Ask a StepChange debt advisor a bankruptcy question

StepChange_Allen

dtjones888 said:

Hi

I have two questions here, I've just completed an online income and expenditure form with Business Debt Line. After all of my expenditure I'm actually left with a minus figure. Will this mean I don't qualify for a DRO? 

Also, I am a self employed sole trader but all of my debts are personal and not business related. Will stepchange be able to help me or will I need to go to BDL? 

Thanks in advance 

Hi there

Thanks for posting.

If you're self-employed, then yes, it's Business Debtline that you need to speak with, and they can give you all your advice on this.

Being left in a minus doesn't mean you don't qualify for a DRO, but it means that even without the debts you're short of making ends meet every month. If this is the case, it would likely mean you'd end up in debt or arrears again, so we'd recommend being confident of being able to pay your ongoing bills and living costs before doing a DRO.

I hope this helps.

Allen

StepChange_Aidan

Reputer459 said:

Hi @StepChange_Allen

Firstly, thank you for your advice.

I'm in £45k debt and have a second "apartment" property which I had previously rented out, but the mortgage is paid on that now, it's independent of my joint mortgaged property with my wife.

I have creditors chasing me for personal debt (unsecured loans I took out to start a business a few years ago) it has not done well due to covid. I've missed two months of payments (previously I had an excellent 900 score credit report and never missed a payment historically.

Some of these lenders are not understanding and I’ve stopped taking their calls. I have 8 lenders in total I owe a total of £45k to.
I have put the second property for sale and have a few interested parties but I'm not happy with the offers made, I'm hoping to hold out until August/September to sell to maximise the sale price. I want to use the sale of the property to clear my entire debt.

Two of the 8 lenders I have spoken to are not understanding of my situation and I can't keep the others off. They are starting to call me relentlessly now and I've started ignoring the calls. I do not wish to enter insolvency as I will have the means to clear the entire debt shortly.

Queries I have:
Q. Can I continue to ignore creditors until I sell my property and clear all my debt at once (worst case by September, likely by End July/August).
Q. Once I clear the entire debt sum shortly, how will that effect my credit rating?
If I became in arrears for 3-4 months in what has been decades of a perfect credit standing with not a single missed payment.
Can the arrears be removed? and will this affect my chance of obtaining credit in the future?

Thank you, I hope you can assist in providing some clarity on the concerns I have.

Kindest Regards,

Hi,

I wouldn’t suggest ignoring your creditors, but if you’re unable to afford the contractual payments and have already contacted them to explain your situation, you could put the payments on hold for now or just offer a reduced amount based on what you can afford.

Lenders will still contact you asking you to bring the accounts up to date, they are also likely to default the accounts after 3 to 6 missed or reduced payments. After the accounts has defaulted the lenders could then potentially take further action against you to recover the debts.

There’s a guide to the collections process for unsecured debts on our website.

I wouldn’t be able to predict how clearing the debts would affect your credit rating as each credit reference agency calculates it using their own algorithm. However, it’s important to bear in mind that the credit rating can only be seen by you.

Lenders make decisions based on your credit history, so a record of missed payments or defaults may make it more difficult to obtain credit in the future. It’s unlikely that creditors would agree to remove the missed payments, as your credit file is meant to be an factual record of your debts.

There’s some more information about credit files and ratings here.

If you are still running a business, I’d also recommend contacting Business Debtline for some specialist advice. If not, please get in touch with StepChange if you need any further help.

Kind regards,

Aidan

Degember

Good evening..

Please could you offer some advice on satisfying CCJs following discharge of bankruptcy?

In Jan 2018 I had a CCJ registered against me (£526) which was one of many debts I couldn’t pay and which led to me finally deciding that bankruptcy was my only option to become debt free.  I entered bankruptcy in May 2018, discharged May 2019.  This included all my debts, including the CCJ.

After spending the last three years rebuilding my finances and trying to repair my credit as best as I could before the 6 years mark arrives, my fiancée and I have tried to get a mortgage.  We had hoped that more options would be available to us once I had hit the 3 year point post-bankruptcy.  Although after an automatic decline from one lender, the issue now would appear to be the CCJ.  On my credit files, it is showing as Active for the full remaining balance of £526.  I asked for assistance from the original debt company (Lowell) and they agreed to mark the debt as partially satisfied, but my credit files remain unchanged.

Our prospective mortgage company’s negative stance is due to the Active status of the CCJ, and it being above £500 pounds.  They would accept someone who is 3 years post-bankruptcy.

Is there anything I can do to get the status of the CCJ changed? I understand that the debt was never truly settled financially, but thought that the bankruptcy would ‘settle’ this debt.  I would even consider paying the outstanding balance as the impact of my current housing situation is more costly than the outstanding figure.

Any advice would be much appreciated! 

For the record and for the benefit of others who might be in my previous situation- something I really regret is not entering bankruptcy sooner instead of trying to live with the noose of unmovable debt around my neck.

StepChange_Aidan

Degember said:

Good evening..

Please could you offer some advice on satisfying CCJs following discharge of bankruptcy?

In Jan 2018 I had a CCJ registered against me (£526) which was one of many debts I couldn’t pay and which led to me finally deciding that bankruptcy was my only option to become debt free.  I entered bankruptcy in May 2018, discharged May 2019.  This included all my debts, including the CCJ.

After spending the last three years rebuilding my finances and trying to repair my credit as best as I could before the 6 years mark arrives, my fiancée and I have tried to get a mortgage.  We had hoped that more options would be available to us once I had hit the 3 year point post-bankruptcy.  Although after an automatic decline from one lender, the issue now would appear to be the CCJ.  On my credit files, it is showing as Active for the full remaining balance of £526.  I asked for assistance from the original debt company (Lowell) and they agreed to mark the debt as partially satisfied, but my credit files remain unchanged.

Our prospective mortgage company’s negative stance is due to the Active status of the CCJ, and it being above £500 pounds.  They would accept someone who is 3 years post-bankruptcy.

Is there anything I can do to get the status of the CCJ changed? I understand that the debt was never truly settled financially, but thought that the bankruptcy would ‘settle’ this debt.  I would even consider paying the outstanding balance as the impact of my current housing situation is more costly than the outstanding figure.

Any advice would be much appreciated! 

For the record and for the benefit of others who might be in my previous situation- something I really regret is not entering bankruptcy sooner instead of trying to live with the noose of unmovable debt around my neck.

Hi,

Thanks for your post.

Bankruptcy writes off the balance owed to the debt, but the CCJ itself should still be recorded as active on your credit file. Unfortunately, it’s not possible to change the status at this stage, but it should be removed from your file in January 2024, six years from the date of the judgement.

Each mortgage company has their own acceptance criteria, but it’s normally the record of bankruptcy on your credit file that leads to an application being refused rather than a CCJ. However, there may be other lenders willing to help.

There’s some more information on applying for a mortgage after bankruptcy here.

Kind regards,

Aidan

docuk2022

Hi Aidan,

I am considering filing for bankruptcy online and would appreciate your kind advice.

For the last 2 years, I have not been earning and am living with my wife who is self-employed, and my daughter who works for a company in London. On the online bankruptcy platform, on the income and expense section, it says 'lf you don't contribute towards something, leave it blank'. I am confused because I am not earning and therefore, should I mention the actual expenses towards school fees, rent, utilities, etc that my wife and daughter spend/pay every month or should I leave all the expenses amounts blank since I am not contributing towards it? If I leave the expenses blank, it would show the household income of my wife and daughter and against the income, it would show no expenses since I am not contributing!   

I hope I have been able to convey what my confusion is? Please explain what should I write? Your advice would be greatly appreciated. Thanks 

StepChange_Aidan

docuk2022 said:

Hi Aidan,

I am considering filing for bankruptcy online and would appreciate your kind advice.

For the last 2 years, I have not been earning and am living with my wife who is self-employed, and my daughter who works for a company in London. On the online bankruptcy platform, on the income and expense section, it says 'lf you don't contribute towards something, leave it blank'. I am confused because I am not earning and therefore, should I mention the actual expenses towards school fees, rent, utilities, etc that my wife and daughter spend/pay every month or should I leave all the expenses amounts blank since I am not contributing towards it? If I leave the expenses blank, it would show the household income of my wife and daughter and against the income, it would show no expenses since I am not contributing!   

I hope I have been able to convey what my confusion is? Please explain what should I write? Your advice would be greatly appreciated. Thanks 

Hi,

Welcome to the forum.

The online bankruptcy application will ask for details of other household income as well as your own. This is so the Official Receiver (OR) can check that all the expenses are being shared fairly.

If you were receiving an income you would need to enter your share of the household bills (as an example, if yours was 25% of the total income you could say your share is 25% of the rent, council tax, utility bills etc).

If your income is currently zero and you’re not able to contribute towards household costs, you can leave this section blank. So long as the ‘Your income’ balance is zero the OR will be able to see that your wife and daughter are covering expenses. They won’t be expected to pay anything towards your bankruptcy.

I hope this helps.

Aidan

CFlem2022

Hi, I'm looking for some advice
I have manged to rack up around 15k in debt spread over a few CCs and a loan. I'm paying them all back but the interest on my CCs is about to start after the promotion period ends and with the cost of living going up I'm finding due to the amounts I'm paying I'm left with nothing at the end of the month and really struggling. I've looked at a Trust Deed but it seems very drastic, is there any better options? Or is a trust deed my only option?

Thanks 

StepChange_Allen

CFlem2022 said:

Hi, I'm looking for some advice
I have manged to rack up around 15k in debt spread over a few CCs and a loan. I'm paying them all back but the interest on my CCs is about to start after the promotion period ends and with the cost of living going up I'm finding due to the amounts I'm paying I'm left with nothing at the end of the month and really struggling. I've looked at a Trust Deed but it seems very drastic, is there any better options? Or is a trust deed my only option?

Thanks 

Hi there

Welcome to the forum and thanks for posting.

There may be a number of options available to you, it depends on your budget, type of debts and various other factors. The best thing to do would be to visit our website at www.stepchange.org, which has details on of how to register with us free of charge online or over the phone. I assume that you're in Scotland if you've looked at Trust Deeds; we have a Scottish team that can assist you.

We look forward to helping you.

Allen

CFlem2022

Hi, 

I was looking for some advice, I'm looking at a Debt management plan to help pay back my debts but I have an unsecured loan to pay for my car. The payments for this are managble and wondered would I be able to exclude this from any DMP?

Thanks 

StepChange_Aidan

CFlem2022 said:

Hi, 

I was looking for some advice, I'm looking at a Debt management plan to help pay back my debts but I have an unsecured loan to pay for my car. The payments for this are managble and wondered would I be able to exclude this from any DMP?

Thanks 

Hi,

Thanks for your post.

In a DMP, you pay one affordable monthly payment, and this is then shared out fairly among your debts.

We can’t recommend excluding an unsecured debt from a DMP as this would show preferential treatment to one creditor over the others. There is a risk that other creditors may not accept a reduced amount or be more likely to take further action if they feel that they are being treated unfairly.

I hope this helps.

Aidan