Is bankruptcy my best option

fishfinger1

Hi I currently have approx £22500 of credit card debt. Living in rented accommodation and a car worth £500 I was considering a Dmp but having been on the debt free wanna be thread some of the guys suggested bankruptcy maybe my best option for a fresh start. The word bankruptcy alone seems to terrify me tho. Any advice would be most welcome

HappyMJ

fishfinger1 wrote: »

Hi I currently have approx £22500 of credit card debt. Living in rented accommodation and a car worth £500 I was considering a Dmp but having been on the debt free wanna be thread some of the guys suggested bankruptcy maybe my best option for a fresh start. The word bankruptcy alone seems to terrify me tho. Any advice would be most welcome

It's a lot better than living on beans on toast for 5 years. A DMP requires you to spend as little as possible and put as much money towards your debts as possible for 5 years if you are renting a house and up to 10 years if you own a house and want to keep it.

The allowances given in a bankruptcy allow you to have fairly normal expenses. The only things you aren't allowed to budget for are things considered luxury such as smoking, alcohol and drugs (unless prescribed by a GP). You can even have a holiday in bankruptcy. Not much of one but you can budget for a cheap weekend away during the first year.

National_Debtline

Hi fishfinger1


In very general terms, a DMP might be considered a better option than bankruptcy for those who have something tangible to lose, like a house, or a profession that doesn't allow insolvency i.e. accounting, law etc. . If those risks don't apply to you, then bankruptcy might well offer your best route to a fresh start. I gather you've already taken some advice from Stepchange as well as the peeps on here, so you would be going in eyes wide open.


Good luck


Dennis
@natdebtline

Johnsmith2016

If your debt was 20,000 a debt relief order maybe best.

if you could pay it down 2.5k

As already said - DMP 5 years of living on nothing.

Bankcruptcy this is wiped after 12 months when you get discharged. All options will be negative on credit file, but if your low income/benefits, no assets and it will take you longer than 5/6 years via other methods then bankcruptcy could be best.

You can do it online from april 6th so avoid going to court.

fishfinger1

National_Debtline wrote: »

Hi fishfinger1


In very general terms, a DMP might be considered a better option than bankruptcy for those who have something tangible to lose, like a house, or a profession that doesn't allow insolvency i.e. accounting, law etc. . If those risks don't apply to you, then bankruptcy might well offer your best route to a fresh start. I gather you've already taken some advice from Stepchange as well as the peeps on here, so you would be going in eyes wide open.


Good luck


Dennis
@natdebtline

I have spoken to stepchange but ive yet to call them back to hear their suggested solution. I will never have a job which bankruptcy will affect. I am at some point in the future hoping to have a mortgage does bankruptcy put an end to those hopes. Also ive read it's suggested you open a basic bank account. I already have 2 bank accounts 1 which I use and the other which I don't. Will the account I don't use still be left open so I can use that rather than having to open a new account

Johnsmith2016

You have to put both bank accounts on the forms. The OR will usually ask you which one you want to keep, and declare no interest in it - if its your every day current account and your not in an overdraft which you intend on including in the bankcruptcy. That said, even if the OR declares no interest, the decision on if you can keep it rests with the bank ... So i would plan for them both to be either froze and closed, or froze and downgraded. You can open a basic bank account with barclays, i did the day after bankcruptcy, has contactless, online and mobile banking so everything i could want except a overdraft.
Best 2 are barclays or nationwide.
Nationwide will mortgage lend 36 months after discharge, so as long as you clean up your credit file after 12 months, rebuild your credit history via vanquis credit card or similar and have a good track record of paying on time and save a solid deposit, think more 15-25% then you could get accepted by nationwide based on their criteria. It drops off your file after 6 years at which point more high street lenders should become open to you... Depends on your time frame and when your looking to buy, but yes, people can and do recover and own their own homes.

fishfinger1

Johnsmith2016 wrote: »

You have to put both bank accounts on the forms. The OR will usually ask you which one you want to keep, and declare no interest in it - if its your every day current account and your not in an overdraft which you intend on including in the bankcruptcy. That said, even if the OR declares no interest, the decision on if you can keep it rests with the bank ... So i would plan for them both to be either froze and closed, or froze and downgraded. You can open a basic bank account with barclays, i did the day after bankcruptcy, has contactless, online and mobile banking so everything i could want except a overdraft.
Best 2 are barclays or nationwide.
Nationwide will mortgage lend 36 months after discharge, so as long as you clean up your credit file after 12 months, rebuild your credit history via vanquis credit card or similar and have a good track record of paying on time and save a solid deposit, think more 15-25% then you could get accepted by nationwide based on their criteria. It drops off your file after 6 years at which point more high street lenders should become open to you... Depends on your time frame and when your looking to buy, but yes, people can and do recover and own their own homes.

Thanks. Ive 2 young kids and I hate having to say no to them all the time when they ask for things because I can't afford it. As regards to house buying I will be getting some inheritance in the next few years so that would be most of the deposit I probably need. I was just not sure if once bankrupt you could never have a mortgage. If I were to go down the dro route how does that work. Could I let's say transfer £2500 off my credit cards onto 1 of my partners so I'm eligible for a dro or does it not work like that

Johnsmith2016

I know its out of your control, but should you go bankcrupt you want to try and ensure you do not come into some inheritance within the 12 months before you get discharged, otherwise they can claim a stake in it - just something to be mindful of should you go down this route.

I am not very well versed in DRO - but i dont see it being a problem, if you can pay this 2.5k down and do a DRO i would say thats a simpler less radical way of clearing 20k debt.

Johnsmith2016

Take a look here at the criteria

http://m.stepchange.org/how-we-can-help-you/debt-solutions/debt-relief-order

fishfinger1

HappyMJ wrote: »

It's a lot better than living on beans on toast for 5 years. A DMP requires you to spend as little as possible and put as much money towards your debts as possible for 5 years if you are renting a house and up to 10 years if you own a house and want to keep it.

The allowances given in a bankruptcy allow you to have fairly normal expenses. The only things you aren't allowed to budget for are things considered luxury such as smoking, alcohol and drugs (unless prescribed by a GP). You can even have a holiday in bankruptcy. Not much of one but you can budget for a cheap weekend away during the first year.

Thanks ive read alsorts about it. But it just seems so easy to get out of debt this way that it can't be true. Have you been through it yourself? Would the or have to look at my partners accounts even tho shew not in the bankruptcy just to see that the household income and expenditures are being halved?

fishfinger1

Johnsmith2016 wrote: »

I know its out of your control, but should you go bankcrupt you want to try and ensure you do not come into some inheritance within the 12 months before you get discharged, otherwise they can claim a stake in it - just something to be mindful of should you go down this route.

I am not very well versed in DRO - but i dont see it being a problem, if you can pay this 2.5k down and do a DRO i would say thats a simpler less radical way of clearing 20k debt.

I know it's probably wring but say I came into the inheritance withing the 12 month period wouldn't I be able to have it put in my partners account?