Please advise - Is bankruptcy the best option for me?

A786123

Hi, I am 29 years old and unfortunately a gambling addict in the process of recovery.
I have debts of over £13,000 - £4-5k in car finance and the rest varies between bank loans, pay day loans and mobile phone providers. 
I have been thinking of going into an IVA but because of my addiction I can not guarantee I will keep up with payments, I have been off work with depression and anxiety recently but have now returned to work. I am on a salary of £23k but cannot guarantee I will be in work for the duration of my IVA, this is why I was thinking of going down the bankruptcy route starting a fresh and at the same time have my gambling addiction under control (I am currently getting professional help). 

Any advice would be appreciated.

Thank you 

Grumpelstiltskin

Firstly what are your housing circumstances Mortgage? Rent? Live with family?

A786123

Grumpelstiltskin said:

Firstly what are your housing circumstances Mortgage? Rent? Live with family?

I am living with family, with no real means of assets in my name 

sourcrates

You are not a good candidate for an IVA.

You have far too little debt, you have no assets to protect, and you cannot rely on a regular income.

If at month end you have less than £75 disposable income left over (not counting any debt repayments) then look at a DRO (Debt Relief Order).

If your disposable income is far more than £75, you could go bankrupt, however 13k is not a massive amount of money, and could probably be better managed via a DMP (Debt Management Plan) which is much less formal, and a lot easier to set up and manage.

One of the free to use debt charities will be able to offer advice on your best option, but going bankrupt for 13k is a little extreme.

A786123

sourcrates said:

You are not a good candidate for an IVA.

You have far too little debt, you have no assets to protect, and you cannot rely on a regular income.

If at month end you have less than £75 disposable income left over (not counting any debt repayments) then look at a DRO (Debt Relief Order).

If your disposable income is far more than £75, you could go bankrupt, however 13k is not a massive amount of money, and could probably be better managed via a DMP (Debt Management Plan) which is much less formal, and a lot easier to set up and manage.

One of the free to use debt charities will be able to offer advice on your best option, but going bankrupt for 13k is a little extreme.

Thank you for your advice, I appreciate it. 

I also have 2 CCJ's - Im wanting to improve my credit rating as soon as possible - I know a IVA takes 5/6 years 

Will going bankrupt be the best option for me to start a clean slate after 12 months? 

sourcrates

No matter what debt solution you opt for, it will show on your credit files for 6 years, so there is no quick fix here, one is equally as bad or as good, as the other.

Why are you wanting to improve your credit rating may I ask? 

More debt is probably the last thing you need, slow, low risk decision making is what`s required now.

MalMonroe

A786123 said:

sourcrates said:

You are not a good candidate for an IVA.

You have far too little debt, you have no assets to protect, and you cannot rely on a regular income.

If at month end you have less than £75 disposable income left over (not counting any debt repayments) then look at a DRO (Debt Relief Order).

If your disposable income is far more than £75, you could go bankrupt, however 13k is not a massive amount of money, and could probably be better managed via a DMP (Debt Management Plan) which is much less formal, and a lot easier to set up and manage.

One of the free to use debt charities will be able to offer advice on your best option, but going bankrupt for 13k is a little extreme.

Thank you for your advice, I appreciate it. 

I also have 2 CCJ's - Im wanting to improve my credit rating as soon as possible - I know a IVA takes 5/6 years 

Will going bankrupt be the best option for me to start a clean slate after 12 months? 

Hi, sorry you find yourself in this situation. 

However, going bankrupt would not be the best option for you. As sourcrates says, above, a DRO would be the better option. Or even a Debt Management Plan. 

Bankruptcy is not over in a year, it hangs around and affects your life for a good while afterwards. It's certainly on your credit reports for 6 years.

My best advice, same as sourcrates again, would be to contact one of the free debt help agencies - StepChange National Debtline or Citizens Advice (click on the links at the bottom of sourcrates' post, above). 

Information about bankruptcy here - https://www.stepchange.org/debt-info/how-bankruptcy-affects-me.aspx 

And also here - 

https://www.citizensadvice.org.uk/debt-and-money/debt-solutions/bankruptcy/before-you-go-bankrupt/check-if-going-bankrupt-is-right-for-you/

What I would do in your position is contact StepChange on their free number and ask for help and advice. Prepare a budget of all your incomings and outgoings so that they can help you. They are not at all judgemental and they are very knowledgeable and, if they recommend a DRO, they will help you to apply for one. I know this because I've had a DRO of my own and StepChange helped me all the way. And I've come out at the other side. When they were helping me, I was assigned a named adviser who I could contact and talk to about all my financial worries. It was such a help. 

I see you are getting professional help for your gambling but did you know that it is now acknowledged as an illness and you can get NHS help as well  -

https://www.nhs.uk/live-well/addiction-support/gambling-addiction/

https://www.england.nhs.uk/2022/02/nhs-launches-new-gambling-addiction-clinics-to-meet-record-demand/

I hope that this is helpful. Feel free to ignore completely if not. I know that feeling of not knowing where to turn but you've managed to get help with your gambling and now asking on here for help, all positive steps towards sorting things out. 

I wish you all the very best. 

A786123

MalMonroe said:

A786123 said:

sourcrates said:

You are not a good candidate for an IVA.

You have far too little debt, you have no assets to protect, and you cannot rely on a regular income.

If at month end you have less than £75 disposable income left over (not counting any debt repayments) then look at a DRO (Debt Relief Order).

If your disposable income is far more than £75, you could go bankrupt, however 13k is not a massive amount of money, and could probably be better managed via a DMP (Debt Management Plan) which is much less formal, and a lot easier to set up and manage.

One of the free to use debt charities will be able to offer advice on your best option, but going bankrupt for 13k is a little extreme.

Thank you for your advice, I appreciate it. 

I also have 2 CCJ's - Im wanting to improve my credit rating as soon as possible - I know a IVA takes 5/6 years 

Will going bankrupt be the best option for me to start a clean slate after 12 months? 

Hi, sorry you find yourself in this situation. 

However, going bankrupt would not be the best option for you. As sourcrates says, above, a DRO would be the better option. Or even a Debt Management Plan. 

Bankruptcy is not over in a year, it hangs around and affects your life for a good while afterwards. It's certainly on your credit reports for 6 years.

My best advice, same as sourcrates again, would be to contact one of the free debt help agencies - StepChange National Debtline or Citizens Advice (click on the links at the bottom of sourcrates' post, above). 

Information about bankruptcy here - 

And also here - 



What I would do in your position is contact StepChange on their free number and ask for help and advice. Prepare a budget of all your incomings and outgoings so that they can help you. They are not at all judgemental and they are very knowledgeable and, if they recommend a DRO, they will help you to apply for one. I know this because I've had a DRO of my own and StepChange helped me all the way. And I've come out at the other side. When they were helping me, I was assigned a named adviser who I could contact and talk to about all my financial worries. It was such a help. 

I see you are getting professional help for your gambling but did you know that it is now acknowledged as an illness and you can get NHS help as well  -



I hope that this is helpful. Feel free to ignore completely if not. I know that feeling of not knowing where to turn but you've managed to get help with your gambling and now asking on here for help, all positive steps towards sorting things out. 

I wish you all the very best. 

Thank you very much, your words of advise are appreciated! 

I will go down the route to get professional help, will get my self registered with StepChange and take it from there, after all the replies I also think DRO would be the best option. 

I have made the step to get help with my gambling and god willing it is going well so far, the next step was to get help for my financial situation and making these small steps are helping me on my journey. 

I hope I come out the other side in a better position. 

Thank you for the links for getting help with my gambling addiction, I am currently seeing a practitioner on a weekly basis and things are in place for me to overcome this horrible addiction. 

Many thanks.

A786123

sourcrates said:

No matter what debt solution you opt for, it will show on your credit files for 6 years, so there is no quick fix here, one is equally as bad or as good, as the other.

Why are you wanting to improve your credit rating may I ask? 

More debt is probably the last thing you need, slow, low risk decision making is what`s required now.

Thank you for explaining that no matter the solution it will still show on my credit file for 6 years, I think a DRO is the best option in my case, I will contact Step Change and see what the advise. 

I am wanting to improve my credit score for the future, thinking about having a family of my own one day and owning a home, I know this is a long way down the line but was to make sure I am making the best steps going forward  to improve my situation as soon as possible. 

Will not be looking to take any more unnecessary credit, which I know is not the best option for me right now, but I also understand taking credit and paying back on time etc will be the best option further down the line to rebuild my credit. 

Thank you

RAS

A few more facts:

All debt solutions affect your credit record for 6 years.

The fees for an IVA are £6-9k ish. You don't pay them up-front but the IVA lead (telephone salesperson and company) will get a referral fee and the practitioner will use any money you pay before your creditors see much. But if your circumstances change for the better, you could end up paying back the debt AND the IVA fees.

IVAs are designed for people with much higher debts and assets to protect; you have no assets. It also requires a stable income over 5 years.

If a DRO is appropriate, the fee is £90.

They best thing right now is to keep up with the professional help, work out your Statement of Affairs (budget) and get some savings behind you for a rainy day.

And keep on the straight and narrow, whilst accepting that the odd slip isn't a terminal disaster, but an opportunity to understand what made you vulnerable at that time. Then get back up and start again.

elsien

A786123 said:

sourcrates said:

No matter what debt solution you opt for, it will show on your credit files for 6 years, so there is no quick fix here, one is equally as bad or as good, as the other.

Why are you wanting to improve your credit rating may I ask? 

More debt is probably the last thing you need, slow, low risk decision making is what`s required now.

Thank you for explaining that no matter the solution it will still show on my credit file for 6 years, I think a DRO is the best option in my case, I will contact Step Change and see what the advise. 

I am wanting to improve my credit score for the future, thinking about having a family of my own one day and owning a home, I know this is a long way down the line but was to make sure I am making the best steps going forward  to improve my situation as soon as possible. 

Will not be looking to take any more unnecessary credit, which I know is not the best option for me right now, but I also understand taking credit and paying back on time etc will be the best option further down the line to rebuild my credit. 

Thank you

It’s not about your credit score, because that is not how lenders make their decisions. They base their decisions on your credit history - CCJs, missed payments, defaults etc. 
You can build up a better credit history over time by getting out of debt and as already said, after six years CCJs and defaults will drop off the system. The closer to that you get without more debts or missed payments the better your creditworthiness will be.