Just been advised to go bankrupt - Scared and need some advice

Jlojgirl1301

Hi all, 
I started up my own business at the beginning of the year, I had debt, but between my husband and I we were managing it. In the lead up to CV, we were unfortunately getting worse, as my husband's takings started to take a nose dive straight away. 
Since CV - my business has failed to take off, and my husband is a black taxi driver, and London is a ghost town, so we're struggling to make ends meat. We are on Universal credit and all of our debt is on payment holidays currently. Although due to making just over the threshold this month, it's likely we won't get any UC. 
With the impending future of my business struggling to take off (I don't have the money I need to promote it and advertise) and my husband's career likely to be a very slow return to making what he used to, I got in touch with Pay Plan, and have been advised for me to go bankrupt, and my husband to get a DRO. The debt is joint, but mainly in my name as I had much better credit rating that my husband. My debt is £40k and my husbands is just over £5k

First question - I was literally told this on Monday and i'm kind of in a daze that I could possibly be in this situation, i'm scared and I have no idea what to think? Can someone give me a really laymens terms as what the whole process is. I've read lots, but I feel like it a language i'd never have to know. I understand that I submit the bankruptcy myself and pay the fee. But after that, does all of my debt just stop? Do I still have to pay into it for the next year? Sorry if this all sounds mumbled, but i've just had a panic attack and feel like I need to get everything out in one hit.  A step by step guide would be great if anyone could point me in that direction. And preferably not one with acronyms and jargon talk (this is all very new to me) 
Second question - As my business is in such early stages, I have no way of knowing whether it's going to have really good months or bad months over the coming year, so what happens if I start to earn a good wage from it? Will the bankruptcy be terminated/? 
Third question - When I spoke to the adviser, he said that I'd need to surrender my car. I use my car for work. The car is my husband's name - will I still need to surrender it? 
Fourth question - Does the decision to go bankrupt get any easier? I feel completely ashamed of myself and want no-one (other than my husband) to know what has happened. We've got out of debt before, we've got back into it, we've gone round in circles and I hate that i'd be judged yet again. 

Thank you in advance. - Please be kind. I'm so nervous. 
L

Grumpelstiltskin

Have you contacted one of the debt charities?
The car may be a problem, how much is it worth?

Jlojgirl1301

It was PayPlan. Halifax put me through to them. They are an independant free advice service. They said that my husband would need to go through CAB to file his DRO, and I would need to do mine via Gov.com. 

The car is fully paid for, in my husband's name, and they said that it's worth £6500, so i'd probably be asked to give that up as it's the only asset we have. 

MalMonroe

Jlojgirl1301 said:

Hi all, 
I started up my own business at the beginning of the year, I had debt, but between my husband and I we were managing it. In the lead up to CV, we were unfortunately getting worse, as my husband's takings started to take a nose dive straight away. 
Since CV - my business has failed to take off, and my husband is a black taxi driver, and London is a ghost town, so we're struggling to make ends meat. We are on Universal credit and all of our debt is on payment holidays currently. Although due to making just over the threshold this month, it's likely we won't get any UC. 
With the impending future of my business struggling to take off (I don't have the money I need to promote it and advertise) and my husband's career likely to be a very slow return to making what he used to, I got in touch with Pay Plan, and have been advised for me to go bankrupt, and my husband to get a DRO. The debt is joint, but mainly in my name as I had much better credit rating that my husband. My debt is £40k and my husbands is just over £5k

First question - I was literally told this on Monday and i'm kind of in a daze that I could possibly be in this situation, i'm scared and I have no idea what to think? Can someone give me a really laymens terms as what the whole process is. I've read lots, but I feel like it a language i'd never have to know. I understand that I submit the bankruptcy myself and pay the fee. But after that, does all of my debt just stop? Do I still have to pay into it for the next year? Sorry if this all sounds mumbled, but i've just had a panic attack and feel like I need to get everything out in one hit.  A step by step guide would be great if anyone could point me in that direction. And preferably not one with acronyms and jargon talk (this is all very new to me) 
Second question - As my business is in such early stages, I have no way of knowing whether it's going to have really good months or bad months over the coming year, so what happens if I start to earn a good wage from it? Will the bankruptcy be terminated/? 
Third question - When I spoke to the adviser, he said that I'd need to surrender my car. I use my car for work. The car is my husband's name - will I still need to surrender it? 
Fourth question - Does the decision to go bankrupt get any easier? I feel completely ashamed of myself and want no-one (other than my husband) to know what has happened. We've got out of debt before, we've got back into it, we've gone round in circles and I hate that i'd be judged yet again. 

Thank you in advance. - Please be kind. I'm so nervous. 
L

Hello!

First of all, do not be ashamed. These things happen to the best of us. It's a big shock, I know.

Second of all, please contact a 'proper' debt help agency like StepChange, their details are here 
https://www.stepchange.org/contact-us.aspx

If you speak to someone at StepChange they will help you all the way through the process and answer each and every question you have. Step by step, as you requested. (Well, that's part of their name). 

The difference between Pay Plan and StepChange is that not only will StepChange advise you in great detail what to do, they are also authorised to act on your behalf. They won't just say you need to go bankrupt and leave you to sink or swim. Chances are you may not need to surrender your car at all - but you may have to get a cheaper one.

Do speak to a proper debt help agency though, it's free and you have nothing whatsoever to lose. They do not judge you and they do not embarrass you. I've been through a similar process when I had a DRO. They help you so much, you'll be so relieved. (I hope! I was, and I had to go through everything on my own too, which was very, very scary.)

P.S. Yes, it DOES get easier and you will survive!  I'm out the other side of the DRO (which is similar to a bankruptcy as it hangs around for 6 years).  You can do it! 

[Deleted User]

Another vote for StepChange.  They were very helpful with my decision to become bankrupt.  Very understanding, knowledgeable and non-judgemental.

sourcrates

The reason they mentioned the car, is because you say they advised your husband do a DRO, you cannot have a car worth more than 1k in a DRO, its similar in bankrupcy.

If your husband just did a debt management plan instead, as the car is in his name, you would be able to keep it as his vehicle, you would only have to surrender it if (A) you went bankrupt, and (B) he did a DRO.

If you went bankrupt, and he went into an informal debt management plan, the car will be safe.

I hope i`ve explained that clearly enough.

Bankrupcy is not meant to be a punishment, in fact most people find relief once they press that button, if you have more than £20 disposable income in your budget, then you will get an IPA (income payment arrangement) this usually lasts for 3 years.

If your buisness takes off, and your income increases in the first 12 months, then if you already have an IPA, it will increase, if you don`t have an IPA, you may get one, they can only do this before you are discharged though.

Process is actually very easy and simple, you apply online, submit online, pay the fee, the rest is done over the phone, and by post, you can be declared bankrupt the same day, but usually it takes a day or two to process.

You are normally discharged after 12 months and your debts are wiped clean.

The bankrupcy will stay on your credit file for a further 5 years, then disapear for good.

fatbelly

Payplan do everything that stepchange do, but in my experience give the client more time, maybe because they are smaller. They are completely above board and reputable and I refer to them from Citizens Advice quite frequently. Having said that, it does not sound like they explained these options very well!

Now then, with a bankruptcy and a DRO there is a lot to get to grips with in order to understand how they work. Rather than give a lecture here, you should read this
https://www.nationaldebtline.org/EW/factsheets/Pages/bankruptcy/how-to-go-bankrupt.aspx
and this
https://www.nationaldebtline.org/EW/factsheets/Pages/debtrelieforders/droadvice.aspx
Yes, National Debtline is another source of great advice. You could even contact them. They have no product to sell and are advice-only.

There were two concerns from your first post. 
1. You do need to decide who is the owner (not just the registered keeper) of the £6500 car before you enter either solution, and you should be able to evidence this if asked. In bankruptcy you will not be allowed to retain it and the best scenario is that it is sold and £1000 returned to you if you can prove that it is essential for your work. In a DRO, a car worth over £1000 disqualifies your husband from the scheme.

2. I worry about the timing and why you feel now is the time to enter these two forms of insolvency. Maybe there are priority debts and you are being threatened, though you didn't say that. Would token offers for 6 months not be a better move while you get your ducks in a row? You may have other options is business improves.

One thing you could think about doing is to start a new post on debt-free wannabe and post a statement of affairs (obvs format for mse)

hopper01609

I can honestly say I was petrified of going br put it off for years,now I wish I had of done it sooner if you decide to go br don’t be scared.
my OR phoned me to book a telephone interview then reassured me I was not to worry, we had abit of a laff in the interview about some things

enthusiasticsaver

If the car is worth £6500 and is fully paid off I think your husband should do a DMP then he will not need to give it up although take Fatbellys advice above as this may be a grey area.  As others have said the bankruptcy is a way of you making a clean start and with no income and £40k of debt it does sound like that is the best option for you unless there is a possibility that more time may allow your business to recover.  Do you own a house or have any other assets? 

Morfx

sourcrates said:

The reason they mentioned the car, is because you say they advised your husband do a DRO, you cannot have a car worth more than 1k in a DRO, its similar in bankrupcy.

If your husband just did a debt management plan instead, as the car is in his name, you would be able to keep it as his vehicle, you would only have to surrender it if (A) you went bankrupt, and (B) he did a DRO.

If you went bankrupt, and he went into an informal debt management plan, the car will be safe.

I hope i`ve explained that clearly enough.

Bankrupcy is not meant to be a punishment, in fact most people find relief once they press that button, if you have more than £20 disposable income in your budget, then you will get an IPA (income payment arrangement) this usually lasts for 3 years.

If your buisness takes off, and your income increases in the first 12 months, then if you already have an IPA, it will increase, if you don`t have an IPA, you may get one, they can only do this before you are discharged though.

Process is actually very easy and simple, you apply online, submit online, pay the fee, the rest is done over the phone, and by post, you can be declared bankrupt the same day, but usually it takes a day or two to process.

You are normally discharged after 12 months and your debts are wiped clean.

The bankrupcy will stay on your credit file for a further 5 years, then disapear for good.

Not meaning to jump on someone's thread, but with regards to an IPA, Can that only be increased until your discharged or for the whole 3 years?

luvchocolate

An IPA runs for 3 years and can go up or down depending on circumstance. 
You must notify your OR within 21 days of change