time to go bankrupt?

norserose

Hello,

It's my first time on here, but looks like you all know the score! I'm after a bit of advice really if anyone can help, am waiting for an appointment with a counseller from the consumer credit people but it's ages off and not sure what to do meantime.

Basically, the situation is this; I owe about £16k, basically because I went back to college 2 years ago and took out a career development loan. Which is ironic, since I haven't been in steady employment since, but anyway.

I pay out about £400 a month in repayments, regardless of how much money is coming in. I have been unemployed for 4 months out of the year so far, and the repayments have been going out despite the fact that I am on job seekers allowance and get £55pw. At first I sustained this by maxing out my overdraft, but this is now at it's limit. I spoke to the loan people, who have given me an extra £600 to tide me over and a repayment break until the middle of next month. But once that starts again I can't keep paying it back. Even if i find employment, after rent and repayments I have about £25 a week to survive on.

Is it best at this point to cut my losses and go bankrupt?

newfunk

As someone who is bankrupt, I would personally try not to go bankrupt for that much, if it is just this debt that you have, then can't you go back to them and explain your situation. I cant believe they have given you another £600, talk about irresponsible by them!! If it was me Id explain the situation again, tell them what your thinking of doing, and then Im sure they would be more than willing to drop the payments down, maybe freeze the interest, and look at righting part of it off....this is just how I see it from my experience, others may view it different..

Good luck in whatever you decide. Just remember its not the end of the world.

ms_london

What you should do is contact ALL of your creditors, let them know you are unemployed & claiming jobseekers allowance. Agree with them a token payment, whether its a £1 or £5 to pay for the time being, but assure them that if and when your circumstances change, you will be in contact again to increase your repayment. Have you told them you are out of work? Have you been looking for work?

If you could list all of your creditors, it would help you get a better understanding of exactly what you owe. Who you owe money to (barclaycard etc), the balance, the minimum payment, whether you have Payment Protection Insurance on them (which might well be valid if you are out of work, have you looked into this?).

Are you a single person? Married with kids? How old are you?

I personally think that this can be sorted, rather than going down the bancrupcy route.

When you were working, what was your wage? What could you be earning?

Ive done the same, but its naughty that you asked for an increase on your overdraft AND that the bank gave it to you when you are out of work (i just kept increasing mine and increasing it). As i said, you need to call ALL of your creditors. Do it tomorrow, you need to stop borrowing money, whether this be overdraft, credit cards, everything. Your creditors cant have your money if you dont have any, if you only have £50ish a week coming in, then thats all you have coming in. But the main thing is to be honest with them, call them and then back it up in writing, make sure that you make the repayments on time, whether its a £1 or £10, if the payments are continously late it will annoy them.

I hope this helps.

Ms_London

norserose

I've actually already contacted my creditors, that's when the people I get the loan from upped my loan. I was adamant that I didn't want any further debt, but after an hour on the phone to them, it was their suggestion and seemed like the only way to buy myself more time.

I'm 28, I own pretty much nothing, so nothing can be repossessed if I go bankrupt. I know that bankruptcy is not ideal, but I can't help that thinking it's preferable to paying £400 for the next 7 years. I suppose, bearing the interest in mind, I'm probably more like £18,500 in debt. Even when I get work,as a writer I'm unlikely to be paid more than £14k per year. Knock £5k off that for my creditors and I'm only looking at an income of £9k per year.

With debt like that, ever starting a family's out of the question, unless I ditch my boyfriend and get a very minted replacement!

Bearing this in mind, is it better to go bankrupt, or struggle on?

Turning_into_scrooge

I'm on a debt management plan with CCCS at the moment and will be for quite some time :eek: . I know their appointments do tend to be approx. a month ahead but i would certanily not consider brankrupcy untill you have had your session with them as there may be other options for you. Bankruptcy is rather a huge step and unless CCCS recommend it i would hang in there. Write to all your creditors and tell them you have contacted CCCS, give them your ref. no. explain the situation and offer them a small pyament monthly untill CCCS take over dealing with it or tell you to go bankrupt and include the small token payment in with the letter to show you are willing to pay something. They should give you time to meet CCCS and sort things out with them but whatever you do, don't allow them to push you into paying more than you can afford right now or take any more loans out as that really doesn't solve the problem. :eek: I hope this helps and i wish you well

newfunk

norserose wrote:

I've actually already contacted my creditors, that's when the people I get the loan from upped my loan. I was adamant that I didn't want any further debt, but after an hour on the phone to them, it was their suggestion and seemed like the only way to buy myself more time.

I'm 28, I own pretty much nothing, so nothing can be repossessed if I go bankrupt. I know that bankruptcy is not ideal, but I can't help that thinking it's preferable to paying £400 for the next 7 years. I suppose, bearing the interest in mind, I'm probably more like £18,500 in debt. Even when I get work,as a writer I'm unlikely to be paid more than £14k per year. Knock £5k off that for my creditors and I'm only looking at an income of £9k per year.

With debt like that, ever starting a family's out of the question, unless I ditch my boyfriend and get a very minted replacement!

Bearing this in mind, is it better to go bankrupt, or struggle on?

If it was me, i'd keep contacting the loan company, and stress to them your situation, and what you are trying to do to resolve it!! I went Bankrupt for 100k, if it had been 16k I would have made everyeffort to pay it off, even if it meant over 10 years..You dont know whats gonna happen in 12 months time....you may wrute a bestseller!!! As for the boyfriend, im sure you dont mean it..but money really isnt everything!!

norserose

was joking - wouldn't swap my bloke for anyone...!

But basically, everyone thinks that I'd be better off living on £25pw for the next 7 years, not being able to save any money in that period? What if I do end up starting a family - I wouldn't be able to stop working at any time because I can't pay my minimum payments otherwise!

I dunno, it's tough. I'd feel better if I'd got in this debt through buying shoes and handbags, but it's purely funded my education, which hasn't got me the job as yet....

meanmachine_2

Sorry if this sounds a bit harsh, but you do have to take responsibility for what you owe. Going bankrupt over such a small sum (comparatively) is just barmy, it really is.

You're thinking of your future, but as a bankrupt the world becomes a much greyer place, it really does.

Think of the £16K as the price you're paying for the career that you now have. I'm sure many people would love to work as a writer full time and avoid the drudgery of office life.

And as other posters have pointed out, this £16K investment might yield you a far greater return in the future, if (when?) you write a bestseller.

Most people on these boards have huge debts - £100K plus - in the form of a mortgage. they can't just default ion these debts in return for a better life.

Again, sorry to be harsh, but it sounds to me like people are turning to bankruptcy FAR too easily.

deemy2004

If it were moi

I would send a letter to all the creditors telling them I am unemployed, no assets and list all the debts

And then tell them that I can pay you £5 per week etc if you agree to suspending interest charges, and when you get a job you will up the amount of payment

Also say, if there is no agreement that you have no choice but to go bankrupt.

mrcow

norserose wrote:

But basically, everyone thinks that I'd be better off living on £25pw for the next 7 years, not being able to save any money in that period?

What people are actually saying is that you should be looking to face up to your responsibilites and pay off what you owe. Bankrupcy is not a way out when feeling a bit of a pinch because you've borrowed too much, and it's certainly not a process that should be taken lightly.....take a look at any number of threads on this board to see how desperate a process it is.

By all means negotiate lower repayments whilst you're looking for work, but you've now been unemployed for four months, if you've not found work in your chosen field, then maybe it's time to start broadening your horizons? Even if it's temporary work, you need something or you'll end up with no confidence or self respect.

Once you do start work, if you're worried about only having £25 per week left over, then you're just going to have to do what everyone else does when money is tight....cut back, or find a second job. The minimum wage is over £5 per hour, you'd only have to do some weekend work for a few hours a week to more than double your weekly disposable income.

I dunno, it's tough.

Yes it is. Many, many of us here have been there, done that and come through the other side, and yes, we've also brought up families in the process, so that's not out of the question either.

If you're worried about paying off a loan over the next seven years, imagine how much worse it would be to screw up your credit rating for the foreseeable future over an amount which is workable given some effort and time. How are you going to ever buy a house?

Good luck. I hope that you find work very soon and that you reap the rewards of your course. Don't beat yourself up about the debt, you made what you thought was the right decision at the time. You need now to be putting in place actions that prevent the debt from getting any worse and look towards paying it off.

jen_jen_2

im gonna differ here and say it can be worth going bankrupt for 16k for all sorts of reasons, rather than spend the next 7years paying it off you can save for a good deposit for a house or begin the savings habit because your credit rating is affected.

however, it is still possible to get credit after you have been discharged from bankruptcy, its often more expensive but may be less than the 16K you still need to clear to be staight.

the reasons for the debt are irrelevant you need to do what you can live with. if you need peace of mind, no creditors and no credit then bankruptcy is your option. if you feel you need to pay off creditors then thats what you do

there is a moral oblidgation arguement - sure but not at the expense of your health (worry and stress) or your future and to be fair bankruptcy is a legal and perfectly reasonable solution to your problem, just because other people dont choose to do it doesnt make it wrong for you.