What are the practical ramifications of bankruptcy?

Justindebt

I was wondering how one's life is affected by being bankrupt.

Can one operate a current account, for example?

grumbler

Just an example: 'Going To Court This Week' thread ...

pug_in_a_bed

That thread is really useful, and gives lots of info, but my tuppence anyhoo...yes youcan have a bannk account, what is called a basic account - no overdraft facility, often no cheques and a solo or visa electron card. I am with the co op following my bankruptcy: they were a nightmare from start to finish due to id problems - my bills are included in the rent so i didn't have that form of id for a start.

Anyway, i went with them cos i wanted the card.

I have found that having to think about how much i spend in great detail, ie without a handy overdraft ( and hefty charges if you go over) has been great. Its really made me understand my spending.

I cant write off what i have just spent, i think and dwell on it...I have pretty much stopped the impulse buys that we all often suffer from, heck I've even returned stuff later when i've mulled it over!

Obviously you can't get credit and stuff but that hasn't been an issue for me. The only annoying thing was that cos your bank account is considered frozen the day you go bankrupt, and i had to wait 12 weeks for the co op to get the new account open, my wages had to go elsewhere. My mum did this for me, which was also a help as she was constanly asking me what i was needing this ammount and that ammount for!

My idiot employers also paid 6 weeks of wages in to the bankrupt account despite the new one being set up for ages and wages going in fine, which, as the official receiver warns you, becomes their property. Luckily HSBC agreed it was not their money and paid it back to my employer, who paid me (right before chrsitmas too).

Anyway, thats my grumble done.

Potless

Bankruptcy can screw you up for 6 years!!!

Justindebt wrote:

I was wondering how one's life is affected by being bankrupt.

Can one operate a current account, for example?

I was bankrupted when my business was "forgotten" by a certain publisher using a recognised colour as part of their name. The result was I was interrogated by the Receiver of Revenue for 3 seperate visits where I had to produce all cheque books, receipts and anything they wanted. If I couldn't produce a piece of paper, shaking of heads and "tut-tutting" ensued - making you feel like the worst criminal ever.

Then you find you can only get a basic "Solo" card type debit account which will accept direct debit and standing orders but NO Credit.

You are then required by Receiver of Revenue to pay "an agreed" amount of money monthly to their appointed Administrator - usually an accountants company, this you should insist on being paltry (£70.00?!) AS YOU ARE BEING BEING SCREWED - WHY PAY FOR THE PRIVILEDGE?

My bankruptcy went through in 1999 and I was given my certificate of discharge dated 2002, although I have a fight until now to get it as Receiver of Revenue "lost" my file.

I have checked my credit file and one creditor held up defaulting my record until 2001 - why I have no idea but they refuse to alter this.

The result is that I cannot get a current account or credit card to start repairing my credit record until this clears in September next year.

So if you can avoid bankruptcy I would do so.

I would like to hear from anyone who could advise on credit card or current accounts for my situation and I can produce a copy of the discharge certificate.

pug_in_a_bed

Wow, that is horrendous and I can only sympathise. Am i right in thinking this was a business bankruptcy, not a personal bankruptcy? Perhaps the difference in our experinences lies there.
Someone told me all uk banks are required by law to provide a basic bank account for people in just such a position, afetr all , you need somewhere for your wages for a start, and not everyone has relatives who can let the money be paid to them (can anyone confirm this?)

Fortunately I do not earn enough for the receiver to make a payment order against me. At the moment I am also being considered for early discharge, although its due up in August anyhow.

You really have had a time of it and I wish you luck for the future.

newfunk

I went bankrupt from a business failure coupled with a bad divorce and my ex taking the lot....however as I was self employed it was not really classed as business bankruptcy, as you yourself aquire the debts, mine were around 120k ish if i remember. i went bankrupt march 03 and will be discharged March 06...the only time it has affected me was getting car insurance, soon as I mentioned I was bankrupt, i had to pay up front or pay an enormous interest rate to pay monthly ( this was elephant) I got my mum to put it on her CC and I pay her every month!!

To be honest, not being able to get credit aint to bad, as I know am far more sensible when it comes to spending, and as with most MSEers love finding and looking for a bargain, gives you some satisfaction if you havent paid full price.....I am lucky in the fact my Fiancee has an account, but she only has Visa Electron which works most places we need!!

The fact I am debt free for the 1st time since I was 17 is great, I pay for everything in cash, and If I havent got it, I cant have it, which in itself makes you more careful as I try to save a bit, just in case I want something i know I wont get cheaper!! The Bankruptcy is on file for 6 years, but whats that in the grand scheme of things? I am hoping to move to Canada in about 3 years, and would never have dreamt that I would have had that opportunity!! Im not saying that everyone should run debts up and then just declare bankruptcy. But for me, it was the best thing i could have done!!

alfie74

I went bankrupt in Oct 2003 and under the change in rules was discharged Apr 2005. I have check with the OR and I am still liable to pay my IPO until Oct 2006. Bear this in mind that you'll probably still have to pay something into the pot for longer than bankruptcy.

All my discharge means is that I can do certain jobs and lifts maybe half of my responsibilities to the cause. If your income changes you must notify so the IPO can be looked at again. I spoke to the receiver to try and pin down what was classed as income in terms of the IPO. If my wages doubled, for instance then more would have to be paid into the pot. So I have no incentive to get a better job. If one the otherhand I got a windfall, such as a lottery win or inheritance, then that would be all mine. Apparently, but double check all this.

The Co-op took 9 weeks to open the bank account, as opposed to the 4 it said it would. I gave them a copy of my order along with my application. Find the list of basic bank accounts and you can see only two offer debit cards on their accounts. Only one offers a debit card to an undischarged bankrupt. I got to keep my CB account upon agreement with head office and the OR for somewhere to pay my wages. This was accidentally frozen two weeks later and the balance in there (almost a £100) at the time was emptied and sent to the OR. Got the money back after a while as they are only interested in the money in the account on the day of bankruptcy.

With all the potential problems of getting your hands on frozen cash, if you are filing voluntarily, you best to time it well. I did it right after being paid, having telephoned the court to make an appointment to appear at the court on an agreed date. In the morning I went round emptying all my accounts so I had some cash in hand to get me through the next few weeks on top of the filing fees.

VISA Electron cards are pants. Although they do work in a few online places, the card I have has no CVN number. It can be made to work on some occasions though with some tricks. Alternative might be a pre-pay virtual card if you can load it somehow and take the fees on the chin.

My no1 bank which has my wages paid into it, refused an upgrade to a current account. I don't want an overdraft, I just want a usuable debit card! I was even refused by the Co-op for a SAVINGS account. Just waiting for a credit file to see if the discharge is logged. If not (quite likely) then a certificate of discharge will be need and some corrections/updates made.

Personally, it wasn't all that bad to go through, especially as I really had next to nothing in assets and an understanding landlord (who needs to be told really as he has to confirm how much rent I pay). There are lots of little problems along the way such as buying goods online (so much cheaper than shops with big windows), but these can be worked round with very good supportive and understanding friends/family.

Some goods (like a worthless old poor condition classic car I had) had to be dealt with, even though it was worth about £50. (It would have cost them more to collect and auction it) If you have a friend/family who is willing to make a third party offer acceptable to the OR, then this may be an option. You can always buy it back after you are out of bankruptcy.

HTH

pug_in_a_bed

similarly to the above, the co-op took 11 weeks to open my account!