HELP! CAB and Bankruptcy

tracystrong

I hope someone out there might be able to shed a little light on an awfully confusing situation.

My husband lost his job in Feb this year. I do not work as I have 3 year old twins to care for. We have debts of approx £10,500 covering a loan and credit cards. We are both currently on benefits and my husband is seeking employment. We live in a small town which means any employment my husband applies for requires transport. We own our own car (R reg, not in tip top condition). We do not own our home it is rented through a Housing Authority. We have been in touch with our creditors regarding a minimal payment of £1.00 per month until circumstances change. Some have accepted this, other have not and are requesting full payments or futher action will be taken. We have been advised by CAB that bankruptcy would be a preferable option, under our current circumstances. We are getting weekly phone calls and letters from creditors demanding payments, even though CAB have been in touch with them direct. I don't really know how long I can take this for. We understand that we have had the money and are willing to try and pay the debts off, but at the present time we have no way of doing so. We are not in a position to want to buy our own home in the near future, so the fact that getting future credit does not currently worry me. We have no other assests apart from the car. I have checked several websites for information regarding the process of bankruptcy and get confused by what they can take, what happens to the debt afterwards, if we would still be liable to pay for a certain amount of debt etc.

If there is anyone out there that can help...............Thank you

Eager_Elephant

Hi tracystrong,

I have not personally gone bankrupt but a few people from another debt forum I frequent have.

Why do CAB think your best option is bankruptcy? I can see that you are on benefits and obviously with a debt of £10500 it is hard to meet the mimimum payments.

How likely is it that your husband will get another job? Does he have specialist skills or does he generally work in unskilled jobs? How much does your husband normally earn?

I think that if your husband is likely to get a stable job fairly soon then maybe bankruptcy isn't the best answer.

How will you pay for the fees? The court fees are waived if you are on benefit but you still have to pay about £320 for the OR.etc.

I think it is good that the debts have been passed on to debt collection agents becuase it will generally mean they can accept a lower monthly payment. Most of the big financial companies have set figures(targets) that they can accept however debt collection agents have probably bought your debt for less than half what you owe so any money is a bonus.

The debt collection agents will always ask for more money than you initially offer, they want to see how far they can push you and see if you will up your payments, stick to your guns and offer only what you can afford.

Can you imagine if they tried to take you to court for more money (not likely btw), the judge would be able to clearly see your income, will be annoyed with the creditor for taking you to court and it has been known for the judge to write off the debt or even to accept lower payments (although I can't see them going much lower than £1.

I think if you were to go bankrupt then they wouldn't take your car as your husband will need it to help look for work and then once he has found work so he can travel there. If however your husband has a disability and can no longer work then maybe a car isnt such as necessity.

Have you considered going out to work, could your husband watch the children? (I understand this isn't ideal for some families.

If you did go bankrupt you would have to present a SOA (statement of affairs) to the Official Receiver who would decide if you have any surplus income, if you do he will normally ask for you to pay 50% of your surplus income towards your debts for anything up to 3 years and after that date you would pay no more. Obviously if you are on benefits you wouldn't be expected to pay anything, however if your husband got a job then he would need to inform the OR so that he can look at your circmstances again. If your husband doesn't find a job before you are discharged then you do not need to tell the OR.

Hope this helps, if you have any more questions let me know

EE

Eager_Elephant

I'm not sure if I'm allowed to do this that's why I done a seperate post so all my words weren't removed.

On this other debt forum I go on we have a licensed debt counsellor who has his own debt recovery firm (only business debt), he has created a website which should answer a lot of your queries:

http://www.kronos.moonfruit.com/

Sorry if this is not allowed, no connection to the website apart from this guy is so helpful and generous with his time to help others in debt.

EE

Debt_Free_Chick

tracystrong wrote:

I have checked several websites for information regarding the process of bankruptcy and get confused by what they can take, what happens to the debt afterwards, if we would still be liable to pay for a certain amount of debt etc.

If there is anyone out there that can help...............Thank you

And breathe .....

First off, they don't take anything you need for normal living - no furniture, no TV etc. They are only interested in "valuables" they can sell. They won't take hubby's car, if he needs it to earn a living.

The debt gets written off! It's gone ... the lender loses their money, unless the Official Receiver (OR) can take some of your valuables and sell them - then the OR uses the proceeds to give some money to the lenders.

You may have to pay some money to the OR for a period - probably no more than 12 months. The OR will only take some of your excess i.e. what you have left over, after you've budgetted for ALL your expenses. So do make sure you have a robust budget that covers EVERYTHING.

Have you seen this about bankruptcy? A nice "plain english" guide.

Debt_Free_Chick

Eager_Elephant wrote:

Sorry if this is not allowed, no connection to the website apart from this guy is so helpful and generous with his time to help others in debt.

EE

I'm sure you're OK as no-one can profit financially - not you for the link, and not Col for his site

Yes ... I know who you're talking about

bpyoung

Debt_Free_Chick wrote:

And breathe .....

First off, they don't take anything you need for normal living - no furniture, no TV etc.

Eh? Who needs a TV?

Debt_Free_Chick

bpyoung wrote:

Eh? Who needs a TV?

I agree

But the OR will still not take household goods that are considered to be part of "normal" life. You can have my TV if you like - just don't take my radio!

Phoebs

Hi Tracystrong - whilst I am not glad at all that you are in your current situation, I was glad to see this thread.... I was coming on to post about bankruptcy too and the replies so far have been really useful.

I do hope you get things sorted soon

(I'll go off and do my thread now so I don't hijack this one :-) )

jen_jen_2

As you are in reciept of benefits and they are the minimum you need to live on, OR very unlikely to ask you contribute a regualar payment, if you or husband begin to work this may change.

Are the debts in one name or both, if both names you will both have to go bankrupt and two sets of fees - something to consider maybe??

Bankruptcy will also be an answer for when your creditors call, If you decide against bankruptcy they will eventually lay off more once the payment arrangements are in place, it can take some time for this to happen and its very stressful but you will soon be confident in telling them your situation and stating that the offer you have made is all you can afford.