Debt worries

PonyMummy

Hello

This is my first post and I have some debt worries I wonder if anyone can help with. My partner and I have roughly £23000 of debt in overdrafts and credit cards, due to unforeseen circumstances, having our son and some spending and rubbish budgeting (*embarrassed*). We have recently contacted stepchange and they have advised we have a year of paying £1 to each of our 6 creditors and then review our situation. They then advised we may be able to do a DMP but also advised us to consider bankruptcy. According to our budget we have £44 a month available for our creditors, and apparently it would take us 40+ years to clear our debts. We know this probably wouldn't be the case as my partner gets regular bonuses every year (not guaranteed) of around £2000-£3000 and pay rises of about £50 extra per month most years. However my worry is we will be pushed into bankruptcy as we can't guarantee our situation will improve enough to see a DMP as a viable option. We would be happy to go on a DMP in the knowledge that we could use any extra we get to bring down the debts, but would stepchange see it as a viable option?

My second worry is one of our creditors might petition for our bankruptcy we have no property as we rent but we do have a family car, which cost us £2500 last year. Our son's car seat fits in it and it's a bit of a beast so I'm not sure it'd fit in a smaller, budget car, and I don't think it's reasonable to be asked to sell the car seat as get a cheaper one when you're not meant to use second hand car seats. We also have a lot of "stuff" I'd be terrified we'd be made to sell if bankrupt - our engagement and wedding rings, my flute which was a 21st birthday present, the iPad we use to watch catch up TV as we don't have a TV licence (agreed with TVLA), and we also have a toy collection, it seems silly but we don't go out much and the things we have at home bring us so much happiness. We are selling a lot of stuff but we have things I just couldn't bear to part with, I had a difficult childhood and have a lot of issues with attachment and getting rid of things. I know it sounds stupid but I'd rather have debts than have to sell some of the things I love. Please no judgments

Can anybody help ease my worries? I've tried talking to my partner and she just says "don't worry, we'll see where we are in a year"... But I can't stop thinking about it, I'm terrified our home will be ripped apart!

shinner

I am sure someone with more knowledge will be along soon but I would start with token payments and try and save anything extra for settlements. Have you got a basic account set up ?

splodgethefirst

A few suggestions - wise folk on here can suggest ways you can cut back on your monthly budget by completing the following "statement of affairs" http://www.stoozing.com/calculator/soa.php

As Shinner (above) suggests, opening a basic bank account with no overdraft facilities with a bank you have no links to is a very good idea. it prevents the rule of offsetting being used against you.

as to your goods, i don't think they can force you to sell them.

You might like to contact National Debtline or stepChange and ask their advice about how bankruptcy could affect you.

HTH

Splodge

longtermplanner

PonyMummy wrote: »

My second worry is one of our creditors might petition for our bankruptcy

This isn't going to happen. Your creditors would get no money if they made you bankrupt because the costs of bankruptcy would be thousands and they get paid first, so there would be nothing for the creditors.

The only creditors that take irrational decisions to make people bankrupt in my experience are tax debts, HMRC and council tax. Assuming you don't have any problems with these, you aren't going to be made to go bankrupt.

Stepchange however gave you good advice...

National_Debtline

Hello there,

I absolutely agree that Stepchange have given you some good advice. Token payments is absolutely the right way to go for the time being. You may be able to look at making full & final settlement offers with your partner's bonus - You can read more about those here.

It's important to consider the length of time it might take for you to become debt-free, and 40 years isn't going to be reasonable at all. We would generally recommend making token payments if there is a strong likelihood that your circumstances will change within a reasonably short period of time. On the face of it, bankruptcy *could* be a good option - it's certainly the fastest and cheapest one. There are, of course, implications - and the car is likely to be sold given its value. The Official Receiver/Trustee may allow to buy a cheaper car if there are no reasonable alternative transportation options open to you. Here is a link to our bankruptcy fact sheet..

Very best wishes,

David @ National Debtline.

sourcrates

Hi,
As stated above, this is the cost of making someone bankrupt today in England, To start with, a total of £705 in costs has to be paid to file for personal bankruptcy; £180 goes to the court and £525 goes to the official receiver. In some cases (for instance, if you are on a low income or receive benefits) you could be exempt from the court fee, but not the official receiver's fee.


So if you don't own a property, or have belongings that add up to the total owed plus costs, then this is a very unlikely scenario, as there would be nothing for the creditors at all.


The advice you have been given on token payments is good, and your partners advice "see where we are next year" is also good, if you can save some money up, then try and clear the debts one by one on a "full and final offer basis", also have you checked the age of the credit card debts ?


Where they taken out pre April 2007 ? if so may have paperwork issues, wise to check with a CCA request, may give you more room to manoeuvre in negotiations.