Go bankrupt or not? My SOA

tinandsue

Hi all! My husband and I contacted the CCCS about 1 yr ago and have been tirelessly paying our debts on the self help scheme since then. Originally, we had 9 debts but we are now down to just 5. We managed to pay off those 4 debts by agreeing settlement figures at a reduced rate.

Our 5 remaining debts have all accepted pro rata payments interest free and we have been paying these for the last year. Our 3 debts with Egg have been accepted as interest free for the life of the payment which is brilliant. Our debt with the Halifax however, was accepted interest free for 12 mths. That 12 mths is now up and they want us to resubmit a budget and list of creditors. That is fine and we have done this but it will take about 3 mths for them to process our paperwork and in the meantime, the interest is going back on and charges will be incurred when we can't make the full payments. They have also said that they can only give us interest free for 1 more year max. It's infuriating!

I have spoken to the CCCS again today and they have said we can 1) either stay as we are and suffer the charges etc until the paperwork is sorted 2) Go on a debt management plan with them but this will mean increasing our payments to Egg and lengthening the time it takes to pay off Halifax. Or 3) and this is their recommendation, go bankrupt.

I just don't feel easy about going bankrupt so thought I'd post up our SOA and hopefully someone here can help.

Income Per Month

Husbands Wages £ 820.00
Child Benefit £ 235.73
Child Tax Credit £ 651.30
Working Tax Credit£ 161.76

Total income £1868.79

Expenditure per Month

Rent £277.21
Council Tax £107.34
Gas £ 30.00
Electric £ 30.00
Telephone and 2 mobs £65.00
TV licence £11.30
Postage and Stationery £5.00
Road Tax(2 cars) £24.17
Car insurance £59.64
Breakdown £9.19
Petrol £200.00
Food,toiletries,cleaning£760.00
Clothing and shoes£40.00
School trips/activities £15.00
Medicines £10.00
Dentist/Optician £30.50
Hairdressing £33.75
Sport/hobbies/entertainment £21.67
Sundries/emergencies £25.00

Total Expenditure £1754.77

This leaves us with £114.02 for debts.

List of Debt

Egg Loan £5887.30
Egg Loan 2 £1448.50
Egg card £2041.28
Halifax card £7673.18
Overdraft £ 199.28

Total Debt £ 17,249.54

I should also point out that we have 4 children aged 10,9,6 and 2.
We also run 2 cars as we live in a very rural part of Scotland hence why our fuel costs are so heavy. Also, our dental costs are high as we have a private dentist as no NHS available anywhere near here.

Sorry it's so long but I really hope some of you will be able to advise us on what action to take next.
Many thanks.

NekoZombie

the only thing that sticks out is household at £750.

It'll take you a very long time to clear your debt when only repaying £114 per month, so I can see why they suggested bankruptcy. While it does sound like a clear option, it is obviously a decision only you can make. It took me a few months to get my head round the idea myself, but I can honestly say so far its been the best decision of my life.

tigerfeet2006

Hmmm! agree with Neko that £750 does sound a lot for house hold expenses and can see why CCCS have suggestED BR. Only you can make the descion. If you decide to go down the BR route then we will be here to support you with advice and cyber hugs and whatever you need. If you decide you want to try and carry on for a little while longer then I would get over to the Old Style Board and get their help in reducing your household bill so you can chuck more money at the debt.

lou779

I can see why they are advising bankruptcy. My husband went bankrupt nearly 3 years ago now, he'd been made redundant and we couldn't make repayments. We were pretty much told we can either pay off minimal amounts for the rest of our lives (Well thats a bit of an exaggeration) or go bankrupt. It was the best decision we've ever made, my husband was able to go back to college and is now working as a computer programmer. He would never have been able to do this if he hadn't gone bankrupt because we have children.

We are in Scotland and the whole process was not as scary as originally thought. We were told to wait until someone took him to court (we were lucky and this happened pretty quickly, some people wait months even years) we then took the letter to the solicitor (legal aid because we get tax credits) and he took it from there, we got a letter one day saying it had been to court and had went through. After a telephone conversation with the trustee in which we gave our income and expenditure that was it, we've heard nothing since. We think he will be discharged next month though. The bank of Scotland closed our account but we got a basic account with Clydesdale which now even gives you a maestro card.

One very important thing is that warrant sales are banned in Scotland so you wont get bailiffs or anything. It will be up to the trustee whether you get to keep your cars though but if you need them for work it should be ok.

Broken_hearted

You don't need to go bankrupt but it is easier to do so. Some people can handle payment plans while others make themselfs ill stressing about the debt. CCCS has been telling us to go bankrupt for a couple of years, yet we have managed to pay over as third of the debt in this time.
You have done well so far, Halifax are a pain in the **** if you don't mind dealing with a DCA ask them to pass you over to Blair oliver scott who are much nicer and better organised than Halifax. Good luck.

savagevixen

Hi,
I have 5 kids and we were allowed £660 for Household, food etc. So I think yours will be way too high.
However your clothes can be £10 per person per month, so you could up that a bit.
Our Gas and Elec were much higher too (yours are very low)
Good Luck.

wherediditallgo

That's one thing I like about the CCCS - they're very honest about your options. I know some people find them a bit too honest, but I prefer to know where I stand with people.

They told me much the same as you, tinandsue - I can either continue paying what I was paying (which wasn't as much as I should have been) for the next 12-15 years or go BR, since the agreements I had in place already were probably the best I was going to get. They told me that, because of health issues, I didn't have the capacity to take on a part-time job on top of my full-time one, so I'd be pretty much stuck at the level I was at, & could be considerably worse off if one of my creditors decided they wanted me to pay more & took me to court or even went as far as making me BR. CCCS felt that, even if I didn't go BR when they told me to do so, there was a very good chance I would do so within 6-12 months because I wasn't making all my payments, & creditors would only tolerate that for so long. They were right - six months or so later, I was at the court filing for BR. I don't regret it for a second.

I can understand your reticence about going BR. CCCS told me to not just think about how I'd manage to make the payments that year, but every year from that point on until the debt was cleared, & that's something I'd say to you. What would happen if your husband lost his job? What would you do if your winter heating bill were much higher than expected because of e.g. illness? If you need both cars, how would you manage if one was off the road because it needed expensive work not covered by the insurance? You've got to take into account you have 4 children who will probably become more expensive not less as time goes on. Add to that the two cars, & any household repairs/replacements that may need doing, & you've got an expensive time ahead of you for years to come.

I wouldn't suggest going BR to anyone (as others have said, that's a decision only you can make in the end), but if you get defaults on your credit rating because of not being able to make the payments, your credit file will be affected for the same six years that it would be if you went BR, so you'd not be much better off than you are now & if the rates go up you could be even worse off than you are now.

savagevixen

Broken_hearted wrote: »

You don't need to go bankrupt but it is easier to do so. Some people can handle payment plans while others make themselfs ill stressing about the debt. CCCS has been telling us to go bankrupt for a couple of years, yet we have managed to pay over as third of the debt in this time.

But, to be fair Broken hearted, you are not in the same position you have a house that you own with an extremely enviable mortgage. As WDIAG has pointed out, really the OP has nothing to lose by going bankrupt. We were in a similar position and it seemed ludicrous to keep struggling, when you have tried your best for years. Bankruptcy is a perfectly acceptable way to manage your debts.
I am sure if we owned our own home things would be very different. The OP has stated they pay rent.

tinandsue

Thank you all for your advice. But I am still having trouble understanding the main differences. We already both have a default against our names but are able to keep running a bank account. Is this something that we wouldn't be able to have if declared bankrupt? Also, what does it mean to have it "discharged"?

Broken_hearted

I started with the same level of debt and a lot less income everyone is different.

You can run a basic bank account as a bankrupt, however your bank may close the one you have now or downgrade it.

tigerfeet2006

The rules in Scotland for BR are completely diffrent to the England. Have a look at this site they should be able to answer a lot of your questions. Unfortunatley we don't have that many people from Scotland here.

http://www.debtquestions.co.uk/debt_forum/viewforum.php?f=16&sid=969f08314b15fdfb726a06357d565049