Been advised to go bankrupt

JCH

I was hoping to get some advice from people who have been through this already.

To give some background, I have debts amounting to around £10,500 including a personal loan, overdrafts and credit card.

I have been defaulting on the conractual payments for my loan for some years now and the bank have got to the stage of freezing my accounts and threatening court action. I have always paid something each month, but its well below my contractual amounts. Other proposals I have put to the bank have been rejected.

I have a low income of £14,000 PA and so after all living costs I have say £100 surplus a month. At this rate, it will take me a very long time to clear all my debt!

I contacted CCCS for guidance and to my suprise they suggested bankruptcy. I did not think this was an option for personal debts of this amount, but they seem to think its the best solution.

I have no assets of value, live in rented accomodation etc and so have nothing to loose on that front. However I am only 28 and obviously it concerns me being bankrupt at my age and it affecting my ability to get a mortgage etc in the future.

My other concern is I took out the loan to clear debts on cards etc. I paid the contractual amount for around a year at which time I went to University. Since then, I have not been able to pay the full amount. The company my loan is with seem to be intimating my intention was always to go to university - this was not the case. A random string of events lead to me being offered a place and accepting it to try and improve my future and for personal issues I had at the time. My worry is, if I bankrupt, they will petition the court and try to make out that I caused the situation deliberately and I am not sure what the implications of this will be.

I guess my other option is arranging a DMP through the CCCS or a similar charity - but I am not sure the loan company will agree to it and I will be pushing 40 before I clear my debt.

Has anyone had a similar situation or can they offer me any advice?

Thanks very much

John

tigerfeet2006

With that amount of debt and your income I can see why they suggested it as an option.

You are discharged after 1 year, then you usually find it will take 2-3 year ish before you may be offered a mortgage though you may have to pay a couple of % over the odds to start. The longer you wait the easier it will be and the better the %.

Don't worry about the loan, if the OR ask's about it then tell him exactly what happened. As long as you are open and honest then you should be fine.

Oh! and welcome to the board.

JCH

Thanks for your comments, is always encouraging to get support!

To be honest, the main appeal of bankruptcy now I have looked into it is that I can try and work towards a clean sheet!

My main concerns were that I would be accused of foul play and the implications on my partners credit rating etc.

Does anyone know, as another point, what assets they would take under bankruptcy? I have a computer and quite a good camera - do they sell items like that?

The_Madmouse

Assets of extreme value are usually taken for example big plasma screens etc...PC's Cameras etc the OR will have NO interest in so you should be fine with what you have......unless you've a sports car in the garage & a few old masters hidden under the stairs

JCH

No sports cars or Masterpieces unfortunately - otherwise I would have sold them long ago to pay things off!

Thats probably the worst thing about it...10k in debt and nothing to show for it apart from insomnia!

squirrel_pigeon

Hi JCH.

I'm in the same situation as you. I'm 26 and my debts aren't massive, but it's going to be a long time before I can clear them. At the moment I have no surplus but my ex got a job today so when the child support starts coming in my surplus will be about the same as yours.

I tool a consolidation loan out with Welcome and only made 3 payments before I (finally) left my ex and couldn't pay anymore. They have accused me of fraud, demanded that I attend their office with my bank statements and even rung me at work and embarrassed me in front of my colleagues.

You're not alone.

xxxx

JCH

Its sucha difficult position to know what to do for the best isn't it.

I understand the banks positions in a way - they need to ensure they get their money, but they way they go about things really doesn't help people who are truley struggling.

My loan company asked me to pay £250 a month! I asked them how they expected me to do this when I couldn't even afford my contractual payments, but speaking to them is like getting blood from a stone - they wont budge an inch!

JCH

Does anyone have any sound advice about renting after Bankruptcy?

I have read some things on many forums - and I think renting a home is my biggest worry if I go bankrupt.

I am currently renting and live with my girlfriend, my first concern is whether the OR would automatically tell my landlord I am bankrupt (I have never missed a rental payment and rent through a private landlord). If so, I guess they have the right to chuck me out should they want to. Also they could decide when the current year lease runs out not to renew it.

Following from this, I am concerned about being able to rent a proporty after. Most people advise renting privately, which is always a good option - but can be limited for choice I guess. Other posts suggest landlords want 6 months rent up front! For a 1 bed flat in Brighton, that could mean around £4000 plus a deposit on top.

If anyone can share their experiences it would be useful.

Thanks

betterlatethannever

Hi JCH, renting is a bit of a grey area. Personally i begged the OR not to tell my LL and he promised not too. So far the LL hasn't found out.:j
Most LL's would rather have a BR thats always paid there rent on time than have to go through the cost and hassle of getting in new tenants.
I'd suggest that you also beg the OR and wait and see. Sorry thats not much help and i had to go through weeks of uncertainty, constantly worrying that i would receive a letter from my LL telling me to get out.
The only advice for renting after Br is to visit ALL the agents in the area and be up front with them. There have been cases of them saying that they will contact the LL concerned and ask whether he would allow you to rent the property.This is mostly the smaller, independant ones. The only other thing is to try and rent privately, checking local papers and shop windows.
Having the 6 months rent up front helps-but as you say, is a huge amount to find, also having a guarentor can help.
Hope that helps a little.

JCH

Thanks thats helpful. There are so many grey areas, thats what makes making a decision so hard!

I haven't missed payments to the land lord, so hopefully the OR would have no reason to let them know.

Regarding the future - I guess the best system would be to continue living frugily after BR by saving as much as I can each month (can you open savings accounts or ISA's if BR?). That way, if/when I do need to move, I would have a lump of money to offer upfront if it was needed.

fiveyearplan

JCH wrote: »

My main concerns were that I would be accused of foul play and the implications on my partners credit rating etc.

Do you have any joint accounts/loans/finances with your partner? If not then it should affect their credit rating. If you did want to move to another rented property could you put it in partner's name?

If you do have a joint account with your partner and it is in good order, I would have your name taken off in case it is closed with your bankruptcy. I just had my name taken off a joint account I had with my husband so he can still have the account when I'm BR.