Steps Before Filing for Bankruptcy

EG35891

Hi, hoping for a bit of clarity. I will unfortunately be filing for bankruptcy in the next couple of months but just want to check what I need to get in order before submitting the application. I have circa £55k in debts. I have never missed a payment and don't have any arrears or CCJs etc. A DRO would take me 10 years and 2 months to pay off so I feel that bankruptcy is the best option as I'm caught in this cycle of robbing Peter to pay Paul every month and it's just so stressful. After doing the budget, I know I will have some money leftover each month so I know I will be subject to paying the 3 year payment plan, which is all fine. So my questions are:

1. I have a car on finance for which payments end in April 2025. I can either give the car back or pay the balloon payment of £4k and keep the car. During the time I've had it, there are a few dings and scratches that I will be liable to pay for which I doubt I will be able to afford. What is the best option? I need a car for work as I travel around so I'm hoping I might be allowed to keep it? Is this something I can negotiate with the OR? 

2. I haven't yet asked for breathing space from my creditors - should I do this first and try to set aside some money over the two months before defaulting? 

3. I have a joint account with Revolut with my partner. He knows I will be filing for bankruptcy and we only use this account for paying bills - should I close this account and switch the bill payments to my current account? It's me who pays for the bills anyway. 

I think that's it for now - thanks in advance for any help! 

EG35891

Sorry, I meant debt management plan not DRO and double checked it is 9 years and 9 months. 

stu12345_2

who recommended bankruptcy which debt charity, cos if you got your debts down to £50000 a debt relief order may be better and depends on car situation as well 

deciding your own bankruptcy is never advised, go to a debt charity for 100% confirmation that's the best solution 

I assume you rent and don't own

breathing space no point, just stop paying everything but your car for months, if you need to keep it, but that's classed as preferential treatment of creditors.
then go bankrupt, but any money you have saved up will be taken from you in bankruptcy unless you spend it first in things you can justify 

EG35891

Hi, yes I did it through StepChange and there were two recommendations - a debt management plan which would take the 9 years and 9 months to pay off or bankruptcy. 

No, I don't own any property and do rent. I literally have no assets. 

EG35891

I'm in Northern Ireland and also just found out that creditors here don't offer the same breathing space as England and Wales anyway. 

I'm a bit terrified of just stopping all payments as I've never missed one. Maybe the DMP is the better option but the thought of having debt for basically another 10 years is soul destroying and would that also mean at least 10 years of bad credit rating? 

sourcrates

Do you own a house?? or live with a partner that does, in that house?

A car in bankruptcy can`t have a value exceeding 2k, unless its an adapted disability vehicle.

Don`t rush to push the button, debt collection can take years, nothing is going to happen quickly, so take stock of your situation first.

If you are going to do this, pre-preparation is a must, you must treat all creditors fairly, so stop all payments to all of them, get yourself a safe new basic bank account, with a bank with whom you have no debts.

Save some cash, and keep it at home, you will need it as bank accounts can be frozen even if no debt is owed on it.

Sort out the situation with the car, most likely return it, if you have 4k lying around, buy something cheap under 2k.

You will need £680 for the bankruptcy fees.

stu12345_2

from first glance bankruptcy may be best.
you may keep car if it's essential for work , eg no buses, but you may be required to get a cheaper model eg £4000.max car

What's it's current market value and is there no other method to get to work 

so if you pay off balloon what will car be worth, cos official receiver may still take it from you and leave you with £4000 max for another car, cos you are meant to release all assets to help pay back debts

sourcrates

stu12345_2 said:

from first glance bankruptcy may be best.
you may keep car if it's essential for work , eg no buses, but you may be required to get a cheaper model eg £4000.max car

What's it's current market value and is there no other method to get to work 

Its 2k in bankruptcy stu, 4k in a DRO.

stu12345_2

thanks sourcrates, always thought it was £4 k cos of taxi drivers going bankrupt and saying a £2k car will breakdown and I've got dro on the brain at moment 

can you still have your job or rent private if you are bankrupt, 
What's more important debt free faster and  forget about credit file

EG35891

Thanks both. So first step is to stop paying the creditors? I have two personal loans and a few credit cards. Or should I contact them first to ask if I can have a couple of months repayment holidays? 

I know the car is a bit of a complication. I work in construction and I travel a lot so I need something roadworthy. The balloon payment if I keep it is £4k which I can't imagine an OR allowing me to pay but then I would be without a vehicle. Although I guess if I wait to file for bankruptcy until next year I can save £2k to buy one and give up the VW when the finance period ends. 

We rent our house from an estate agents and may partner doesn't have any assets either apart from his car. We have a joint account which is only for bills but I will close that down. My current account has an overdraft and the same bank is where my loans and a credit card are with so I will transfer my wages utilities to my Revolut.

sourcrates

stu12345_2 said:

thanks sourcrates, always thought it was £4 k cos of taxi drivers going bankrupt and saying a £2k car will breakdown and I've got dro on the brain at moment 

Well good luck finding a 2k car these days, something that constantly breaks down is not what you want to be stuck with.