Is Bankruptcy right for me?

WBMK

Hi all,

Need some advice on whether bankruptcy is a good option for my situation and what I should expect to happen if I went ahead with it (length of time I'd need to pay, amount to pay, etc)

I don't have any real assets, I don't own any property and have 2 cars (mine and my partners) with a total value of around £2500. I've included below all my credit accounts and an SOA, I've tried to be as accurate as possible but some of the values are estimated so feel free to question/advise me on them.

Mine and my partners finances are completely separate (no joint accounts), if I was to go ahead and file for bankruptcy, would her finances be looked into as well or just mine?

My income varies quite a lot depending on how many hours I work, so I've calculated my income as my guaranteed hours, would they accept this value as my income or would I need to prove it with payslips, etc? I don't want to commit to a bigger payment based on my recent income and then not have the same amount of overtime going forward.

I stopped making payments around 2 months ago so still waiting on defaults to start landing before making any concrete decisions.

Any other advice is greatly appreciated.

Credit Cards

Aqua - £1550

Barclaycard - £3500

Jaja - £2150

John Lewis - £1350

Marbles - £2100

RBS - £7350

Vanquis - £1350

Zable - £1650

Subtotal - £21000

Unsecured Loans

MyCommunityBank - £13900

Plata - £2950

Subtotal - £16850

Overdrafts

Halifax - £1500

Lloyds - £500

Subtotal - £2000

Store Accounts

NextPay - £365

Very (BNPL) - £1600

Subtotal - £1965

Total Debt - £41815

Statement of Affairs and Personal Balance Sheet

Household Information

Number of adults in household........... 2

Number of children in household......... 2

Number of cars owned.................... 2

Monthly Income Details

Monthly income after tax................ 2730

Partners monthly income after tax....... 173

Benefits................................ 0

Other income............................ 0

Total monthly income.................... 2903

Monthly Expense Details

Mortgage................................ 0

Secured/HP loan repayments.............. 0

Rent.................................... 550.68

Management charge (leasehold property).. 0

Council tax............................. 158

Electricity............................. 50

Gas..................................... 63.24

Oil..................................... 0

Water rates............................. 54.31

Telephone (land line)................... 0

Mobile phone............................ 28.16

TV Licence.............................. 15

Satellite/Cable TV...................... 0

Internet Services....................... 39

Groceries etc. ......................... 600

Clothing................................ 80

Petrol/diesel........................... 300

Road tax................................ 55.99

Car Insurance........................... 184.78

Car maintenance (including MOT)......... 50

Car parking............................. 0

Other travel............................ 0

Childcare/nursery....................... 0

Other child related expenses............ 0

Medical (prescriptions, dentist etc).... 20

Pet insurance/vet bills................. 0

Buildings insurance..................... 0

Contents insurance...................... 22.62

Life assurance ......................... 0

Other insurance......................... 19.21

Presents (birthday, christmas etc)...... 100

Haircuts................................ 0

Entertainment........................... 186.47

Holiday................................. 150

Emergency fund.......................... 100

Total monthly expenses.................. 2827.46

Assets

Cash.................................... 0

House value (Gross)..................... 0

Shares and bonds........................ 0

Car(s).................................. 2500

Other assets............................ 0

Total Assets............................ 2500

No Secured nor Hire Purchase Debts

Unsecured Debts

Description....................Debt......Monthly...APR

Total unsecured debts..........0.........0.........-  

Monthly Budget Summary

Total monthly income.................... 2,903

Expenses (including HP & secured debts). 2,827.46

Available for debt repayments........... 75.54

Monthly UNsecured debt repayments....... 0

Amount left after debt repayments....... 75.54

Personal Balance Sheet Summary

Total assets (things you own)........... 2,500

Total HP & Secured debt................. -0

Total Unsecured debt.................... -0

Net Assets.............................. 2,500

Created using the SOA calculator at www.stoozing.com. 

Reproduced on Moneysavingexpert with permission, using other browser.

fatbelly

Yes, bankruptcy is an option. There is a fee of £680 that you won't avoid.

I think you should try to evidence one car  as owned by you and one by partner. You won't be allowed two cars. Probably make yours the cheaper one.

Some of your expenditure items may not be allowed so you may get an Income Payments Agreement. That runs for 3 years.

You are just over the 40k threshold for a DRO, which is less intrusive if you can get it. You could maybe try affordability complaints to see if you can get under that. It's a longer route to insolvency but a DRO is done and dusted in 12 months with no risk to assets, no contribution from income and, if you get a windfall, it is not taken.

MattMattMattUK

You say you and your partner's finances are separate, but you list a very low income for them, do they work? You list no benefit but if you have two children, based on your income would would get child benefit at a minimum. Some of your costs look quite high, they would also be horrifically high if you are only paying half of them and your partner is paying the other half.

WBMK said:

My income varies quite a lot depending on how many hours I work, so I've calculated my income as my guaranteed hours, would they accept this value as my income or would I need to prove it with payslips, etc? I don't want to commit to a bigger payment based on my recent income and then not have the same amount of overtime going forward.

They would want to look at averages and they would want payslips and bank statements, not just your say so, bankruptcy is a legal process. They would also question large cash withdrawals as hiding money etc.

WBMK

fatbelly said:

Yes, bankruptcy is an option. There is a fee of £680 that you won't avoid.

I think you should try to evidence one car  as owned by you and one by partner. You won't be allowed two cars. Probably make yours the cheaper one.

Some of your expenditure items may not be allowed so you may get an Income Payments Agreement. That runs for 3 years.

You are just over the 40k threshold for a DRO, which is less intrusive if you can get it. You could maybe try affordability complaints to see if you can get under that. It's a longer route to insolvency but a DRO is done and dusted in 12 months with no risk to assets, no contribution from income and, if you get a windfall, it is not taken.

I've actually just been reading up on DRO's as an alternative, is the limit not £50K?

Which expenditure items wouldn't be allowed under BR or a DRO?

WBMK

MattMattMattUK said:

You say you and your partner's finances are separate, but you list a very low income for them, do they work? You list no benefit but if you have two children, based on your income would would get child benefit at a minimum. Some of your costs look quite high, they would also be horrifically high if you are only paying half of them and your partner is paying the other half.

WBMK said:

My income varies quite a lot depending on how many hours I work, so I've calculated my income as my guaranteed hours, would they accept this value as my income or would I need to prove it with payslips, etc? I don't want to commit to a bigger payment based on my recent income and then not have the same amount of overtime going forward.

They would want to look at averages and they would want payslips and bank statements, not just your say so, bankruptcy is a legal process. They would also question large cash withdrawals as hiding money etc.

To clarify, when I say our finances are separate, I mean we don't have any joint accounts, everything is in my name as I'm the sole earner hence the low income for them, the £173 I've listed is child benefit as that is in their name.

fatbelly

Yes you're right . I thought I had hit the reason why you didn't want a DRO.

The limit is 50k. You are at 42k

Entertainment, holiday and emergency fund.

It's an individual application so your partner's income is only relevant in calculating their share of joint expenses.

Emmia

Looking at your household income and expenses, you're only just covering the things you've budgeted for - no emergency fund to repair or replace a car that fails/breaks down for example, or headroom if the gas bill goes up.

Setting aside whether a DRO or bankruptcy is better, does your partner have any ability to work to raise your household income overall?

WBMK

fatbelly said:

Yes you're right . I thought I had hit the reason why you didn't want a DRO.

The limit is 50k. You are at 42k

Entertainment, holiday and emergency fund.

It's an individual application so your partner's income is only relevant in calculating their share of joint expenses.

The majority of the entertainment amount is actually fees for dance school for my children that's under contract for 12 months, there wasn't another field that I felt this came under on the SOA, would this be an allowed expense? I don't have any subscriptions, etc.

WBMK

Emmia said:

Looking at your household income and expenses, you're only just covering the things you've budgeted for - no emergency fund to repair or replace a car that fails/breaks down for example, or headroom if the gas bill goes up.

Setting aside whether a DRO or bankruptcy is better, does your partner have any ability to work to raise your household income overall?

I've calculated the income based on my guaranteed hours of 45/week, however I often work upwards of around 60 so it's usually higher, but these overtime hours are not guaranteed. I also have to take mandatory unpaid leave every now and again to reduce my average working time under the working time regulations as I drive a HGV.

WBMK

Emmia said:

Looking at your household income and expenses, you're only just covering the things you've budgeted for - no emergency fund to repair or replace a car that fails/breaks down for example, or headroom if the gas bill goes up.

Setting aside whether a DRO or bankruptcy is better, does your partner have any ability to work to raise your household income overall?

Also, if we was to increase our overall household income, my understanding is I most definitely wouldn't be eligible for DRO and my bankruptcy payment agreement would surely increase by the additional income, is this correct?

Emmia

WBMK said:

Emmia said:

Looking at your household income and expenses, you're only just covering the things you've budgeted for - no emergency fund to repair or replace a car that fails/breaks down for example, or headroom if the gas bill goes up.

Setting aside whether a DRO or bankruptcy is better, does your partner have any ability to work to raise your household income overall?

Also, if we was to increase our overall household income, my understanding is I most definitely wouldn't be eligible for DRO and my bankruptcy payment agreement would surely increase by the additional income, is this correct?

Surely in life the aim is to have enough money to not need a DRO or Bankruptcy, or to fall into debt. 

The point I was trying to make is that your income only just covering your basic expenses is probably what has led to the various debts on credit cards etc. so as a household i e., you and your partner once you've either gone bankrupt (which will prevent you reaching for credit to tide you over for a fair while) or have gone through the DRO, you probably still don't have enough money coming in. 

As a single wage earner in a job that requires a certain level of health and fitness, that's also a bit risky if you developed a health issue preventing you working as an HGV driver.

Edit: because of your forced unpaid leave to bring your working hours to the legal requirements,  you're effectively not actually earning overtime payments - if you include overtime, what's your average monthly income over the last 12 months?