Considering bankruptcy

george_112

hi, this whole Coronavirus impact has made me lift my head from the sand and realise I can’t carry on like this my debt just doesn’t seem sustainable, I’m a single mum, 2 children. I work part time and owe 30k in loans, cc & catalogues. I was depressed after my divorce and I think I just got in this mess trying to carry on and project an image that all was great. My income is 1775 including all benefits and wages and my debt repayments are 880, rent is 600. Family are giving me money each month to help but that’s not a long term solution. I just have a few questions about doing it, if you could help me please. 
Should I open a bank account before and get all payments transferred over?  
Will the or tell my landlord? I’m completely up to date and have never missed a payment in 7 years
will my utilities carry on as a dd? I’m actually in credit with these
Im scared about the or interview. I don’t understand how I’ve ended up in this mess so how do I tell them the reasons. It was a series of very bad decisions made when my head was not in a good place and the bank just kept offering me loans. I consolidated and then due to the extra monthly loan payment, used the cc again. I’m worried they will think I took credit and couldn’t pay it but I always thought I’d be able to. I’m no longer getting child maintenance and the payments are just too much to sustain, we barely have any money for food and I’m just getting further into debt. This has been a massive wake up and I’m hoping this will give me a chance to start a fresh. Thank you 

mwarby

First off do an soa https://www.stoozing.com/soa.php it will give us a better picture. From what your saying it’s very possible you’ll have an IPA in bankruptcy, it might be that a DMP works better (your debt is too high for a DRO)

You will need a new bank account. Some say to get before bankruptcy some say to get after bankruptcy is declared. If you have an overdraft or debt with where you currently bank your account will almost certainly be closed. Some will let you have a new account but your history with them will be marred. I generally suggest Nationwide if you don’t have debts with them. By far and away the most important thing is to secure your income ASAP the last thing you want is for overdraft to be recalled leaving you unable to get any money. There is a slight risk that an account opened before bankruptcy will be frozen for a period of time or closed 

You don’t need to tell your landlord, if there are no rent arrears the OR has no need to contact them. However if you are paying your rent and are a good tenant(no complaints from neighbours, not trashing place etc) this should be more important than bankruptcy, if anything that helps to make sure they are paid 

The interview is a fact find exercise, they aren’t there to judge you and will have certainly have encountered worse behaviour than you can imagine. They will want to know
- how you got into the debt (why and when, and why did you believe you could afford it)
- any life events which changed above eg job loss
- clarification or justification on any unusual or excessive expenses
- details of any assets you’ve had in last decade or so (eg houses)
- the accounts you want to use going forward
- next steps

if you get an IPA this maybe mentioned at the initial meeting or may have to wait a few weeks, the priority is fact finding and getting paperwork in motion

mwarby

Re not being able to afford credit I wouldn’t worry too much. Everyone pretty much in later stages takes on debts they can’t afford given 20/20 hindsight, robbing Peter yo pay Paul isn’t unusual. If you took out credit to go on a lavish holiday or get a fancy car, or some unnesescary building work (like say a conservatory) just after you learned of redundancy or when you had started missing payments then yes worry - the OR will want to know what you were thinking, if you just started using more overdraft and credit card for essentials nobody will judge 

george_112

Thanks for your reply! I’ve done this, not sure if my outgoings would be acceptable. I can explain most things. 
Presents £40 two children, Xmas & birthdays plus gifts for party’s they are invited to from school
child expenses - swimming lessons and brownies
other transport - no car so buses and train passes 
entertainment - thought I’d be allowed to take children out somewhere occasionally 
holidays - not sure if this is ok
Groceries - includes dinners for school and nursery 
I’ve just lumped all the debt into one for this rather than break it down

thanks again! 

Household Information[/b]

Number of adults in household........... 1

Number of children in household......... 2

Number of cars owned.................... 0[b]

Monthly Income Details[/b]

Monthly income after tax................ 630

Partners monthly income after tax....... 0

Benefits................................ 421

Other income............................ 747[b]

Total monthly income.................... 1798[/b][b]

Monthly Expense Details[/b]

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 600

Management charge (leasehold property).. 0

Council tax............................. 65

Electricity............................. 58

Gas..................................... 69

Oil..................................... 0

Water rates............................. 54

Telephone (land line)................... 0

Mobile phone............................ 40

TV Licence.............................. 13

Satellite/Cable TV...................... 12

Internet Services....................... 16

Groceries etc. ......................... 400

Clothing................................ 40

Petrol/diesel........................... 0

Road tax................................ 0

Car Insurance........................... 0

Car maintenance (including MOT)......... 0

Car parking............................. 0

Other travel............................ 150

Childcare/nursery....................... 65

Other child related expenses............ 48

Medical (prescriptions, dentist etc).... 15

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 15

Life assurance ......................... 0

Other insurance......................... 0

Presents (birthday, christmas etc)...... 40

Haircuts................................ 20

Entertainment........................... 25

Holiday................................. 20

Emergency fund.......................... 25[b]

Total monthly expenses.................. 1790[/b]

[b]

Assets[/b]

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 0

Other assets............................ 0[b]

Total Assets............................ 0[/b]

[b]

No Secured nor Hire Purchase Debts[/b]

[b]Unsecured Debts[/b]

Description....................Debt......Monthly...APR

Total..........................30000.....880.......0[b]

Total unsecured debts..........30000.....880.......-  [/b]

[b]

Monthly Budget Summary[/b]

Total monthly income.................... 1,798

Expenses (including HP & secured debts). 1,790

Available for debt repayments........... 8

Monthly UNsecured debt repayments....... 880[b]

Amount short for making debt repayments. -872[/b]

[b]Personal Balance Sheet Summary[/b]

Total assets (things you own)........... 0

Total HP & Secured debt................. -0

Total Unsecured debt.................... -30,000[b]

Net Assets.............................. -30,000[/b]

[i]Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.[/i][/font]

mwarby

Your groceries might be a bit high, haircuts and clothing maybe a bit low, your internet seems very cheap, you could probably expand on tv by 5-10 maybe Netflix or something 

whats other income ?

given you’ve only £8 spare, I’d guess you wouldn’t get an IPA, OR could say no presents, entertainment and only 300 for groceries, which would shift you into an IPA, most  aren’t that harsh though

mwarby

Holidays are allowed, generally though your looking at more a cheap but kind deal a year rather than Disneyland, I think £20 is fine, maybe pitch for £30

presents I expect your allowed perhaps £50 per child for Christmas and same for birthdays, presents for other kids maybe less so. I suspect 20 a month would be fine £120 per child per year, you might be allowed more I dunno 

george_112

Hi, my internet is £15.90 with the post office but will be up soon and is awful anyway. How much could I have for clothes. I was worried that would be too much but with kids shoes, school uniforms and constantly growing children it adds up. 
Sorry the other is my tax credits I meant to add it in with other benefits, they are child benefit and housing benefit 

mwarby

For internet you could easily go fibre and have 25-30 a month

For clothes I’m not sure but I’d go for £20 each, with adults it’s just clothes wearing out, kid will wear out quicker, outgrow and need uniform and pe kit and social clothing

The OR can always knock back, I’m not saying to take the mickey but here goes a justification 

per child - uniform x 5 to last a year £60 PE kit £20, shoes £30 x 2 trainers £30 x 2 (two sets a year seems reasonable perhaps conservative) other clothes £50 - that’s your £240 a year (£29 a month)per kid. Maybe my estimate is way off, the key is to be able to reason your expense 

mwarby

The ages of your children may also have an impact. The fashion demands of teens will make clothing them more expensive than a primary school kid. Not that you’ll get enough for designer gear, but you get the idea

yiyr bankruptcy budget isn’t about scraping by and living on gruel, it’s about meeting reasonable domestic needs

george_112

Kids are 6 and 4. It just feels like such a big thing. I’ve not been sleeping properly for so long worrying about money so now I think I need to deal with it. I look at the kids and think this will give us a chance of a better quality of life as right now it’s tough and unfair on them. They often comment on if we can save pennies could we get a chocolate treat after school and that shouldn’t be so
 they worry about 

george_112

You’ve been a massive help, I’m going to tweak this SOA and sort an account to get my wages etc moved ASAP. I’ve started the bankruptcy form and once my income and household bills are moved I’ll submit it. I can afford the fee if I don’t pay the loans next month. Would that be frowned upon by the OR?