Advice wanted/SOA (I know you love those)

KeepOnKnitting

Long story short I made some really bad decisions in all sort of areas of my life when I was younger, and while I now am pretty good at managing my money, I've a lot of ground to make up. I am planning to go to university next September. As far as I can see, my options run to either making my creditors an offer to give them everything I can in the next year with the agreement that it all be wiped next September, or bankruptcy.

On this basis, I need to know that I am doing everything I can on the budget front, whilst also being realistic.

Statement of Affairs and Personal Balance Sheet

Household Information
Number of adults in household........... 1
Number of children in household......... 0
Number of cars owned.................... 1

Monthly Income Details
Monthly income after tax................ 1144 (Partly zero hours contract, partly self employed)
Partners monthly income after tax....... 0
Benefits................................ 0
Other income............................ 300 (I have a lodger)
Total monthly income.................... 1444

Monthly Expense Details
Mortgage................................ 0
Secured/HP loan repayments.............. 0
Rent.................................... 400
Management charge (leasehold property).. 0
Council tax............................. 88
Electricity............................. 35
Gas..................................... 47
Oil..................................... 0
Water rates............................. 22
Telephone (land line)................... 18
Mobile phone............................ 5
TV Licence.............................. 0
Satellite/Cable TV...................... 0
Internet Services....................... 12
Groceries etc. ......................... 200 (I work a physical job, and probably £15 of this is materials for self-employment)
Clothing................................ 15
Petrol/diesel........................... 190 (Have to drive for work)
Road tax................................ 13
Car Insurance........................... 40
Car maintenance (including MOT)......... 25
Car parking............................. 5
Other travel............................ 10
Childcare/nursery....................... 0
Other child related expenses............ 0
Medical (prescriptions, dentist etc).... 10
Pet insurance/vet bills................. 0
Buildings insurance..................... 0
Contents insurance...................... 0
Life assurance ......................... 0
Other insurance......................... 0
Presents (birthday, christmas etc)...... 5
Haircuts................................ 10
Entertainment........................... 0
Holiday................................. 0
Emergency fund.......................... 10
Total monthly expenses.................. 1160


Assets
Cash.................................... 750 (This would be my bankruptcy fee)
House value (Gross)..................... 0
Shares and bonds........................ 0
Car(s).................................. 500
Other assets............................ 0
Total Assets............................ 1250

No Secured nor Hire Purchase Debts

Unsecured Debts
Description....................Debt......Monthly...APR
NRAM...........................38640.4...1.........0
Santander credit card..........5843.67...1.........0
Santander Overdraft............2400.58...1.........0
Unpaid council tax.............1328.12...1.........0
Halifax/Moorcroft..............514.55....1.........0
Halifax/Robinson Way...........1717.06...1.........0
Total unsecured debts..........50444.38..6.........-
Currently giving each of my creditors £10 a month except NRAM and the council tax. They both relate to a repossessed property.

Monthly Budget Summary
Total monthly income.................... 1,444
Expenses (including HP & secured debts). 1,160
Available for debt repayments........... 284
Monthly UNsecured debt repayments....... 6
Amount left after debt repayments....... 278

Personal Balance Sheet Summary
Total assets (things you own)........... 1,250
Total HP & Secured debt................. -0
Total Unsecured debt.................... -50,444.38
Net Assets.............................. -49,194.38

Created using the SOA calculator at .
Reproduced on Moneysavingexpert with permission, using Firefox browser.

rockm87

Hi and welcome!!

How did you know I love these!! nosy parker eh?

do you really have money left at the end of the month? You need to make sure you are taking stock of every penny spent, maybe worth keeping a note of everything you buy.

Good on you for getting a lodger. Your utilities seem a little high, is this overpaying? i would look to reduce this when possible.

Otherwise have you spoke to a debt charity like Step change?

HappyMJ

You have £50,000 of debt no assets and no chance of decent paid work in the next 12 months. I'd go the bankruptcy route.

In bankruptcy you can budget £20 a month for a holiday.

You can also allocate more to your monthly groceries.

You can also put £12/£13 down for TV licence whether you pay for it or not.

This should hopefully eliminate all of your surplus and you will have very little to pay.

In 12 months all of your debts will be written off and you can start again and look for much better paid work.

Save as much as you can for the following 5 years and then you can get a mortgage and your bankruptcy will not affect your chances of a mortgage.

KeepOnKnitting

Ah, you got me rockm, I'm totally a lurker. Gas is paying back a bit that I need to from previous winters. Electric is a key meter which I love as it means I can't get behind with it! As you say, I am sure there are better deals, but having tried to change my phone deal recently I'm guessing that a credit check would be a bit of a problem.

HappyMJ, thank you for your honesty.

National_Debtline

Hi

It’s a good idea to speak to Business Debtline if you have any form of self-employed income, to help to account for any fluctuations and any business expenses. Also if you need a business bank account or trade credit and you are considering bankruptcy.

You don’t need to have ‘business debts’ to speak to them.

www.businessdebtline.org

James
@natdebtline

Pixie5740

i thought your SOA was looking good (Lodger paying £300 in a property that is only £400 to rent) and couldn't understand why you had a bankruptcy fee. Then I saw your debts and that you've had a house repossessed. Bankruptcy does have repercussions especially if you want to buy a property further down the line but since you've already had somewhere repossessed you're already a bit goosed anyway. You may as well be hanged for a sheep as a lamb and I think bankruptcy would give you a clean slate and allow you to focus on your studies so that when you graduate you've essentially hit the reset button.

I don't know what impact bankruptcy would have on your business or obtaining student finance though.

andyfromotley

I'd speak to step change or national debtline.

Those debts are huge in comparison to your available income. I can see no way in which you could save enough to to make serious offers to clear these debts. Even if you could get a 20% F&F settlement rate (unlikely) you are still going to need around £10k.

Even a DMP would take forever.

It may be in this case that bankruptcy is a good option. You will then be able to go uni without this hanging over you and be two thirds of the way to all dropping off your history by the time you finish uni.

Give them a bell.

KeepOnKnitting

I have spoken to national debtline, and they did agree that there were worse things I could do than go bankrupt, but a friend of mine suggested that I write to my creditors and offer to pay as much as I could, although she was sceptical they would accept only a year of payments as settlement. I just wanted to get external opinions before I went to the trouble.

My self-employment shouldn't really be affected by bankruptcy. My employed income fluctuates more, and I don't have a separate business account or use any credit for my business. I don't have a limited company or use any lines of credit.

I think as much as anything I've just been scared by the prospect and needed some reassurance.

JasX

KeepOnKnitting wrote: »

, but a friend of mine suggested that I write to my creditors and offer to pay as much as I could, although she was sceptical they would accept only a year of payments as settlement. I just wanted to get external opinions before I went to the trouble.

You owe £50,000. You have £750. Your friend is not living in the real world and giving you rather foolish advice as:

-your current spare money (inc the £200 each month) will barely make a dent in the interest let alone see any company accepting offers of the size you'll be in a position to make

-any negotiated or non-bankruptcy route you take will likely last much longer than the bankruptcy and impact both the amount of spending money you have to live on and creditworthyness for a longer period

I see bankruptcy as a good option here

KeepOnKnitting wrote: »

My self-employment shouldn't really be affected by bankruptcy. My employed income fluctuates more, and I don't have a separate business account or use any credit for my business. I don't have a limited company or use any lines of credit.

you are probably correct but worth a call as suggested above to check and sound out any other self-employment related pitfalls

asparagus1968

HappyMJ wrote: »

You have £50,000 of debt no assets and no chance of decent paid work in the next 12 months. I'd go the bankruptcy route.

In bankruptcy you can budget £20 a month for a holiday.

You can also allocate more to your monthly groceries.

You can also put £12/£13 down for TV licence whether you pay for it or not.

This should hopefully eliminate all of your surplus and you will have very little to pay.

In 12 months all of your debts will be written off and you can start again and look for much better paid work.

Save as much as you can for the following 5 years and then you can get a mortgage and your bankruptcy will not affect your chances of a mortgage.

and no contents insurance, would that be allowed as well?

HappyMJ

asparagus1968 wrote: »

and no contents insurance, would that be allowed as well?

Yes it would. A fixed term life insurance policy is also accepted. The funeral costs are paid first then the OR gets the proceeds and distributes them to cover the debts and finally your beneficiaries get whatever is left over. Life assurance where you get a payout whether you die or not however is not. A policy may be worded as a whole of life policy or permanent life assurance. They have a cash value which the OR can claim as part of a bankruptcy.

Excessive pension contributions are not accepted but a couple of percent of salary 100% matched by the employer may be acceptable.