Should I go Bankrupt when I have to inevitably have to move out?

Nick511

Well long story short. 

I am 21 and 35k in debt! Income £19,914

Currently on PayPlan paying 250£ a month.

I passed my apprenticeship recently so hopefully I get a decent paying Job or a promotion.

I am going have to move out very soon which is unfortunate. I’ve been offered an IVA but I don’t like the sound of it. 

I have money ready to move out. But I am going to struggle hard paying these payments. 

So would be nice getting input from anyone that’s been in my horrific situation at this age! 

Many thanks

Chris_English

That's a huge amount of debt to have at your age; has it bought anything that you can sell?

Bankruptcy immediately bars you, for life, from certain professions, and will have a majof effect on your finances for a very long time, possibly decades, so it's not something to be done lightly.

The starting point for anyone to be able to advise you is that you need to fill out a statement of affairs, listing your income, outgoings, assets and debts, so that you (and anyone who wants to help) can understand where you are right now, and what the possibilities are from here.

I'm really surprised that at age 21 you've been able to take on so much debt, so hopefully some or all of it is secured against assets that can be sold to help you towards getting back on your feet.

Nick511

I have no idea how I got approved for all the credit and loans but hey ho we live and learn. They are all unsecured I have nothing to sell to pay a sufficient portion towards.

This all stemmed from cryptocurrency investments and made a complete lose, it was all good last year but now I’ve lost it all. Pretty reckless thinking about it now.

Well undoubtedly I’m pretty stuck here. I have to move out soon.

I am a Qualified IT Technician now so I’m good if I have to go bankrupt ultimately. Really I’m on this DMP till I can find a suitable place.

Debts

AMERICAN EXPRESS                  £1,153.00
SERVICES EUROPE LIMITED
BARCLAYCARD  £5,590.00

CLYDESDALE FINANCE  £499.00

HOME RETAIL GROUP CARD  £330.00

LLOYDS BANK CREDIT CARD   £6,092.00
LLOYDS BANK NO 1    £999.00
M & S BANK    £6,629.00
NEWDAY CARDS LTD (FLUID)    £598.00
SALARY FINANCE  £12,897.00

Total income                                                                   £

1,400.00

Total outgoings                                                              £

1,130.83

(Savings contribution)                                                       £

20.00

Debt admin fee (if applicable):                                          £

0.00

Total available for priority creditors    £

125.00

Monthly Outgoings

Rent                                                                                  £	450.00
Mortgage                                                                          £	0.00
Other secured loans                                                         £	0.00
Council tax/rates                                                               £	0.00
Other home and contents                                                 £	0.00
Gas                                                                                   £	0.00
Electricity                                                                          £	0.00
Other utility costs                                                              £	0.00
Water                                                                                £	0.00
Care and Health Costs                                                     £	2.50
Transport and Travel                                                        £	263.33
School Costs                                                                    £	0.00
Pensions and Insurances                                                 £	0.00
Professional Costs                                                           £	0.00
Other Essential Costs                                                       £	125.00
Total fixed costs   £	840.83

Communications and Leisure                                           £	187.00
Food and Housekeeping                                                  £	60.00
Personal Costs                                                                 £	43.00

Chris_English

Have you at least stopped gambling now? Also, are you sure that you’re never going to want to work in IT in banking? It’s a common route for IT workers, but banks are generally not keen on employing bankrupts, so it’s another thing to consider, as is the issues which you may have renting or buying a place to live.

Others will be better placed to advise you on the options available, but bankruptcy so young is a major thing.

Nick511

Yeah that’s all done and over with now. And no I won’t work for a bank I have plenty of options with IT which great but yeah ultimately it will take me 11 years to complete my dmp so I really don’t know what’s best for me at this point.

payplan want me to set up an IVA but I don’t know if an IVA is the best option.

Thank you for replying it’s really helpful getting other’s opinion. This is extremely stressful situation for me now.

sourcrates

In terms of your credit file, there is no difference between bankruptcy/IVA , each will be recorded for a period of 6 years.

Some professions may ask you if you have ever been bankrupt, mostly jobs in finance, it won`t Barr you for life from anything, however I do agree bankruptcy at your age is not ideal, but then neither is dabbling in crypto currency, but that`s an argument for another day.

A IVA will last 6 years, most likely half as long as the DMP you are on now, which will take around 12 years to complete, your monthly payment will be similar in each case.

Bankruptcy will be over in 12 months, it costs £680, and all your debts are included.

In all cases you must quell your appetite to gamble, otherwise the results will be catastrophic for you going forward.

Nick511

sourcrates said:

In terms of your credit file, there is no difference between bankruptcy/IVA , each will be recorded for a period of 6 years.

Some professions may ask you if you have ever been bankrupt, mostly jobs in finance, it won`t Barr you for life from anything, however I do agree bankruptcy at your age is not ideal, but then neither is dabbling in crypto currency, but that`s an argument for another day.

A IVA will last 6 years, most likely half as long as the DMP you are on now, which will take around 12 years to complete, your monthly payment will be similar in each case.

Bankruptcy will be over in 12 months, it costs £680, and all your debts are included.

In all cases you must quell your appetite to gamble, otherwise the results will be catastrophic for you going forward.

Thank you for your reply. I’ve put aside the crypto life it really wasn’t worth it in the end. I have the money saved for a first month rent and deposit. Along with enough to backrupt myself.

So is it just worth moving out then declaring bankrupt or just get the IVA done and over with and ultimately have to deal with potential problems renting with an IVA on my credit file and lose all the money I saved aside for moving out.

Chris_English

You have to apply for bankruptcy, you aren’t able to just declare it.

Nick511

Chris_English said:

You have to apply for bankruptcy, you aren’t able to just declare it.

Sorry I meant apply.

sourcrates

You say you hope to get a better paid position, so if you opted for an IVA, your payments would increase in line with your earnings, you would also need to have stability around your job, as the arrangement can last up to 6 years.

If you stay with the DMP, any increases can be put into an emergency fund, for you to save.

Further down the line this can be used to make full and final settlement deals with your creditors, thus reducing your debt, and the time you are in debt management.

I would not recommend an IVA, they do have there place, but are really meant for homeowners with an asset to protect, you have no assets, so I would choose another option, IVA`s usually make a lot of money for the IP from the fee`s that are charged, which is exactly why they use the hard sell with them.

So basically if you want the quickest way out of this, opt for bankruptcy, but be aware of the possible repercussions.

If you choose the long haul, stick with the DMP, save up that emergency fund, and you could cut the time in half.

You have had the pro`s and con`s of all options, so its your choice now really.

newsgroupmonkey_

Nick511 said:

Yeah that’s all done and over with now. And no I won’t work for a bank I have plenty of options with IT which great but yeah ultimately it will take me 11 years to complete my dmp so I really don’t know what’s best for me at this point.

payplan want me to set up an IVA but I don’t know if an IVA is the best option.

Thank you for replying it’s really helpful getting other’s opinion. This is extremely stressful situation for me now.

Just a heads up. FIrstly, I work in IT and have done for 26 years. Until recently I was a people manager for a very large managed services company working in pretty much every sector. Unless you find somewhere long term in private sector, you'll end up at some point working in public or banking sector - it's honestly where the money is.

It could also preclude you from working for a managed services company. If you think that most large companies do their IT in-house, you're very much mistaken. Companies like CGI, Nasstar, Capita, Fujitsu and so on dominate this market.

As you start your career, you're probably not thinking about the big bucks in contracting, but it's where the money is. And inevitably, you'll need clearance from either FCA or Government or Police or whatever. Government and Police clearance IS possible with bankruptcy (although you'll need to be honest and it could take a lot longer and if your credit is still pants, you may still get turned down). FCA? I've not checked the docs lately, but certainly in the past it was very difficult.

Even then, working in IT, many private sector companies (think retail, lawyers and so on), will want people to do credit checks.