To give or to give up?

TS_777

Dear Money Saving Experts,

My husband got a debt 68K (credit cards, loan,overdrafts). His minimum repayments are 1.6K/month. He is out of job now, but is applying for a job currently. There is a hope that he will get one soon but we don't know for sure. His salary expectation is 2K/month.

I have 30K on my ISA and 4K on my children accounts. I could give it to my husband to pay half of his debt now. I have a job (2.2K/month), which is just enough to pay for rent, food and bills, so potentially we could live on it, while his salary will go towards his debt repayments. But I am worried that he will not be able to pay off other half if his salary is lower than expected. And there will be no hope of getting a house ever, since there will be no money for deposit.

Another way is to declare himself a bankrupt. All his debts are on his sole accounts, I am just a second cardholder on 2 of them. We have no house, no car. In this case I keep my and children savings and could potentially apply for a mortgage on my sole name later.

In regard to this option I have some questions:

If a husband is a bankrupt will it ruin my credit record as well?
Will I get a morgage if I am married to a bankrupt?
What if I divorce him? Will it help to reduce the damage to my credit record and increase possibility of getting a mortgage?
My husband has private pension (30K), will it be taken by creditors or will he keep it if he goes bankrupt?

I don’t know which way to go. Struggle and pay off the debt or try to salvage what is left. I would prefer to pay off the debt, but is it a right thing in the long run? This will mean I will never have a house as I am already 40.

Thank you for reading this and any advice is sincerely appreciated.

pania

hey hun and welcome aboard?
My biggest concern would be, yes you could pay it off, BUT would you do that with the peace of mind of knowing that he ahs learnt his lesson and wouldn't run up any further debt? If you're not sure, dn't do it!!

Unfortunately i belive that as you are married and financially linked, any savings that you have would be taken as part of the bankruptcy, Try posting this on the bankruptcy board where you'd get loads more specified advice on this.

Is his credit rating still quite good? Could he shuffle the cards a bit? I.e put higher apr cards onto any surplus balance on a lower apr card?

Whack up an SOA of your incomings and outgoings, see the sticky by the lovely southern scouser at the top of the forum,
Include EVERYTHING you can think of and put in outstanding balances, interest rates, credit limits et al.

good luck and see you bac here shortly. xx

plumduff-2

Your husband is in a perfect position to go BR... Your credit rating would not be affected unless you had joint accounts, this does not include debts where you are 2nd card holder..

You would be able to get a mortgage in future. you would be able to immediately.. Him going BR would not affect you being able to do this...

As for the lvel of debt. I have seen much worse.. Getting divorced because of debt is nonsense, unless you just dislike him anyway and are using this as an excuse..

I would not recommend you using your svings to pay half the debt off.. it would still leave him with a massive £30K+ anyway and you would probably feel resentment at haing to spend yours and thekids money...

If he earns £2K per nonth - when he gets a new job, he will probably have an IPA to pay for three years, but this would probably be less than what he is paying now...

Have a look at the Insolvency Servoce website for details on IPAs and also regarding the pension.. I do know some pensions are safe but some are not, so you woud need to check this out the Ins. Serv website has a bookley called what happens to my pension...

All in all I think BR would be his best option... You keep your money.. which has nthing at all to do with the OR... and his BR - unless the money has sat in one of his accounts and recently been transferred to your... which the OR would see as him disposing of assets prior to BR..

Hope this helps...

poppy10_2

Pinkkat is being a bit harsh - it's perfectly reasonable for you to look out for yourself and your children's security. You've worked and saved hard to amass your 30k savings. If you just give him a huge lump sum he won't learn his lesson, He'll continue to build up debts and expect you to bail him out again. Both of you will end up with nothing.

Go for broke!

immoral_angeluk

If a husband is a bankrupt will it ruin my credit record as well? Only if you're financially associated to him or go bankrupt with him. Check your credit file to see if you're linked. Close any joint accounts and then ask for a file of disassociation to be put on your credit file.

Will I get a morgage if I am married to a bankrupt? Yes I don't see why not, if you are not financially associated to him.

What if I divorce him? Will it help to reduce the damage to my credit record and increase possibility of getting a mortgage? I can't believe you'd seriously consider divorce to protect your credit record! Surely there are more important things in life than getting a mortgage?????:eek: :eek:

My husband has private pension (30K), will it be taken by creditors or will he keep it if he goes bankrupt? I don't know but hopefully someone will be along to answer this soon.

pinkkat8910

poppy10 wrote: »

Pinkkat is being a bit harsh - it's perfectly reasonable for you to look out for yourself and your children's security. You've worked and saved hard to amass your 30k savings. If you just give him a huge lump sum he won't learn his lesson, He'll continue to build up debts and expect you to bail him out again. Both of you will end up with nothing.

Go for broke!

We'll agree to disagree then Poppy, I think divorcing over someones debts is 'a bit harsh' :rolleyes:

Although, as you say I don't think giving him the 30k would help him in the long term and he would still be left with in excess of 30k of debt ... keep hold of your savings for yourself and the childrens future.

fermi

Hi TS 777

The advice given by plumduff and immoral_angeluk with respect to bankruptcy is spot on. Particularly, don't give up your savings or the children's.

What happens to pensions in bankruptcy is explained here:

What will happen to my pension?

But the most important bit is:

How will bankruptcy affect my pension?

Following the introduction of the Welfare Reform and Pensions Act 1999, where a bankruptcy order was made on a bankruptcy petition which was presented on or after 29 May 2000 all pension schemes which have been approved by HM Revenue and Customs do not form part of a bankrupt's estate and therefore cannot be claimed by the trustee in bankruptcy.

What are approved pension schemes?

Approved pension schemes are essentially:

• any pension schemes registered under section 153 of the Finance Act 2004 (essentially schemes registered by HM Revenue and Customs plus annuity contracts used to secure benefits under a registered pension scheme which do not
  provide for immediate payment of benefits) • all retirement annuity contracts;
• any personal pension schemes approved by the HM Revenue and Customs for tax purposes; and
• stakeholder pensions.

These are the most common approved pension arrangements, but yours may be different. If the official receiver is in any doubt as to whether your pension scheme has been approved by HM Revenue and Customs, he/she will write to your pension provider for confirmation.

Once the official receiver is satisfied that your pension is an approved pension arrangement he/she will write to you and to your pension provider confirming that the pension does not form part of the bankruptcy estate.

What if my pension scheme is an unapproved scheme?

If your pension scheme is unapproved, you may still be able to exclude it from your bankruptcy estate by applying to court for an exclusion order or by making a qualifying agreement with your trustee. This is something to discuss with your trustee.

If a pension policy does form part of your bankruptcy estate, the official receiver or insolvency practitioner trustee can claim the lump sum and the regular payments even after your discharge from bankruptcy. It may be possible for you to 'buy back' your interest in the pension policy from the trustee in bankruptcy and you should speak to your trustee about this.

If you have any bankruptcy specific questions you can also post on the "Bankruptcy & Living With It" board.

Please take some professional advice regarding your best option to deal with this.

[SIZE=-1] You can contact:
[/SIZE]

• [SIZE=-1] Your local CAB Office and ask to speak to a 'money advisor'.[/SIZE]
• [SIZE=-1]The Consumer Credit Counselling Service (CCCS) - Tel: 0800 138 1111 [/SIZE]
• [SIZE=-1]National Debtline - Tel: 0808 808 4000 [/SIZE]
• [SIZE=-1]Payplan - Tel: 0800 917 7823.[/SIZE]

Hope that helps.

TS_777

Hi guys, thank you so much for all your great comments! I think I’ll keep my savings as you suggested and I’ll tell you the beginning of the story.

A year ago my husband was made redundant. Instead of looking for a new job, he decided to venture into a murky world of on line trading. He was flirting with finances for some time. For example he would get a 0% credit card, borrow money for 1 year, transfer money to savings account, pay the debt at the end of the year, pocket the interest earned. He was always very careful, managed all well and paid all his debts in time. In this way he acquired lots of cards (that is why his debt now is so high) and confidence (too much!). A year ago he assembled his 40K savings+my 40K (you see, at that time I had 70K in savings) and started online spreadbetting. For me it sounded like trading in shares, but my understanding of the system was very vague. It turned out to be very risky. At the beginning things went well, he earned 20K in 6 months. Then he lost half. Instead of pulling away with what was left, he became more determined to continue, to have it back. The more he was losing the more he wanted to persist. Men! so brave but also so stubborn sometimes…(I am taking 3 deep breaths to calm down….ok…) So he lost 80K invested and borrowed to the limit on all his cards (68K). He did not stop until the end which came 3 weeks ago.

To be fair to my husband I will say that he is a family man, he loves me and children, everything was fine before, he did this because he wanted to get money for the family. But such big mistake! I feel like he’s gone mad!

We are still renting and pay 1400£/month, which is out biggest expense. It is nothing special, a very modest 2-bedroom flat in a purpose built flat. That’s why credit record is important, I feel the only way to save money is to get a mortgage right now. I have 2 years ahead of a contract job, it usually is renewed, but you can never be 100% sure. I feel the only way to cut the rent is to get a mortgage, but it is scary to start in such turmoil, maybe it is overstretching too far?

Will I divorce husband to improve credit record? I could, but I don’t want to, it is more like a way of letting my anger out. I am so mad at him for borrowing without telling me, I would sell him on e-bay if I had any offers, anyone tempted? To oil platforms or to goldmines in Africa. Fortunately for him or more likely unfortunately (because he will have to listen to my naggings now) oil platforms do not take people older than 26! I also threatened to tell his mum about his deeds. This is even more wicked cruelty than divorce, don’t you think?

I will post my SOA tomorrow, as I don’t remember my bills, maybe you could pick up something there? Please keep writing guys, I need you… My children are away on holiday and I have sleepless nights, while my husband sleeps like a log!! Unbelievably!!!

TS 777

climbgirl

TS_777 wrote: »

A year ago my husband was made redundant. Instead of looking for a new job, he decided to venture into a murky world of on line trading. He was flirting with finances for some time. For example he would get a 0% credit card, borrow money for 1 year, transfer money to savings account, pay the debt at the end of the year, pocket the interest earned. He was always very careful, managed all well and paid all his debts in time. In this way he acquired lots of cards (that is why his debt now is so high) and confidence (too much!). A year ago he assembled his 40K savings+my 40K (you see, at that time I had 70K in savings) and started online spreadbetting. For me it sounded like trading in shares, but my understanding of the system was very vague. It turned out to be very risky. At the beginning things went well, he earned 20K in 6 months. Then he lost half. Instead of pulling away with what was left, he became more determined to continue, to have it back. The more he was losing the more he wanted to persist. Men! so brave but also so stubborn sometimes…(I am taking 3 deep breaths to calm down….ok…) So he lost 80K invested and borrowed to the limit on all his cards (68K). He did not stop until the end which came 3 weeks ago.

Hang on a minute here, this isn't online trading, this is gambling! Plain and simple! Online trading is acting as a broker in the sharemarket. Online spreadbetting has nothing to do with shares, it's gambling - on horses, sports events etc. It's not playing the stockmarket.

What your husband has done is card-tarted to make money on the interest - which is fine when done properly, but it's not an actual job! Card tarting is when you take the money from credit cards, put it in savings accounts and pay it ALL back when the interest free period ends. There shouldn't be any massive debts because the money is sitting safely in a bank account all the time, making interest. The interest is where the profit is, not in using the money to speculate.

It sounds to me like your husband has broken the rules and instead of keeping the money in a bank account to pay it back at the end, he's gambled it and tried to make more.

You need to be very, very careful here. I know you're married to this guy but you need to protect yourself and your children financially. It sounds to me like he has a massive gambling problem and that he's pulled the wool over your eyes about what he's actually doing. Until he sorts out the gambling problem, he isn't going to change. If you give him the money to clear his debts, he'll just gamble it away again. Either by using the cash, or using the credit it'll free up.

I don't think he's been completely honest with you. He's already gambled away £40k, you have every right to be mad. Be very, very careful and take steps to protect yourself and your children financially. I don't know if that means divorce but I'd get that £30K put away where he has absolutely no signing access to it.

rayday2

I would sign the money over to the children to be honest sounds drastic but if he was divorce you he could claim that money back, very scarey stuff.

He is a gambler and gamblers get desperate. Is he working now how will he may his DMP?

tesuhoha

Your rent sounds very high. I would take the £30k and put it down on a 2 bed flat/terraced house depending on where you live then your hubby would not be able to touch it divorced or not, because its the childrens' home. The mortgage would be less than the rent you are paying at the moment.