Deciding what to do with my debt

Mitchel.

Hi

I have 12k of debt or just over however I'm trying to also invest in a business so cash flow is king. I've been offered either a dro, pay it off or go bankrupt. I have no plans for buying a house or having anything large on finance like a car.

Couple of questions

If I pay all my debt off in a year how quick will my credit score recover as I'm looking to finance equipment for my business?

Or if I go bankrupt and keep all the money I would spend paying the debt off to invest in equipment will it be 6 years before my score recovers?.

Lastly if I go for a dro how long will that effect my credit file for is it as easy as a bankruptcy to set up as I know I can do that online

Any advice would be great please

National_Debtline

Hi Mitchel,


If you were to go bankrupt and you have savings then they would be lost to the bankruptcy, so the money you plan to use to invest would be taken from you. (All assets are seized in bankruptcy and this can be investigated for the 5 years before going bankrupt). And, if you have more than £20pcm disposable income you will be asked to make payments into a bankruptcy for 3 years under an Income Payment Arrangement. Plus, you cannot be the director of a limited company for the 12months you are bankrupt or in a DRO.

With a DRO, if you have more than £1000 worth of assets or more than £50pcm disposable income you won't qualify. So, reading between the lines of your post, insolvency options don't appear to suit you.

So, if you were to pay the debts off in 12months, then the status of the debts will change from defaulted or in arrears to settled. This will be more positive but may still take time to actually improve your rating (potentially years). DRO's and bankruptcy would affect your file for 6 years and possibly beyond that too.


Laura
@natdebtline