Worried about bankruptcy

Greg_

Morning guys. I’ve just joined the forum after reading up on lots of posts regarding bankruptcy.

Due to my business failing and a personal guarantee on a business loan, I am faced with having to go bankrupt. I have spoken with an IP and it is their recommendation that I do so.

I cannot explain the complete fear I have with the thought of going bankrupt. I have searched for other forum users personal stories of the process but I couldn’t really find the answers I was looking for.

One of my main worries is what actually happens during bankruptcy and for how long ? Does the bulk of my income go towards the bankruptcy with just a basic amount left to keep a roof over my head , or would there be any leftover money that i could put into savings etc ?

How long would I be paying back towards bankruptcy ?

And finally , for those of you who have unfortunately had to go bankrupt , how did you find getting a mortgage etc once your bankruptcy was over ?

Sorry for the long winded thread and hope you are able to offer some advice.

Thanks in advance.

luvchocolate

Hi read all the stickies and the welcome thread.. loads of info on there.
When you go B.R you fill in your S.O.A and any surplus income of £20 plus 100% of this goes to the O.R in an I.P.A which lasts for 3 years this payment can go up or down as your circumstances change.

Its advisable to open a basic bank account away from any you owe money to, the banks will usually close any accounts other than a basic one upon notification from the O.R
I would also suggest you call business debt line for advice.
Plenty of people have got a mortgage 3 years after B.R. A large deposit will help.
Keep in touch and good luck

National_Debtline

Hi Greg

Welcome to forum. I understand bankruptcy is daunting, but it can also be a good way to get a fresh start if there is no other realistic way to repay your debts. luvchocolate has covered some of your questions above, and I agree contacting Business Debtline for some independent advice is a good idea.


You will need to apply for bankruptcy online and pay the £680 fee before submitting. You'll generally be notified in a couple of days if the order has been made, and this is followed shortly after by contact from the Official Receiver (OR). They will interview you, either in person or over the phone, to discuss all the information you've put in your application.


The OR's role is to run the bankruptcy, including deciding if you should have an income payment arrangement (IPA) and if you have assets that can be sold. You're discharged (and your debts are written off) after 12 months but the IPA can last for 3 years. There are lots of people on the board who have been through the process and I'm sure will share how they got on. Good luck with it all.


Susie
@natdebtline

TownCalledAlice

Hi Greg

Definitely have a look around at IPAs. I was astonished to see what sort of things would be accepted - a decent food budget, allowance for clothes etc. We had been living penny to penny for so long that it felt like a luxury to consider things like that. I then read that bankruptcy is about having a fresh start, not punishment, and it began to make sense.

The process of bankruptcy has been so straightforward. I applied to a local fund to cover my fee. I haven’t had to go anywhere near a court room - just an online application and a telephone call.

Tally

Greg_

Hi there ,

Thanks for your replies and sorry I’m just coming back to you.

This is still ongoing and I’ve made no decision yet on what I’ll do, but the threatening letters have begun so I really need to decide soon on what to do. I’ve organised to meet an insolvency firm next week to go over my options.

I really do want to get this sorted. Losing so much sleep but have so many concerns , such as how I’ll get by on what is deemed my allowance each month , especially knowing I’ll be on limited money for the next 4 years.

I earn 35k in my new job , but I assume most of this will be swallowed up in the IPA that has been mentioned. I find it all so confusing. It’s a position I never thought I’d end up in.

TheGardener

No - most of your salary will not be 'swallowed up'. An IPA will reflect your normal outgoings and living costs so unless you live alone you are not even guaranteed to have an IPA. Even if you do have one, IPA's are 3 years, not 4.
Do an SOA and post it here there is a good one at http://www.stoozing.com/calculator/soa.php so we can offer more advice. When compiling your SOA don't try and skimp on your living costs - be honest and remember BR allows for normal living costs - not scrimp and starve mode.

Importantly - Are you paying into your new employers pension scheme? If not then arrange to do so as fast possible (before BR) - anything upto about 7 or 8% is acceptable and not only benefits you considerably - it also shows you are taking a responsible approach to you future finances and of course reduces the 'disposable income' element of your take home pay available for an IPA.

Don't lose sleep - remember this is you taking control of your finances and planning for a responsible and solvent future. Take comfort from the fact YOU are in charge now.

haggis0073

Is the insolvency firm you are seeing free or do they charge for their service, if they do charge then it could potentially be wasted money.

The members on this forum are full of knowledge, and most people on here who give advice have been through the process of bankruptcy and will almost certainly have an answer for any of your questions

When it comes to IPA's, as gardner mentioned above, post up your SOA and we can advise from there, you will be possibly surprised on how much you can put down for expenses

System

Greg_ wrote: »

. Losing so much sleep but have so many concerns , such as how I’ll get by on what is deemed my allowance each month , especially knowing I’ll be on limited money for the next 4 years.

I earn 35k in my new job , but I assume most of this will be swallowed up in the IPA that has been mentioned. I find it all so confusing. It’s a position I never thought I’d end up in.

Well for a start you'll not have all the debts you're currently having to service to worry about. You'll not have a car on finance. When you get down to the basic outgoings - mortgage/rent, council tax, TV license, gas/electric, phone/internet, food and clothing it is quite surprising just how little you can live on. One thing it does do is force you to examine your spending and hopefully unlearns the bad habits you've gained in the past such as not thinking about the odd couple of quid here and there you spend on coffees and the like which quickly rack up to £1000s a year.

It is stressful now but once you've gone through the process and the OR meeting it'll be like the weight of the world has been lifted from your shoulders.

sourcrates

Greg_ wrote: »

Due to my business failing and a personal guarantee on a business loan, I am faced with having to go bankrupt. I have spoken with an IP and it is their recommendation that I do so.

I cannot explain the complete fear I have with the thought of going bankrupt. I have searched for other forum users personal stories of the process but I couldn’t really find the answers I was looking for.

One of my main worries is what actually happens during bankruptcy and for how long ? Does the bulk of my income go towards the bankruptcy with just a basic amount left to keep a roof over my head , or would there be any leftover money that i could put into savings etc ?

How long would I be paying back towards bankruptcy ?
.

Greg_ wrote: »

I’ve organised to meet an insolvency firm next week to go over my options.
.

Hi,

Bankruptcy is not the beast from the east it once was, nowadays it is all done online and by post, you pay your fee, if the OR has no objections, then you go bankrupt........very quick, very easy, no need to appear in court any longer, all very simple.

An IPA lasts for 3 years, and is only payable if you have £20 or more disposable income left, so it is essential, and i stress essential, that you budget correctly for every single thing you spend money on.

You mention your meeting with an insolvency firm next week, do they charges for their service ?

I am assuming they do, if its advice about your company going bankrupt, then business debt line can help you for free, bankruptcy fees are high enough, so try to avoid any further unnecessary legal costs.

coolcait

If Greg is in Scotland, the IPA - or Debtor Contribution Order - will last for four years.

sourcrates

coolcait wrote: »

If Greg is in Scotland, the IPA - or Debtor Contribution Order - will last for four years.

Good pick up, but If that were the case, surely he would of referred to it as sequestration and sherif court, instead of bankruptcy and OR ?