

He earns about 38k a year, she about 35k a year and up to now had joint custody of 1 child each though it is now looking likely that both children will end up with their father and she will go back to the 20% CSA payment.

Just wondering what her best course of action would be - would any debts be divided up so each of them would be responsible for 50% each or would she now be better off going down the bankruptcy route herself and let her ex then sort out the debt?

We are also looking at her coming to live with me, at least in the short term. I have my own home and a good credit history. Would her being there affect anything?

Thanks.

Hi and thanks for your post.

It sounds like your new partner would benefit from some free and impartial advice.

This article below should explain how joint debts are treated in bankruptcy, and all about joint and several liability.
http://moneyaware.co.uk/2011/09/we-got-a-joint-loan-now-weve-split-who-has-to-pay/

Your partner’s credit rating wouldn’t affect you personally unless you became financially connected through a joint financial product – such as mortgage or joint account.

If you partner needs anymore advice I’d recommend she gives us a call, we have a specialist bankruptcy team that can assist her free of charge.

I hope this helps.

Kind regards,

Mat