Bankruptcy Question

stu69

I have a question relating to bankruptcy and hope I can find help here!

I have a large dept of 30,000 split between credit cards and loans and an additional dept of over 10,000 on a negative equity from a flat I had to leave and sell approximately 5 years ago due to circumstances out of my control. (I entered an affordable housing scheme that went very very wrong!, and timed perfectly before the 2005 financial crisis, forced to sell at a great loss)

I am in full time employment with a salary of 37,600 and run an ebay business to top up my income. (selling photography kit)

My financial situation is totally unmanageable, its been heading this way for some time but at a point now where I am drowning and only managing to make all my payments with the turnover from my business (approximately 6 to 8,000 monthly turnover which I use to juggle my debts).

The stress and pressure of maintaining the turn over in my business to make payments, maintaining full time employment and the ending of 0% deals on cards is mounting up, I am stressed and its affecting family life. I have a partner and 2 young children so cost of living is getting worse all the time.

My question is can I apply for bankruptcy while still managing to make minimum payments or wait unit the inevitable collapse of the situation (me or the debt).

Any advice would be massively appreciated!

VeryInTheRed

Your first and most important thing to do is to speak to one of the FREE debt charities.

There are a few and they are detailed on the sticky thread at the top of this section of the forum.

I used Stepchange and found them very good.

If the outcome of your advice session is that BR is the right thing for you then you may as well stop paying all payments.

In fact, whatever course of action you take to deal with your debts (IVA, BR, DMP) you may as well stop paying now. You will of course get letters and phone calls - just tell them you are in discussions with a debt charity and ask for a 30 day hold. You won't get calls etc then.

If you want to maintain your credit rating then you will need to keep paying the minimums and hope to impact the capital debt in the future.

If it is totally unmanageable then I would stop paying and get the advice.

Once you have had the advice and made a decision on what route you are taking, talk a lot on here and read a lot on here. The advice, knowledge and support is brilliant!

VITR

fatbelly

I'd be interested to see a statement of affairs

Calculator here

http://www.stoozing.com/calculator/soa.php

The question is : if you stopped paying your non-priority creditors, would your £37600 salary cover you living expenses? The soa will show this

stu69

Thanks for both responses, I have contacted step change and am currently filling in the debt remedy questions.

I did a high level calculation on the SOA calculator and it paints an ugly picture, its impossible to be as specific as required as there is a lot of unpredictability in monthly expenditure with kids and also work factors. I have based this purely on my income/expenditure, my partner works part time but we keep our finances separate due to my circumstances. (She does contribute all she can). It would not be cost effective for her to work full time due to the child care we would require.

With the unsecured debt in place I have a deficit of -539 pounds which explains my dependency on the turnover of my ebay business.

My available funds after all outgoings is only 67 pounds! (debt repayments are 606 pounds a month)

This is a shock, I really have buried my head in the sand for a long time.

To be honest I can see no way out of this mess!

stu69

Funnily enough we spoke about that the other week, right now I work full time and run a small business in what little spare time I have, my other half works part time every weekday, all day Saturday and Thursday evening - we hardly see each other and are both knackered.

If I left her and the kids she would actually be better off (financially that is)

Not going to happen but you do wonder what's the point in working if your broke anyway. I simply can't earn more, I am in my 40's and pretty much peaked in my career (if you can call it a career).

It is all to easy to focus on the negatives though, at the end of the day its only money and has no real value in life, my kids/family are amazing and that cancels all the other crap out any day of the week

fatbelly

If you post the soa we can better advise whether bankruptcy is a viable option. It might be.

If you have any equity in property, or significant assets, or consider the business to have any intrinsic value, then you might be better just making token offers to the non-priorities, much as I dislike that strategy.

What did Debt Remedy say?

stu69

The debt remedy recommended an IVA.

What worry's me is there is mention of a fee, I appreciated that stepchange are a charity but not what I expected to see.

I need to understand the implications of an IVA, form what I have heard it is a bad option. (not that there are any good ones!)

Geoff1963

my partner works part time . . . It would not be cost effective for her to work full time due to the child care we would require.

I'm not sure, but what if she becomes full-time, and you look after the kids ?
Your creditors can't chase you for income you don't have, but your partners increased earnings would be independent.

fatbelly

stu69 wrote: »

The debt remedy recommended an IVA.

What worry's me is there is mention of a fee, I appreciated that stepchange are a charity but not what I expected to see.

I need to understand the implications of an IVA, form what I have heard it is a bad option. (not that there are any good ones!)

All IVAs have two fees built into them. You just make a monthly payment for 60months (often 72 if you have property) and the creditors get their 'cut' after fees.

It's a form of insolvency for someone who needs to go bankrupt but has an asset to protect (see my post #6).

The reason why I didn't suggest an IVA in that post is that I doubted you'd would get one to cover 40k of debt at £67 per month.

If Stepchange think they can do that, and you have those things to protect, then go for it. Otherwise, bankruptcy.

stu69

fatbelly wrote: »

All IVAs have two fees built into them. You just make a monthly payment for 60months (often 72 if you have property) and the creditors get their 'cut' after fees.

It's a form of insolvency for someone who needs to go bankrupt but has an asset to protect (see my post #6).

The reason why I didn't suggest an IVA in that post is that I doubted you'd would get one to cover 40k of debt at £67 per month.

If Stepchange think they can do that, and you have those things to protect, then go for it. Otherwise, bankruptcy.

Thanks for the info, I have no assets of any value, I live in a rented property and only paid 800 for my car 2 years ago so doubt that would be worth much now.

I will speak to stepchange over the phone for some direct feedback, there may have been an error in my form.

To be honest I am very uncomfortable writing all this information down for some reason, makes it a too real

Do you know if there is any reason I would be rejected for bankruptcy? I would need to really need to dig deep to find the money for the application - would be devastating if it was rejected!

Thank you so much for you input.

stu69

On reflection I failed to include my negative equity repayments in the form!!
I will cover that when I call them.