Debt got too big handle

fl123

Throughmyfingers said:

I cant offer much on the bankruptcy front but i think there are some threads on here relating to this and different debt consolidation options which might be worth a read.

On the immediate money front, have you looked to maybe see if you have anything you can sell thats no longer in use. Marketplace can have a quick turnaround especially on weekends.  I also do prol1fic surveys and i have easiley racked up £20 in a week as some of them pay quite well. I try to do them on my breaks at work rather than online shopping 😂

hahah, that's really cool. I looked them up, but seems they have a waiting list I applied for it, and maybe I get lucky. Thank you for that, already feeling mentally better seeing so many people helping out and providing valuable advice ! When someone is in debt, its hard to see a solution, and its places like these that make a huge difference.

sourcrates

On paper at least, you have a good income, and quite a large amount of disposable income, I`m guessing that`s not entirely accurate.

You mention bankruptcy, yes that would render you debt free, all your debts can be included, the only down side is any amount of disposable income over £20 will attract an IPA (Income Payment Arrangement) which would normally be for 3 years, so could turn out to be expensive.

I`m thinking you need to take advice from one of the free debt charities, as perhaps a debt management plan, or even just better money management, may be the real answer here.

A more accurate SOA is needed before that decision can be made.

fl123

Thank you @sourcrates , I really appreciate your comment. I made a post in the living with bankruptcy thread since what I am trying to understand regarding bankruptcy is if the IPA can be less than 3 years. The reason why I ask this is because, on paper, if an NT tax code is applied, so no more income tax to pay, added alongside what remains from my net income after expenses, it should clear all debts in under a year.

Are there exceptions to having the NT code applied ?

I am aware it looks good on paper, but unfortunately in reality all the extra income went down the drain every month, huge mistake on my part and I'm glad to be working towards getting it all behind me and try to never repeat such mistakes.

I have made all attempts to stop gambling and "trading", and although I do believe I am on the right track, with someone else in charge of my finance, I will surely will not spend money on this.

Brie

Must admit this is the first time I've heard anyone mention that you don't income tax if you are bankrupt.  But according to DebtCamel you are right!    (sorry wanted to check if it's true)

This might help if you are considering bankruptcy.  Lots of other interesting reading on the website too on how to handle debt.

A Guide to Bankruptcy in England, Wales and N.Ireland (debtcamel.co.uk)

sourcrates

fl123 said:

Thank you @sourcrates , I really appreciate your comment. I made a post in the living with bankruptcy thread since what I am trying to understand regarding bankruptcy is if the IPA can be less than 3 years. The reason why I ask this is because, on paper, if an NT tax code is applied, so no more income tax to pay, added alongside what remains from my net income after expenses, it should clear all debts in under a year.

Are there exceptions to having the NT code applied ?

I am aware it looks good on paper, but unfortunately in reality all the extra income went down the drain every month, huge mistake on my part and I'm glad to be working towards getting it all behind me and try to never repeat such mistakes.

I have made all attempts to stop gambling and "trading", and although I do believe I am on the right track, with someone else in charge of my finance, I will surely will not spend money on this.

The IPA last`s 3 years regardless, if your income goes up, so do your payments, if your income goes down, again, so do your payments, if you can no longer afford your IPA, then payments stop.

You need a budget to live on, there are standard rates in bankruptcy, you won`t pay tax on the first 12 months of income, it will go into your IPA instead, should you repay your entire indebtedness at some point, then your payments will stop.

You will need conformation of this from the OR, as there may be other fee`s charges involved.

However if this scenario is the one that is most likely to be played out, you could settle your debts without the need for bankruptcy, allowing them to default and be sold on, all accounts could be settled for a discount further down the line, yes it would take longer, and your credit file will still be messed up for 6 years, but no bankruptcy will be registered.

Food for thought.

fl123

sourcrates said:

fl123 said:

Thank you @sourcrates , I really appreciate your comment. I made a post in the living with bankruptcy thread since what I am trying to understand regarding bankruptcy is if the IPA can be less than 3 years. The reason why I ask this is because, on paper, if an NT tax code is applied, so no more income tax to pay, added alongside what remains from my net income after expenses, it should clear all debts in under a year.

Are there exceptions to having the NT code applied ?

I am aware it looks good on paper, but unfortunately in reality all the extra income went down the drain every month, huge mistake on my part and I'm glad to be working towards getting it all behind me and try to never repeat such mistakes.

I have made all attempts to stop gambling and "trading", and although I do believe I am on the right track, with someone else in charge of my finance, I will surely will not spend money on this.

The IPA last`s 3 years regardless, if your income goes up, so do your payments, if your income goes down, again, so do your payments, if you can no longer afford your IPA, then payments stop.

You need a budget to live on, there are standard rates in bankruptcy, you won`t pay tax on the first 12 months of income, it will go into your IPA instead, should you repay your entire indebtedness at some point, then your payments will stop.

You will need conformation of this from the OR, as there may be other fee`s charges involved.

However if this scenario is the one that is most likely to be played out, you could settle your debts without the need for bankruptcy, allowing them to default and be sold on, all accounts could be settled for a discount further down the line, yes it would take longer, and your credit file will still be messed up for 6 years, but no bankruptcy will be registered.

Food for thought.

Thanks for that information ! My main concern is not the banks, but my previous workplace who paid the sales bonus out. If they agree to do a monthly payment, that would be good, if they don't and want to go to court and potentially go after a CCJ, I want to cover all my bases, that is why I was thinking about bankruptcy since having around 4k per month ( NT tax code + amount after living expenses ) would be 48k within a year. With debts at around 40k, even if fees would be at 8k ( which to me sounds like a fairly big number to be honest , but best to think at worse case scenarios, rather than best case ones), all debts would be paid up + fees in 1 year. I am thinking that my credit score, as you correctly said, would be messed up either way.

theoretica

fl123 said:

The reason why I ask this is because, on paper, if an NT tax code is applied, so no more income tax to pay, added alongside what remains from my net income after expenses, it should clear all debts in under a year.

Are there exceptions to having the NT code applied ?

I commented on your other post - this is not as good as it sounds at first - what seems to happen is the income tax is no longer collected PAYE - but your income tax due for the rest of the year *is* calculated by HMRC and added as another debt.  Which could work out as less income tax paid for someone with huge debts compared to income, but doesn't seem so good in your case.

fl123

theoretica said:

fl123 said:

The reason why I ask this is because, on paper, if an NT tax code is applied, so no more income tax to pay, added alongside what remains from my net income after expenses, it should clear all debts in under a year.

Are there exceptions to having the NT code applied ?

I commented on your other post - this is not as good as it sounds at first - what seems to happen is the income tax is no longer collected PAYE - but your income tax due for the rest of the year *is* calculated by HMRC and added as another debt.  Which could work out as less income tax paid for someone with huge debts compared to income, but doesn't seem so good in your case.

Interesting, I thought it was all wiped out for the year, unless there is a job change. Do you happen to have a source for this ? I am really interested in reading and understanding more about this. Thank you !

enthusiasticsaver

Surely if your income is £4k per month and your expenses only £1k then this £40k debt should be easily sorted without declaring yourself bankrupt? Why is this particular option the one you seem to be gravitating towards? You may be debt free within a year but you have to pay a bankruptcy fee and it is a drastic step to take so I would not go down that route without advice from a free debt charity. If you can stick to a budget and live within the soa you have put up you would be debt free in just over a year anyway. 

Bear in mind that the Nil tax code applied after bankruptcy is only for the rest of that current tax year up to April so not necessarily a whole year. 

The gambling/trading is obviously a different issue and arguably more important if you are to sort this out once and for all. 

fl123

enthusiasticsaver said:

Surely if your income is £4k per month and your expenses only £1k then this £40k debt should be easily sorted without declaring yourself bankrupt? Why is this particular option the one you seem to be gravitating towards? You may be debt free within a year but you have to pay a bankruptcy fee and it is a drastic step to take so I would not go down that route without advice from a free debt charity. If you can stick to a budget and live within the soa you have put up you would be debt free in just over a year anyway. 

Bear in mind that the Nil tax code applied after bankruptcy is only for the rest of that current tax year up to April so not necessarily a whole year. 

The gambling/trading is obviously a different issue and arguably more important if you are to sort this out once and for all. 

From a numbers perspective, I think I can pay everything off, slowly, but I think it is possible without going bankrupt. What I am afraid, and I am 100% honest, is potentially relapsing. In the case of bankruptcy for example, someone else takes my money, so I won't be able to relapse either way .. its difficult but there are things that scare me