Is bankruptcy right for me?

BrokeAndWorriedUK

Firstly, let me just beg for you not to judge me. My anxiety is through the roof, MH in the toilet, I'm going through a lot of things right now, not just money related and I can barely cope with being alive (I am not asking for MH advice) so be gentle, pls don't judge. 

Someone suggested I post my expenses etc here to get advice on bankruptcy.

Income after tax: £1773

I have approx £17k of debt, which I pay around £300 a month for currently. After all bills and food that leaves me with around £40-50 to knock about with, but often winds up going on food and household expenses honestly.

Not a homeowner, don't own a car. All in £ GBP.

780 Rent/bills (inclusive)
116 Council tax
33 old phone*
78 new phone
28 entertainment/subscriptions etc
25 website hosting
300 food and household groceries
15 prescriptions (this is as an average as I don't get them monthly)
20 transport 

* I cannot get rid of this 

An IPA under bankruptcy would put me in an even worse position - right now £300 is the maximum I pay, but it is bendable to about £250 if I have a struggle month and need to lower optional payments. But if I go into an IPA, they'll take EVERYTHING plus put caps on my legitimate expenses because some dude who earns 3 x what I do has decided it's too much.

BrokeAndWorriedUK

I can't edit my post for some reason, but want to add can someone advise if I've read it wrong, whether they think I'd even get an IPA etc? Thank you

ManyWays

You have nothing in there for clothes, dry cleaning, replacing household goods, gifts, holidays, dentists, opticians, haircuts...

why cant you get rid of the old phone?

Grumpelstiltskin

OK Stop panicking, no way is bankruptcy the answer for such a relatively small amount of debt.

Get yourself over to the Debt Free Wannabe board, you will be asked to post a Statement of Affairs and then you will get the best advice for your situation.

Basically you will be advised to stop all unsecured debt payments and to let them default. Nothing terrible will happen when you stop paying.

BrokeAndWorriedUK

Grumpelstiltskin said:

OK Stop panicking, no way is bankruptcy the answer for such a relatively small amount of debt.

Get yourself over to the Debt Free Wannabe board, you will be asked to post a Statement of Affairs and then you will get the best advice for your situation.

Basically you will be advised to stop all unsecured debt payments and to let them default. Nothing terrible will happen when you stop paying.

1. I am not panicking, I am in a mental health crisis.
2. We are literally on the debt free wannabe board???

BrokeAndWorriedUK

ManyWays said:

You have nothing in there for clothes, dry cleaning, replacing household goods, gifts, holidays, dentists, opticians, haircuts...

why cant you get rid of the old phone?

1. No holidays
2. No gifts (no family)
3. Haven't been to a dentist since 2019
4. I cut my own hair
5. No optician, no need

Because i can't. I need the number for reasons I cba to explain to a stranger, respectfully.

RAS

Bankruptcy is for people with a lot more debt than you owe. Please do not get drawn in by the TV and social media ads. An IVA is for those who can't go bankrupt because they've a house to protect and life on them is miserable for 6/7 years.

There are a couple of debt solutions which might be appropriate but before you look at a DRO or DMP, please do a Statement of Affairs as you've not allowed for a lot of essential items in your first post. You may feel nervous about posting but we see an awful lot of people lurching from crisis to chaos because their basic budget doesn't include everything. 

Meantime,

Get a new basic bank account and get your benefits and other income paid in there. Monzo and Starling can be applied for on-line.
Once that's done stop paying all unsecure consumer debt. If you've got CT or secure debts pay them off.

The sky won't fall in. You can also ask someone like CAP to help by sending letters telling your creditors only to communicate in writing. And they may help with the early letters.

Creditors have everything automated, so it'll take several months for them to generate serious correspondence. It may also take a little while for a human to interrupt the automated system and stop calls, texts and emails. But there are other ways to improve the situation.

If you can stabilise your budget, which may well be close to even or in deficit, it may be appropriate to ask forebarance and get them to write off the debt. It won't be instant, it may take a couple of rounds of letters but even if 

But first let's look at your SOA and see if that's an appropriate plan. Or a DRO if you can't get help with the write-off.

And remember, people here have been there, done it and will support you.

swingaloo

BrokeAndWorriedUK said:

ManyWays said:

You have nothing in there for clothes, dry cleaning, replacing household goods, gifts, holidays, dentists, opticians, haircuts...

why cant you get rid of the old phone?

1. No holidays
2. No gifts (no family)
3. Haven't been to a dentist since 2019
4. I cut my own hair
5. No optician, no need

Because i can't. I need the number for reasons I cba to explain to a stranger, respectfully.

Not really the way to respond to a reasonable question.


The phones are taking a massive amount each month, can you not change the £78 a month one to a pay as you go for a tenner a month? Is that not feasible.

Do you live alone? If so the 300 a month for food is excessive. Could that be lessened.

If you dont need a prescription every month then you would be better buying a 3 monthly prescription, they are around £30 so would save you money. You can usually make those cover 4 months if you get repeat prescriptions at the right time.

Is the debt credit card related? if so stop paying, you will get a default but then can negotiate with them for a token payment each month.

sourcrates

OK, lets calm things down a bit, who on Earth has put the idea of Bankruptcy into your head?

For such a small amount of debt, it would be like taking a sledgehammer to a walnut, there are two other much less invasive options that would suit you much, much better.

Firstly a DRO (Debt Relief Order) look it up and see if you might qualify under those criteria, if not, then a DMP (Debt Management Plan) would be the fall back choice.

Links here:

Debt relief orders - what you need to know - Citizens Advice

StepChange Debt Charity. Free Expert Debt Help & Advice

And your budget is fine, in fact too lenient if anything, the actual figures used in bankruptcy are very generous, and you can transfer them over to other debt solutions, its not advisable to cut spending on essentials, despite what some advise on here.

stu12345_2

first of all nothing bad will happen it's just consumer debt.

creditors have to be by consumer credit law very patient and very  understanding, that means they cant just say pay now and only now 

the customer must have a decent standard of living first, hence consumer debts come last except priority bills like rent, council tax , water come first

they also have to be more lenient and understanding to those that suffer from anxiety, illness, disability , gambling problems etc

this is the form you can fill in and post here to help work out a solution 

https://www.stoozing.com/soa.php

RAS

BrokeAndWorriedUK said:

Grumpelstiltskin said:

OK Stop panicking, no way is bankruptcy the answer for such a relatively small amount of debt.

Get yourself over to the Debt Free Wannabe board, you will be asked to post a Statement of Affairs and then you will get the best advice for your situation.

Basically you will be advised to stop all unsecured debt payments and to let them default. Nothing terrible will happen when you stop paying.

1. I am not panicking, I am in a mental health crisis.
2. We are literally on the debt free wannabe board???

OK, just seen your thread on the BR forum. If you decide you have to go insolvent, then BR is not for you. You'd probably be eligible for a DRO, providing you understand the rules.

You may not have been on holiday or been to the dentist for years or get hair cuts, but if you are applying for a DRO, you are entitled to make provision for a modest holiday, hair cuts, medical and dental needs, clothes etc. Whether you choose to spend those allowance on those categories, or to use the money to fund the old phone is your business. But you won't be able to claim for the old phone. You may be able to claim for the new phone but fatbelly is better inform than me.

There will be a top limits on some categories but there may also be adjustments given your specific needs. And given your health issues, it may be that once you've got a basic plan on place and your anxiety reduces, you can make adjustments that balance your total budget. It really doesn't matter how you spend the money once the total budget is agreed. No-one is checking.

Not forgetting that the £75 excess allowed for a DRO is higher than the £20 excess that triggers a IPA in bankruptcy, and it's up to you how you spend that.