Our muddled up big mess...

rb_

Hello,

Sorry for the length of this post, we're attempting to channel our thoughts and feelings in hopefully, some form that makes sense...

In a previous thread I mentioned that both my wife and I are in Bankruptcy and Trust deed respectively. As under the current conditions creditors don't really see all the money we owe them as a portion is "written off" etc.

Right now we're paying back £350 per month between us based on my wife's contribution to bankruptcy and my payment to the Trust Deed (£150 and £250 respectively). However, the car loan finally came to an end freeing up £150, which from next month will be factored into my trust deed taking the total contributions to £500 per month over the next 2 years.

We owe about £30000, however we thought we were dealing with around £17000 when we made enquiries a year ago about getting our debt sorted out. There was an unsecured loan taken out when we bought this house - around £14000 which took that amount up to the £30k - this loan was actually factored into the mortgage, completely up to date and now is obviously considered a "debt" since we were told to stop paying this when the trust deed started, this made it look like our mortgage payment came down.

However, stepping back we've always had a feeling, before, while and after entering these arrangements that paying £650 under an arrangement for example that would see the creditors see 100% of the debt back over 48 months (If the big loan that we never even noticed an impact from was not included and paid as normal, then that would have been a couple of years the creditors would see all the money back).

I am even maintaining a pro-rata breakdown on a spreadsheet that models this too along side our income\expenditure data etc. We've taken a look at this, made some cuts here and there, my wife could have taken on extra shifts in her contract to increase the amounts slightly as she feels she has capacity as she's part time, all this could have and can be done.

The question is if i wrote to each creditor and told them they could have all the money back over a reasonable period of time vs maybe not getting it all back via us being in a trust deed and bankruptcy - then I would think common sense would show that would have been and be a better method of dealing with the debt.

I have brought this up with the trustees and for example my trustee told me along the lines "i can see your point however your wife's bankruptcy is near impossible to come out of, but you might be able to do something about the trust deed" (not really elaborating what can be done in my trust deed situation however).

We feel we are not "bad people" and fell to bits managing money together with a 3 month out of work period impacting and failing to juggle payments about here and there, buried head in sand for a short while then set out to do something about it... now my wife has a letter indicating they have found some equity in the house (around £4k her share) and are sending someone out to do an internal valuation? why? we've not really found someone yet to buy the beneficial interest yet (if they get a bigger valuation does that mean they will change that letter to get more equity btw?).

We're in decent jobs and just feel when we made initial enquiries we wanted to just manage this, we don't want to write off debts, rather pay them all back and sought piece of mind.... "A cry for help" was needed really.

Quite a muddle there, just don't know what to do - trustee saying "well you signed it that way", fair enough we did but the figures were all adjusted by the accountant and we agreed foolishly that they seemed fine, yet here we are, faced with a possible sale of house possibly, but still feel there's a better way here?

Or should we just let it all go the way it is, accept the house may go - consider that although we feel we could pay all this back, the trustee's and legal system will just make it hard for us, rent a house and make a fresh start with our kids and look forward to being debt free in a few more years anyway - still doesn't make sense though...

Jim

dancingfairy

o.k. I would say that it's quite difficult if not near impossible to overturn the bankruptcy.
Your main questions appear to be:
Was the bankruptcy/trust deed the right way to go/ where you advised correctly?
Will I loose my house?

Was bankruptcy the correct path for you? It's difficult to say really. Who did you speak to to get advice?
Yes you could have done extra shifts, cut your costs. It's partly up to you to think through all the options but partly up to whoever went through all your options with you. If you had doubts then you shouldn't have signed up, sorry.

I assume you made the best decision you could at the time with the information available. Is going back and revisiting that situation actually helping you?
Your creditors aren't likely to care about getting all their money back now and as I said before overturning the bankruptcy will be extremely difficult. You'd have to pay all the OR'S costs as well as being able to pay off you debts. I *think* you'd actually have to be able to pay the debts off in full as well (although I'm not sure on this).
In terms of whether you would loose the house. I'm not sure. I'm sure one of the experts will be along to help but 4k equity is not a lot. I doubt it would be worthwhile the OR trying to force a sale for that much.
df

dancingfairy

there's a sheet here relating to houses:
http://www.bis.gov.uk/insolvency/personal-insolvency/bankrupts-home#lose-home
It sounds like you will need to try and find the money to buy the BI.

Guidance from the IS on how overturning a bankruptcy:"
a. How long does bankruptcy last?

You will be automatically freed from bankruptcy (known as “discharged”) after a maximum of 12 months.

You will also become free from bankruptcy immediately if the court annuls (cancels) the bankruptcy order. An order of annulment can only be made by the court.

You can apply for an annulment at any time if:

the bankruptcy order should not have been made, for example because the proper steps were not taken when obtaining the order; or
all your bankruptcy debts and the fees and expenses of the bankruptcy proceedings have been either paid in full or secured (guaranteed) to the satisfaction of the court; or
you have reached an agreement called an “individual voluntary arrangement” with your creditors to repay all or part of your debts. "

More info on getting a bankruptcy annulled here:http://www.bis.gov.uk/assets/insolvency/docs/publication-word/cancelled.doc

You could consider IVAs. Why did you go for one bankruptcy and one trust deed?
With bankruptcy you are paying your IPA for 3 years and it looks like you will have to buy the BI back from the OR.
If you were to go into an IVA then you would be looking at 4 or 5 years of payments. It would affect your credit rating similarly and you would still have to declare it as a form of insolvency if asked. Basically I can't see much advantage of an IVA over bankruptcy as it would last longer, it would be more likely to fail (leaving you back at square one) since you can't always guarantee to be able to make the set payments for 4/5 years but it would mean the house would be safe.
Basically I think it would be difficult (if not impossible) for you to overturn the Trust deed and bankruptcy right now and can't see that it would have much benefit for you.
How long does the trust deed last? I'd be tempted to finish that and then save up to try and buy the BI or see if family/friends can help out.
The only other issue seems to your issues with the whole 'going bankrupt thing' which you would need to work through.

df