Bankruptcy - info for a clueless newbie!

raven_3

Hello! I'm new here, so be kind

Basically my boyfriend of 22 is in loads of debt. Over 20,000 This started before we met, via credit cards and loans to pay off credit cards etc. We're serious together and I would like us to eventually marry and get a house but this is like a big black cloud hanging over us.

I've been reading up on bankruptcy today and I've noticed a few mentions of it not being an option for those who accrued debts because of 'frivolous' spending - how would you define this? I suppose his debts are mainly from buying stuff he wanted and funding a more luxurious lifestyle than affordable.

All credit cards and now cut up and everyday spending has gone down dramatically. But it still looks like an impossible situation and I really want to help sort it out with some decent advice.

Because of his age bankruptcy wouldn't be too awful as he has no assets except his car. But obviously if it's not an option for 'frivolous' spending...

Can anybody give me any advice/tips and a definition of 'frivolous'? I'm already stressed and it's not even my money!

Thanks in advance,
Raven x

Xbigman

Bankruptcy lasts for 1 year unless the OR decides you were irresponsible in which case the maximum could be up to 15 years. Its too early under the new system to tell how this is being applied, but the OR will want to know what the money was spent on and how you planned to pay it back. If it was spent on holidays, cloths and cash withdrawals with no means of paying, you are in the danger zone.

If he has a job then 20k debts at his age are do-able. You will need 5+ years of tight budgeting and no credit cards to sort him out into a financial responsible marriage prospect. Seriously.
Regards



X

missimaxo

Ok.

With the new legislation, the OR can only look at spending after 1st April 2004 to try and get a Bankruptcy Restriction Order... ie. the thing that means you are bankrupt for more than 1 year. So if your bfriend spending was before then you should be ok with regards that. If it is just living beyond his means, loads of people who are bnkrpt did this, and if the recent stuff is consolidation loans then this is not really frivolous spending.

Also if he has managed to maintain minimum payments on everything, then he can say that he expected to be able to service his debt.

Go to the CAB if you want better advice - they can look at his case and see if bankruptcy would be suitable.

T x

im1dful

Missimaxo is correct about BROs only taking into account conduct post 1/4/04 and so if his debts were run up prior to this he would be OK, however you would have to ensure that he fully cooperates with the OR (Official Receiver) as a BRO/BRU can be sought on misconduct during the bankruptcy.

He should speak to the CAB, but shouldn't just take their advice (rumour among my colleagues around country is that some CABs are just saying that bankruptcy is the easy way out and to go for that even when it isn't). He should also try the Consumer Credit Counselling Service and the National Debtline.

The OR's office (The Insolvency Service) are unable to advise you and will simply say to contact the CAB (I do it all the time).

Bankruptcy is not the easy way out and I would never advise it for someone of his age as he has his life ahead of him and he will have problems in years to come obtaining credit. Although bankruptcy lasts for a maximum of a year (with a BRO/BRU you are not actually bankrupt) it will stay on his credit record for at least 6 years and if he is ever asked the question whether he has been bankrupt before he would have to say yes.

Having said all that I will say that with debts of £20k and no assets the investigation by the OR will be in the form of a telephone interview taking about 30 minutes (I'm assuming he isn't and hasn't been self employed). He will be asked to provide certain details and financial records. After that, as long as there is nothing wrong, he will have to do very little.

It isn't cheap to go bankrupt. It will cost him £420 in Court fees and deposit on OR's costs.

Also there are things called Income Payment Agreements whether the OR looks at the income and expenditure and the if there is a significant difference seeks to take part of it (between 50% and 70%) for the benifit of the creditors.

If he does have a surplus, have you considered an Individual Voluntary Arangement? This is where you make a formal arrangement with your creditors to pay a certain amount per month for a certain period (usually 3 years) and then at the end of it your creditors don't have the right to claim any more money. (Slightly simplified, sorry) This can be good, but the costs of the supervisor can be quite high.

I hope this helps

Luke


Please note that these are my personal opinions based on my knowledge of the insolvency regime and none of this should be taken as legal advice. They do not represent the views of my employer, as I am not allowed to give advice. You should always see your own legal advice.

delboypass

can you get hom to post and outgoings and incomings to see what the difference between the two of them is.

Also since he probably has started to default on his payments, write to all his creditors and get them to freeze the interest until you can see what is going on. Failing to do this will result into a deeper spiral of debt.

raven_3

Hi again

Firstly thanks to everyone for replying. Your advice and support's much appreciated!

He does have a full-time job and earns a decent enough amount. He made the silly mistake a few years back of taking out a loan to cover his credit card debt, then re-spending on the cards, which is why we're where we are today
So he has a loan to pay off, about £230-250 a month (can't remember) and then credit cards bills on top of that. He's written it all down but vaguely remembering there's about 6, with balances ranging from £200-£2000.
He also has a car which he has been paying loads for every month but luckily he's seeing sense and is shopping for a 2nd hand cheap one and selling that.

All in all he usually has about £200 left after everything comes out, on a good month, and then he has to pay for petrol and everyday things, plus he stopped paying rent to his mum cuz he can't afford it. The card payments come out on direct debit just the minimum payments.

We are going to make appointments to see people for when we both have a week off in a few weeks. Hopefully if we talk to a few parties we will get a better overall idea.
Meanwhile he can be looking for a cheaper car.

Do you have anymore info about individual voluntary agreements? Isn't this quite similar to going bankrupt?

Thanks
Raven

BTW he is also permanently overdrawn so when I say 200 spare a month, I mean before he hits his limit. And on a bad month he gets caught out with charges for exceeding his limit. We have tried budgeting before but with everything that comes out his outgoings usually exceed what's coming in.

crystal_clear

i dont know all the ins and out but know of somewhere u can find out all advantages and disadvavtages try this site for more info
http://www.insolvencyhelpline.co.uk/debt_solutions/bankruptcy_solutions.htm i do hope this helps in some way and good luck

ffs

Read "Women Who Love Too Much" - R Norwood.

I know its tired cliched advice, but it may give you a real insight in to your situation, as opposed to your bf's.

IN_LIKE_EVERYONE_ELSE!

Sorry to be picky.
I think it`s £460 cash to file for bankruptcy.

Good luck.