Debt advice needed

Jakdaniels94

Hi all,

Currently 2 months into a DMP with step change for debts totalling 32k. A mixture of personal loans and credit cards.

Paying £330 a month at the moment but think in my initial assessment I may have understated costs of food shop etc.

Exploring the option of bankruptcy but don’t have a great deal of knowledge.

I understand bankruptcy is a big commitment but questions I have are mainly around budgeting.

For example i spend £195 on a monthly train pass. I’m currently learning to drive so if I need to travel other than to work I’d need to pay for public transport. Would that be included in my expenditure?

Thanks 

fatbelly

I understand why you are looking at bankruptcy rather than a ten-year dmp if you don't own property and don't have a job that bankruptcy would affect

It's not possible to be definite about what you are allowed to spend but if you can make out a case for expenditure (like your £195 train pass) then that should be accepted.

I suspect the driving lessons may have to be put on hold though

StepChange_Aidan

Jakdaniels94 said:

Hi all,

Currently 2 months into a DMP with step change for debts totalling 32k. A mixture of personal loans and credit cards.

Paying £330 a month at the moment but think in my initial assessment I may have understated costs of food shop etc.

Exploring the option of bankruptcy but don’t have a great deal of knowledge.

I understand bankruptcy is a big commitment but questions I have are mainly around budgeting.

For example i spend £195 on a monthly train pass. I’m currently learning to drive so if I need to travel other than to work I’d need to pay for public transport. Would that be included in my expenditure?

Thanks 

Hi,

If you feel that some of the costs on your budget have been underestimated, please give our Review team a call.

They can update your budget and reduce the monthly DMP payment if needed. They will also be able to discuss applying for bankruptcy and advise if any of the expenses could be challenged by the Official Receiver.

Regards,

Aidan

Czeskyy

Hello there, 
If may add few of my thoughts about your situation. ( Please note I'm not professional adviser and currently undischarged bankrupt) 

In my opinion DMP is only good for debts witch can't be included in bankruptcy or DRO. With Debt management plan you will most likely need to pay all your debt over years and You will be checked how much u can afford over this time. After some time You may negotiate with debtors settle your debt for less that you own but is not certain. 

In Your case u may be stuck with your pants for years , and if u got better of with money that may ask you to pay more plus there are usually feas for whoever setup You DMP.

BANKRUPTCY - last for a year , with potential IPA payments up to 3 years depending on your situation, and your assets if u have any can be taken from you.
I would say bankruptcy is for someone who has very little or nothing is renting or on benefits etc.
DRO - is similar to bankruptcy last 12 months but there are certain criteria and looking like u are not able tu use this option as u have surplus of money. 
IVA - is for people who have houses or expensive cars lots of assets etc and it last 5-6  years you pay what u can afford ( similar like with dmp ) but after it's finished period of 5 or 6 years remaining debt is written off. 

Please check those options fully explained on official government website.

Please note all those options ( not sure here about DMP) will have long term impact on your credit score, but considering times we living now where many people will go insolvent I'm guessing banks and creditors will be more forgiving otherwise they won't get enough business.

If u have any questions concerns I'm happy to explain my experience with going bankrupt.

Best of luck 

Jakdaniels94

Czeskyy said:

Hello there, 
If may add few of my thoughts about your situation. ( Please note I'm not professional adviser and currently undischarged bankrupt) 

In my opinion DMP is only good for debts witch can't be included in bankruptcy or DRO. With Debt management plan you will most likely need to pay all your debt over years and You will be checked how much u can afford over this time. After some time You may negotiate with debtors settle your debt for less that you own but is not certain. 

In Your case u may be stuck with your pants for years , and if u got better of with money that may ask you to pay more plus there are usually feas for whoever setup You DMP.

BANKRUPTCY - last for a year , with potential IPA payments up to 3 years depending on your situation, and your assets if u have any can be taken from you.
I would say bankruptcy is for someone who has very little or nothing is renting or on benefits etc.
DRO - is similar to bankruptcy last 12 months but there are certain criteria and looking like u are not able tu use this option as u have surplus of money. 
IVA - is for people who have houses or expensive cars lots of assets etc and it last 5-6  years you pay what u can afford ( similar like with dmp ) but after it's finished period of 5 or 6 years remaining debt is written off. 

Please check those options fully explained on official government website.

Please note all those options ( not sure here about DMP) will have long term impact on your credit score, but considering times we living now where many people will go insolvent I'm guessing banks and creditors will be more forgiving otherwise they won't get enough business.

If u have any questions concerns I'm happy to explain my experience with going bankrupt.

Best of luck 

Hello, thank you for this valuable information.

Could you explain your bankruptcy story to me?

I just want to start a fresh and finally get out of debt and I’m really starting to think this is the best way.

I would need to able to save the fee would it be advisable to speak with Step change to lower my DMP to save for the bankruptcy fee?

Also in regards to living costs I pay all the bills and my partner pays towards council tax and rent. 

What counts as reasonable living costs? Obviously I’m not expecting much but I would I be able to save say £20 to build an emergency fund?

Lastly I pick up the occasional agency shift where I earn anything from £60 to £120 per shift several times a month. Would I be able to keep any of this

Thanks again

fatbelly

In the lead-up to bankruptcy, the best policy is to pay all creditors nothing

Czeskyy

fatbelly said:

In the lead-up to bankruptcy, the best policy is to pay all creditors nothing

Yes You right, but sometimes this is best option, tell me would You rather pay your creditors or feed your kids ??? 
Banks and creditors don't care about your situation. Anyway it's more complex that it's looks...

cymruchris

Jakdaniels94 said:

Hi all,

Currently 2 months into a DMP with step change for debts totalling 32k. A mixture of personal loans and credit cards.

Paying £330 a month at the moment but think in my initial assessment I may have understated costs of food shop etc.

Exploring the option of bankruptcy but don’t have a great deal of knowledge.

I understand bankruptcy is a big commitment but questions I have are mainly around budgeting.

For example i spend £195 on a monthly train pass. I’m currently learning to drive so if I need to travel other than to work I’d need to pay for public transport. Would that be included in my expenditure?

Thanks 

You haven't mentioned if you own a property or any assets? Do you own a car? What's the value?

fatbelly

In the lead-up to bankruptcy, the best policy is to pay all creditors nothing. Just concentrate on getting the £680 fee together

OP said in January

My overall debt is £32k. I’ve spoken to step change and they advised I would be best to enter into a DMP and have worked out I can afford £330 per month which would take me approx 8 and several months to complete.

I just want to rebuild my financial life and be able to have savings, buy a property and start a family but this is holding me back. I’m constantly worried and don’t know what to do. When I move forward with things such as starting a new job the debt is always hanging over me.

I have no assets (my most expensive item is my Apple Watch) and I have no savings so I’m genuinely wondering if going down the route of bankruptcy and starting afresh would be my best option.

Czeskyy

Jakdaniels94 said:

Czeskyy said:

Hello there, 
If may add few of my thoughts about your situation. ( Please note I'm not professional adviser and currently undischarged bankrupt) 

In my opinion DMP is only good for debts witch can't be included in bankruptcy or DRO. With Debt management plan you will most likely need to pay all your debt over years and You will be checked how much u can afford over this time. After some time You may negotiate with debtors settle your debt for less that you own but is not certain. 

In Your case u may be stuck with your pants for years , and if u got better of with money that may ask you to pay more plus there are usually feas for whoever setup You DMP.

BANKRUPTCY - last for a year , with potential IPA payments up to 3 years depending on your situation, and your assets if u have any can be taken from you.
I would say bankruptcy is for someone who has very little or nothing is renting or on benefits etc.
DRO - is similar to bankruptcy last 12 months but there are certain criteria and looking like u are not able tu use this option as u have surplus of money. 
IVA - is for people who have houses or expensive cars lots of assets etc and it last 5-6  years you pay what u can afford ( similar like with dmp ) but after it's finished period of 5 or 6 years remaining debt is written off. 

Please check those options fully explained on official government website.

Please note all those options ( not sure here about DMP) will have long term impact on your credit score, but considering times we living now where many people will go insolvent I'm guessing banks and creditors will be more forgiving otherwise they won't get enough business.

If u have any questions concerns I'm happy to explain my experience with going bankrupt.

Best of luck 

Hello, thank you for this valuable information.

Could you explain your bankruptcy story to me?

I just want to start a fresh and finally get out of debt and I’m really starting to think this is the best way.

I would need to able to save the fee would it be advisable to speak with Step change to lower my DMP to save for the bankruptcy fee?

Also in regards to living costs I pay all the bills and my partner pays towards council tax and rent. 

What counts as reasonable living costs? Obviously I’m not expecting much but I would I be able to save say £20 to build an emergency fund?

Lastly I pick up the occasional agency shift where I earn anything from £60 to £120 per shift several times a month. Would I be able to keep any of this

Thanks again

Hi there, 
Bankruptcy or any other form of insolvency should be tailored to You and your situation, same time please remember You need to make your own decision not to take suggestions rather than explore all options and think witch one will be best. Please remember as well debt advisors even charity ones like Step Change need to have money to run hence they will benefit from some of insolvency options like IVA or DMP they should not push on any options rather provide clear expectations of everything.
I personally experience where debt advisors presented me IVA like is best for me and I was about to take this option but fortunately I didn't.

If comes to my story I was in debt for many years and I was successful managing everything and I was paying off all my Credit cards loans HP etc until COVID happen, as I was working at restaurant I was impacted the most. During COVID all my savings ware exploited than I had to sell my car to pay off credit cards but increasing cost and new born baby put me in debt again (  this is short story) 

I knew I'm going in to big debt and I applied for bankruptcy forhand ( instead paying my loan and credit cards etc I put money for bankruptcy fea) 

My budget was straight forward I have no surplus money hence I have no IPA and after year ( now 9 months ) I be discharged.
I hade only one concern of car on finance but I was able to keep.

If comes to You situations I would need to know more details, like for example do u have any valuable assets , do u rent or have house what kind of debt you have etc. But because all those are sensitive info best would be to discuss with Step Change ( please take in credit what i mentioned about debt advisors) , you will need to make your budget and please remember to include everything what You potentially spend money for like medicines barbers going out gym membership etc all those count , step change than should advise You what is allowable experience.
Another thing to consider is fact you live with your partner, although insolvency is personal but fact you live with someone make it bit more complicated specifically of comes to putting budget together ( who pays for what and who is making how much money etc ) for example in my situation I had to provide budget for my whole family total income plus benefits minus expenses.

Anyway like mentioned subject is very deep and all insolvency should be tailored to You.

 

MalMonroe

Hi, please do consider taking StepChange_Aidan's advice (above) and re-contacting StepChange. 

https://www.stepchange.org/contact-us.aspx

They really can help you out of financial messes. I speak as an ex-customer of theirs who was in dire straits and is now debt free.

Don't underestimate the help and advice they can give. It costs nothing to contact them and if you eventually decide not to take their advice then that's fair enough but please, do give them the opportunity, again, to help you.

Just my own opinion and thoughts, obviously but I trust Stepchange's advice implicitly and would still be struggling and flailing around if it weren't for them.

All the very best to you.