Bankruptcy or just keep paying off?

Boobydoo

All

I have been in touch with Stepchange, and what wonderful people they are!

I have a considerable amount of debt at the moment and the Stepchange plan suggested Bankruptcy. Upon speaking to a second advisor I really now need to consider the after effects.

One of my main priorities is to start repairing my credit file, which I know will take a very long time. If I go bankrupt then I understand it stays on file for six years, BUT, after this time, if I want to apply for credit/mortgage/bank account etc I'm still going to be asked if I've been bankrupt.

So which is the better option? Bankrupt or pay off my debts, which at this rate will take 12 years?

TheGardener

In theory - BR is for those who can not pay off their debts, certainly I was in a position where it would have taken me well into my twilight years to get even close to paying my debts off, for me, there really wasn't an option.
There are other considerations other than just the cash. The stress of debt can take a significant toll on your relationships (both present and future) and mental health, it can eat away at your self confidence and well being. Maybe you need to think about what life in debt for that long looks and feels like and if you can make the payments, not just in cash but in terms of the other impacts.
BR is a clean break and for some, a life saver but no one taking that path should do so without understanding the longer term effects. If you are young, does 12 years paying it take all your youth?
Most people on this forum seem to find that after careful financial management, after the 6 years they are able to get the credit they need, maybe not as easily, but they do get it.

National_Debtline

Without knowing the full picture it is difficult to say what would be the best option overall. If we were to only look at the credit referencing aspects of these two options then it is important to be aware that it will be quite tricky to improve your credit rating until you have paid off all of the debt that you owe at the moment. So if you did decide to negotiate, that would likely mean that you would struggle to improve your file for at least the next 12 years. It would then take more time to improve your score once you are debt free.


With bankruptcy it will be on your file for 6 years and after that it is possible that a future lender may ask if you have ever been bankrupt as part of an application (but it will depend on what sort of credit you are applying for). If the question is asked in this way (i.e. using the word 'ever') then you would have to declare it even if it is no longer on your credit file. I hope that helps.


Laura
@natdebtline

Boobydoo

Thank you guys.

I definitely think that with all the stress and pressure that I'm going to pursue the bankruptcy route. I just need to be able to pull together the fee for it.

SomebodyToldMe

When you have built up enough debt that you just are not going to cope with, it is better go for BR.
The problem is, banks etc will keep hitting you with charges upon charges, so it will extremely hard to see your way out of it.
Better to make a clean break and start again, IMHO.