Is Bankruptcy my only answer?

Edsindebt

Just like to take this time to say Hi and say what a great website this is, before boring you all with my story.

Ok here it goes! After making my first step onto the property ladder with the purchase of a 125k apartment @ 20 with a great job earning in excess of 30k a year life didn’t seem to have any mountains to climb.

5 years on and now I feel like I’m a spider in a pint class with no way out!

After 18 months into my mortgage I was made redundant and that’s where it all became real life.

6 months away from the re-mortgage that I had planned, as I was on a 2 year discounted rate. It took me 8 months to find work again after being forced to sell my car to pay bills bearing in mind I also had a £21,000 pound loan costing me £300 a month for 8 years and an overdraft reaching £3000.

I was now earning around 50% of previous earnings with even higher outgoings!

The monthly payment became nearly £800 after the interest rates climbed (Previously £446 with the discount).

My income was now around £1120 a month with £800 of that just paying my Mortgage (I did let out a room, which did help to pay 40% of the Mortgage) not including my loan, fuel, insurance etc.

In the time I was unemployed I was in 8 Months arrears on all my Debts, with my mortgage lender breathing down my neck to do a voluntary repossession, I fount it very hard to find advice on some things but others were great!
It all became too much and I gave in and volunteered the repossession Which I obliged and moved in with my parents.

Now nearly a year later my house has been re-sold with a huge shortfall, I’ve been waiting for this before being able to seek any more advice regards to my debt problem. I’ve been paying the Credit agencies the minimum amount for the months just stopping the threatening letters and phone calls, which is very stressful and just managing to keep it together stopping me hitting rock bottom.

My Mortgage balance was £128,483 and they sold the house for £98,000 leaving me with a £30,000 plus shortfall not including any charges.

After contacting the bank yesterday I managed to find out my total cost of shortfall, the balance stands at £37,148

So my Debt now stands at:

1. Loan = £20,698
2. Overdraft = £2,179
3. Shortfall = £37,148

Total debt now standing at £60,011 @ 23 years old!

I’m currently self Employed earning £1300 a month after tax (while the works there)

Outgoings (monthly):

Rent = £450
Phone = £60
Fuel = £175
Car Insurance = £80
BUPA Health Care = £36
Rac = £9
Computer = £135

Totaling = £945 not including clothes and any other expenses.

So where what when and how? What options do I have?

Scarlett.1974

Hi there :wave:

I'm no expert (they'll be along soon I'm sure) and I would never say to anyone "BR is the only option for you", but it certainly is AN option. I would recommend you speak to one of the free debt advice charities. Personally I couldn't recommend CCCS enough, but there are others too, I'm sure someone with a better memory than me will post the numbers soon

Quick question though - does your rent include all your bills? Because I notice you haven't listed gas, electric, water, council tax etc etc......

Ember999

Edsindebt wrote: »

Just like to take this time to say Hi and say what a great website this is, before boring you all with my story.

Ok here it goes! After making my first step onto the property ladder with the purchase of a 125k apartment @ 20 with a great job earning in excess of 30k a year life didn’t seem to have any mountains to climb.

5 years on and now I feel like I’m a spider in a pint class with no way out!

After 18 months into my mortgage I was made redundant and that’s where it all became real life.

6 months away from the re-mortgage that I had planned, as I was on a 2 year discounted rate. It took me 8 months to find work again after being forced to sell my car to pay bills bearing in mind I also had a £21,000 pound loan costing me £300 a month for 8 years and an overdraft reaching £3000.

I was now earning around 50% of previous earnings with even higher outgoings!

The monthly payment became nearly £800 after the interest rates climbed (Previously £446 with the discount).

My income was now around £1120 a month with £800 of that just paying my Mortgage (I did let out a room, which did help to pay 40% of the Mortgage) not including my loan, fuel, insurance etc.

In the time I was unemployed I was in 8 Months arrears on all my Debts, with my mortgage lender breathing down my neck to do a voluntary repossession, I fount it very hard to find advice on some things but others were great!
It all became too much and I gave in and volunteered the repossession Which I obliged and moved in with my parents.

Now nearly a year later my house has been re-sold with a huge shortfall, I’ve been waiting for this before being able to seek any more advice regards to my debt problem. I’ve been paying the Credit agencies the minimum amount for the months just stopping the threatening letters and phone calls, which is very stressful and just managing to keep it together stopping me hitting rock bottom.

My Mortgage balance was £128,483 and they sold the house for £98,000 leaving me with a £30,000 plus shortfall not including any charges.

After contacting the bank yesterday I managed to find out my total cost of shortfall, the balance stands at £37,148

So my Debt now stands at:

1. Loan = £20,698
2. Overdraft = £2,179
3. Shortfall = £37,148

Total debt now standing at £60,011 @ 23 years old!

I’m currently self Employed earning £1300 a month after tax (while the works there)

Outgoings (monthly):

Rent = £450
Phone = £60
Fuel = £175
Car Insurance = £80
BUPA Health Care = £36
Rac = £9
Computer = £135

Totaling = £945 not including clothes and any other expenses.

So where what when and how? What options do I have?

Hi Hon,

Firstly, look at the positives. You are ONLY 23 and that makes your options a lot better than someone twice your age.

Let's look at the facts:

You are in way too much debt to realistically have any hope of paying it off. Some will say that because you are so young, you have plenty of life left to struggle your way into paying off an amount that is gonna get a lot bigger, a lot faster than you can hope to pay it.

You bought a house whilst you had a good income and you got made redundant which is grossly unfair and not your fault. Had you not lost your job, you would have paid your mortgage - so I don't see this as being your fault. You are a victim of circumstances, sadly.

Your credit rating is trashed now. Repossession, load defaults, credit card defaults. Debt Management Plans and IVA's will not clear this huge debt anytime soon and with an IVA if you lost your job again - you'd be back in a similar situation - you would fail the IVA and be made bankrupt probably anyway.

You would benefit most by going bankrupt. Wipe the slate clean. Ten years down the line you hopefully will be in a more secure position work wise and financially. You would be able to buy your own home again. Go the DMP or IVA route and I doubt you'd ever be in that position again.

That's my advice. Some people are just in too much debt to be able to pay it off, as much as they would like to and I am sure you would prefer to pay what you owe, but you are not going to be able to so why ruin your life?

Too many people let redundancy destroy them. It almost has you. Go bankrupt, start again and one day, do it all again, when the time is right.

Ember xx :santa2:

tigerfeet2006

The first thing we recomend is talking to one of the debt charities to go through all the options available (see my sig.). It is not for us to say yes you should or no you shouldn't, although I have to agree with Ember on the information given it seems to be a good option. Also the judge will ask if you have taken advice and you can answer 'yes'. We can offer some of the best help and support on the web once you have made your descision.

meech78

Oh hon, i really do feel for you!! I bet you feel the world has crashed down on you and it sucks!

To be honest, i do agree with Ember, the debts are too huge to pay off and the idea of wipping the slate clean whilst you are still young is a great idea...it would be a lot easier and as you didn't ask for your circumstances to change and be made redundant once you had bought a flat, i would be very tempted to go BR now and start over. As has already been said, in ten years time you will have a brand new life with money that is actually going into your future rather than down the pan!

I would def speak to someone at CCCs or go down to you local CAB and see if they can offer you any advice, they will help you with the forms if you do decide to go BR and help you with other options if you don't.

Best of luck to you hon and please don't feel like you are the only one out there going through it....we are all in it in some way or another!!

Edsindebt

Scarlett.1974 wrote: »

Hi there :wave:

I'm no expert (they'll be along soon I'm sure) and I would never say to anyone "BR is the only option for you", but it certainly is AN option. I would recommend you speak to one of the free debt advice charities. Personally I couldn't recommend CCCS enough, but there are others too, I'm sure someone with a better memory than me will post the numbers soon

Quick question though - does your rent include all your bills? Because I notice you haven't listed gas, electric, water, council tax etc etc......

Yes the rent includes the bill's, I moved home and my mum decided she could pay her mortgage off quicker with my money. Some friends say my rent's expensive, but it's 50% cheaper than having my own place with all the luxuries like, Sky +, Broadband and food on the table.

Edsindebt

Oh I did forget to mention that I rang CCCS and they have arrange a Call back session to go over everything, I also spoke to National Debtline tonight who are sending me an information pack and basically advised me what you have already said. Thanks all

Scarlett.1974

Hey, I'd love to pay £450 rent if it included all my bills, food, sky etc...... :rotfl: your friend's might think it's expensive now - wait until they move out of "home" :eek:

Best of luck to you, whatever you decide to do. Like tigerfeet said, if you DO make the decision that BR is the route for you, then the support, help and advice you'll receive here really is second to none

backontheup

BR would be a blessed relief for you - and by the time you are 29 you will have a totally clean file again. You have been very unlucky that's all. Have a chat to one of the debt charities such as National Debtline, but to be honest, its a bit of a no-brainer and they will almost certainly recommend BR.

Keep us all posted, and thanks for sharing your story :-)

JulesJay

Hi Ed,

Welcome to the boards.

I can only reiterate what the other guys have said.

Get as much advice you can about your situation from the free debt charities, so that you make a really well informed decision as to where you go from here.

I know its scary at the moment but we are all here for you and will give you all the support you need whatever decision you make - we are a friendly bunch on here - so if you have any questions or just need a chat there should always be someone about.

Just popping out now, but will be back later to see how you are doing.

Take care and keep posting.

Jules x

Edsindebt

Just like to say thanks for all the support.

I've spoken to CCCs and they have said similar thing's. BR seems to be the best option as it'll give me a clean slate, I don't have any assets and I'm young and can recover from this.

One thing that does worry me is I'm Self Employed and wonder how it will effect me, For example it's very hard to find work during the two week xmas holiday about 21st - 2nd this year, So i have to make sure I save money aside for this period where I'll loose two weeks wages. How does that look in the OR eyes?

Plus regards to health and safety on site I have to attend regular training at my cost, So again need to put money aside for this, But won't the OR see it as floating funds?