Ask a StepChange debt advisor a bankruptcy question

Frankice

I am in a very difficult position  at the moment, I owe in excess of £50k to my bank, credit card providers and businesses, over the years I have managed to repay the due debts accordingly 

 since covid ( I took a bounce back loan out which repayments are crippling me ) and a major surgical Hip operation, which I had to scrimp and scrape the money together (over £10k) I am limited in my physical activity, my business has failed and i am now without income, I even tried going back to work driving, but it's a young mans game and employers don't want to know aged people. I have huge debts to repay which I can't; afford.

 I have no income save a very small £2k yearly private pension, and recently my state pension. I live with my wife but do not own the property, nor have I contributed to any costs of the property  nor have \I owned any  assets since a bankruptcy in 2001. 

 I am contemplating bankruptcy yet again, I am at my wits end now and when I try to talk to  any service about  this i get the same bleak answered, 

 have you any suggestions before I do anything really drastic ??  

StepChange_Aidan

Frankice said:

I am in a very difficult position  at the moment, I owe in excess of £50k to my bank, credit card providers and businesses, over the years I have managed to repay the due debts accordingly 

 since covid ( I took a bounce back loan out which repayments are crippling me ) and a major surgical Hip operation, which I had to scrimp and scrape the money together (over £10k) I am limited in my physical activity, my business has failed and i am now without income, I even tried going back to work driving, but it's a young mans game and employers don't want to know aged people. I have huge debts to repay which I can't; afford.

 I have no income save a very small £2k yearly private pension, and recently my state pension. I live with my wife but do not own the property, nor have I contributed to any costs of the property  nor have \I owned any  assets since a bankruptcy in 2001. 

 I am contemplating bankruptcy yet again, I am at my wits end now and when I try to talk to  any service about  this i get the same bleak answered, 

 have you any suggestions before I do anything really drastic ??  

Hi,

Thanks for your post. I’m sorry to hear about your situation.

If you have little or no income, no assets and are not going to be able to repay the debts in a reasonable amount of time, then typically insolvency options such as bankruptcy to write them off could be the way forward.

However, before you make a decision, I’d recommend discussing your situation in more detail and reviewing all options with a debt advisor (if you haven’t already). You mentioned that you’ve already talked to a few services about your situation, are these independent debt advice organisations?

If your business is still trading, I would recommend getting in touch with Business Debtline, who will be able to give specialist advice.

https://www.businessdebtline.org/

I hope this helps,

Aidan

Unicornsandrainbows

Hi
I have a buy to let property that is on an interest only mortgage, with the rises in interest rates my mortgage is now 4 times what it was, and completely unaffordable for me. I I spoke to my Mortgage company  and they had no products to offer (all pulled and they are no longer offering products)  and no solution other than a 3 month period of reduced payments but then I would need to pay the arrears in full! I completed budget forms for them and have paid what I can every month. I have just received a solicitors letter saying they are considering repossession and forced sale and that I am liable for all costs etc. unless I can clear the arrears in 14 days. Because I was paying a reduced amount my credit rating has gone from good to poor, I cannot afford any increase in monthly repayments so cannot afford to take out a loan to clear the arrears even if I could find a lender. The mortgage company wont agree to a further period of forbearance. 

The property is in negative equity and most likely I will end up with a shortfall of 30-40K, if it sells at current market value, this is the only reason I did not sell the property. My husband died by suicide in the property so it has caused me significant psychological damage to keep it going, I have done everything I can, so potentially repossession is a blessing in disguise as it has taken it out of my hands. I am coming to terms with it but don't want to be in a position where it is sold for much less and I have a crippling debt. I have some equity in my own home but cannot re-mortgage as I cannot afford a higher monthly payment and also my credit rating is now shot I have had a DMP in place for over 6 years (maybe 8 or more) and this will be paid off when I'm in my nineties as I can only afford a small monthly repayment. I am scared stiff of them forcing me to lose my house, we have lost so much already as a family and I don't  think I will come back from this. What are my options please and where best should I go for advice? - Thank you

StepChange_Aidan

Unicornsandrainbows said:

Hi
I have a buy to let property that is on an interest only mortgage, with the rises in interest rates my mortgage is now 4 times what it was, and completely unaffordable for me. I I spoke to my Mortgage company  and they had no products to offer (all pulled and they are no longer offering products)  and no solution other than a 3 month period of reduced payments but then I would need to pay the arrears in full! I completed budget forms for them and have paid what I can every month. I have just received a solicitors letter saying they are considering repossession and forced sale and that I am liable for all costs etc. unless I can clear the arrears in 14 days. Because I was paying a reduced amount my credit rating has gone from good to poor, I cannot afford any increase in monthly repayments so cannot afford to take out a loan to clear the arrears even if I could find a lender. The mortgage company wont agree to a further period of forbearance. 

The property is in negative equity and most likely I will end up with a shortfall of 30-40K, if it sells at current market value, this is the only reason I did not sell the property. My husband died by suicide in the property so it has caused me significant psychological damage to keep it going, I have done everything I can, so potentially repossession is a blessing in disguise as it has taken it out of my hands. I am coming to terms with it but don't want to be in a position where it is sold for much less and I have a crippling debt. I have some equity in my own home but cannot re-mortgage as I cannot afford a higher monthly payment and also my credit rating is now shot I have had a DMP in place for over 6 years (maybe 8 or more) and this will be paid off when I'm in my nineties as I can only afford a small monthly repayment. I am scared stiff of them forcing me to lose my house, we have lost so much already as a family and I don't  think I will come back from this. What are my options please and where best should I go for advice? - Thank you

Hi,

I’m very sorry to hear what you and your family have gone through.

If you’ve already spoken with your mortgage lender and they’ve been unable to offer any suitable options, I’d suggest seeking specialist debt advice to look at other ways to deal with the arrears. As the property is buy-to-let, I’d recommend first contacting Business Debtline for help.

https://www.businessdebtline.org/

If there is no way to avoid repossession, and the property is sold at a loss, please bear in mind that any shortfall owed to the lender will then be an unsecured debt and you’d only be required to pay them a share of what you can afford. The debt could be added to your DMP or included in another type of debt solution.

Kind regards,

Aidan

Unicornsandrainbows

Thanks Aidan, in terms of paying what I can afford this is where I am worried they would force the sake of my family home as there is equity in it? 

StepChange_Patience

Unicornsandrainbows said:

Thanks Aidan, in terms of paying what I can afford this is where I am worried they would force the sake of my family home as there is equity in it? 

Hi there

Thank you for coming back to us.

I understand how worrying it must be, even if there is equity in the home this may not mean the creditor will force the sale of your current home. 

There is a set collections process for all consumer credit regulated debts, including mortgage shortfalls. You would receive letters or phone calls which will explain where you may be in the collections process.

You can find out more information about charging orders and orders for sale here, but hopefully to provide you with some reassurance, orders for sales are very rare.

I hope this helps. 

Patience

Serendipity_Meets_Grace

Hello, I'd appreciate some guidance.

I have UK debts (credit cards and Student Loan) in the region of 50K, which I am unable to repay.

I've been living abroad for 3+ years during which time I began to struggle and fall behind on my repayments, and they've been spiralling out of control ever since. I don't have access to my UK mail so uncertain of the full impact of my mounting missed payments.

I'm self-employed but have not earned any income for a while, have no assets (no home, car), also no children or partner. My family has supported me financially over the past 1.5 years.

Am I able to file for bankruptcy despite being overseas at the moment? Or do I need to return to the UK and secure a fixed address first? Or can I use a virtual UK PO Box for filing?

Part of my struggles has been inconsistent housing, and in a few weeks I will be without a fixed address – yet again.

Is filing for bankruptcy an option for me? And can you recommend any organisation who can guide me through the process? I know filing is done online, but I have no clue what documents I need to get ready in advance. My finances are in a real mess and all my bank and SLC letters in the UK are being returned to sender from my last known address as I haven't lived there in years.

I believe I can run a full credit report to get a sense of how dire things currently are.

I'm now better prepared mentally, emotionally, and psychologically to "face the music".

I want to end this vicious cycle of anxiety and restart my life with a clean slate.

Thanks for any expert guidance you can provide.

StepChange_Patience

Serendipity_Meets_Grace said:

Hello, I'd appreciate some guidance.

I have UK debts (credit cards and Student Loan) in the region of 50K, which I am unable to repay.

I've been living abroad for 3+ years during which time I began to struggle and fall behind on my repayments, and they've been spiralling out of control ever since. I don't have access to my UK mail so uncertain of the full impact of my mounting missed payments.

I'm self-employed but have not earned any income for a while, have no assets (no home, car), also no children or partner. My family has supported me financially over the past 1.5 years.

Am I able to file for bankruptcy despite being overseas at the moment? Or do I need to return to the UK and secure a fixed address first? Or can I use a virtual UK PO Box for filing?

Part of my struggles has been inconsistent housing, and in a few weeks I will be without a fixed address – yet again.

Is filing for bankruptcy an option for me? And can you recommend any organisation who can guide me through the process? I know filing is done online, but I have no clue what documents I need to get ready in advance. My finances are in a real mess and all my bank and SLC letters in the UK are being returned to sender from my last known address as I haven't lived there in years.

I believe I can run a full credit report to get a sense of how dire things currently are.

I'm now better prepared mentally, emotionally, and psychologically to "face the music".

I want to end this vicious cycle of anxiety and restart my life with a clean slate.

Thanks for any expert guidance you can provide.

Hi there

Thank you for getting in touch, I'm sorry to hear that you're in a cycle of anxiety with the debts.

It sounds like you've been going through a very difficult time with your housing and I hope you're able to find somewhere safe soon.

As you're currently living abroad, UK debt advice charities may struggle to provide you with debt advice. If you were thinking of returning, it would certainly be worthwhile getting in touch with Business Debtline. They provide free and impartial debt advice for anyone who is self employed. 

When you're in a position to seek advice, they're likely to go through your debts, your income and household expenditure. It would be handy to have this ready.

You can find out more information here.

So far as applying to go Bankrupt abroad, you can apply to go Bankrupt providing you have lived or have had a business in UK in the last three years. You can find out more about this here in this guide to Bankruptcy.

I hope this helps a little and wish you the best of luck.

Patience

Serendipity_Meets_Grace

Hello Patience, thanks for taking the time to provide some guidance. Debt repayments aren't an option as I currently have no incoming earnings and closed my self-employed activities from the autumn of 2023. 

If i return to the UK, will I be able to file for bankruptcy then? I feel this is best course of action to enable me use the energy I have to begin my life afresh, making more beneficial choices, and creating better opportunities for me to thrive.

I welcome any further pointers you can offer.

Thank you.

StepChange_Patience

Serendipity_Meets_Grace said:

Hello Patience, thanks for taking the time to provide some guidance. Debt repayments aren't an option as I currently have no incoming earnings and closed my self-employed activities from the autumn of 2023. 

If i return to the UK, will I be able to file for bankruptcy then? I feel this is best course of action to enable me use the energy I have to begin my life afresh, making more beneficial choices, and creating better opportunities for me to thrive.

I welcome any further pointers you can offer.

Thank you.

Hi there

Thank you for getting back in touch. 

If you're no longer registered as self employed, if you were to come back then a UK debt advice charity would be able to have a look at your circumstances.

It's difficult to say whether at this point Bankruptcy would be the best way forward for you, but if or when you return to the UK and if you would like help, you're welcome to get in touch with StepChange.

You can find our contact details here. 

I hope this helps. 

Patience