Shall I go bankrupt whilst my partner does a DMP?

pheonix_one_day

Hi all.

Lots of great advice on this forum (and helpful stories of people becoming debt free, so thank you for those).

So, I have struggled to find info on the forum that relates to my situation.
My (married) partner and I both have a lot of debt. Mine is about £30k, partners debt is £19k and joint is £7928 (overdraft and £5k+ tax credit over-payments). Total: £56900 approx.

All is a mixture of credit cards, loans, store credit, and a business loan that I (stupidly) personally guaranteed, which was called in due to low levels of trading.

We have been in touch with Step change which advised us to do a DMP. It would take us approx 11years to clear the debt. :eek:
Two of our creditors (mine) won't accept the DMP monthly offer and I'm so sick with worry I feel totally on the edge of being able to cope. I appreciate the help Stepchange has provided but I also still feel I'm not in control of things as Stepchange are the ones communicating with various creditors. I worry debts will get sold on, baliffs calling, CCJ's appearing etc.
I am terrified of my children and family finding out and can't let this happen.

I'm feeling so on edge, I'm not sleeping, becoming ill (current health problem made worse by stress I think) and I'm really seriously wondering if I can cope with this for the next 11 years. We have no assets (rent privately) and both work. Eldest child is classed as disabled.

So, my query is: I've been seriously considering declaring bankruptcy. I am wondering if I can go bankrupt whilst my partner still carried on with own DMP.

Things that complicate things in my head:
Car on HP.
This is our only car, MPV, 3yrs old, £199 per month, about £9500 worth of finance left on it. Car is in my partners name, they took out the HP, and uses it for work and to drop the kids off to childcare and school. I sometimes use it for work.
This is the only reason why we're not considering both going bankrupt. We really need this car, but will the OR take this even if I go Bankrupt?
Joint Bank accounts.
We have 2 bank accounts that were joint - both had about £1200 overdraft each. We don't use either now as have opened a joint basic account elsewhere. These two overdrawn accounts are included in our current DMP, but if I go bankrupt, what happens to this debt? Can I take my partners name off the bank accounts now so that these debts fall under me and the upcoming bankruptcy? Will this look badly on me or be classed as illegal?

Tax credit overpayment.
I'm not sure what would happen to the £5000+ joint tax credits we owe? Would that all be transferred to him and if it's not still paid off after I'm discharged, can they chase me again afterwards for the debt alongside him?

You may be thinking why not do an IVA?
Well, my employment contract states that if I enter into insolvency arrangements (IVA, babkruptsy), I MAY lose my job ("may" is the actual wording - cryptic but massive risk). I work in a sales type industry so nothing obvious as to why I should lose my job. Sales is always a risky career and if my targets aren't hit, or KPI's, I would easily be let go anyway. This risk alone is big enough for us not to enter into an IVA as I am not in a secure job in order to guarantee the legal 5 year payment terms.
Selfishly, morbid but reality, it could be likely I have an elderly family member pass and leave inheritance, which of course I think the person distributing the inheritance checks the insolvency register and the IP would get the lump sum. My understanding is if my relative passes away after BK discharge, it won't matter. If I wasn't so ashamed, I would ask for my children to be named on the will instead of me but traditional family values makes my situation very taboo.

So, (apologies for the huge first post and probably useless blurb), but any advice on whether it would be the best thing for me to go bankrupt and partner stay on a DMP and is this possible taking consideration all (in my head) own complications/worries?

Thanks in advance.

HappyMJ

You don't own the car you are hiring it and anyway it's in your partners name.

How much equity do you have in the car. It might be enough so you may be able to keep it if you can keep the payments going on the HP agreements.

You can take your partners name off the joint bank account which is overdrawn if you clear the outstanding balance. That's probably not going to happen so he'll inherit that debt.

Tax credits will ask either partner for repayment of the tax credits. They don't ask for half they'll ask either of you for all of it. You are jointly liable for that. If you are declared BR they won't chase you for it. That debt will after BR and in the future just be his debt.

I would let the family know. Your name will be published and if they were to do an internet search on your name they could see it. It would also enable them to change their wills if they need to. BR isn't something to be ashamed of. You got into financial difficulties for a very valid reason...at least it wasn't living the high life.

pheonix_one_day

Thanks Happy.

Well, I'm sure I'm not the first to admit that my debts were NOT run up for a purely valid reason - yes the business loan was a life lesson, but I'll admit, we lived beyond our means - although no yachts, fast cars, holidays, champagne or designer clothes! :rotfl:(if only I did have something to show for all this debt!).

The main bread winner being made redundant didn't help - rent of £1450 (at the time) and all the outgoings meant we were literally bleeding money (our savings) to keep up.
Should have seen the wood through the trees earlier....

By the time a new job was found, serious debt had a hold and it was the usual tale of using cards to pay bills, paying minimum amount, borrowing more to get by and then a business loan hits, tax credit bill hits - bingo - we're in :mad:

I'd be interested in hearing from anyone else who's done a different insolvency solution to their partner.
Many thanks.

fatbelly

Advice so far seems good. Tax credit debt is an anomaly in that they can split it between the two parties (so half would be covered by your bankruptcy).But it may be that they would only do that in household breakup cases. In any case your liability would finish with the bankruptcy.

I am not a fan of 11-year dmps for those in rented accommodation with no assets. Did stepchange explain why they did not suggest bankruptcy?

kendall17

4 years time, there will be a positive change in that the car will be repaid. Meaning an extra £199 to pay into the DMP. DMP would drop to just under 9 years (based on DMP payment of £430 then £629)
Think it would boil down to what the budget looked like (any above recommendation spending = increase in IPA?)

sourcrates

It doesn't matter if its 11 years or 9 years on a DMP, its still a bloody long time.


I'm with Fatbelly on this one, I spent 6 years on an IVA, and that nearly did for me, my situation was similar to yours, if I was in the same position again, I would not hesitate to go down the Bankruptcy route.


I would take whatever option would work the quickest for you, this been in debt lark is no fun at all.

kendall17

sourcrates wrote: »

It doesn't matter if its 11 years or 9 years on a DMP, its still a bloody long time.


I'm with Fatbelly on this one, I spent 6 years on an IVA, and that nearly did for me, my situation was similar to yours, if I was in the same position again, I would not hesitate to go down the Bankruptcy route.


I would take whatever option would work the quickest for you, this been in debt lark is no fun at all.

I completely agree, I was just putting it in the eyes of the debt advisor.