Shall we go bankrupt?

Rosey321

Hi

I have a couple of posts in the debt-free wannabe and mortgage threads. After several months of fighting and believing that some miracle is going to happen, I'm resigned to thinking that I may now be in the right forum.

However, having read through many of the posts in this particular forum, I can honestly say that I am glad I came here.

Firstly, I must say that I know that bankruptcy is no picnic - however, some of the posts written quite literally filled my eyes with tears as it seems like such an enormous weight has been lifted off peoples' shoulders. My wife and I have been living with such a cloud over our heads for so long that I just crave such a weight being lifted, and the possibility of a clean slate.

I feel quite a long post coming on filled with questions, details etc so I hope you are sitting comfortably!

Background:
I am 33 and I am a payroll administrator, working towards a payroll management diploma which I will hopefully complete in about 15 months, I live with my wife (32) who is a primary school teacher. We have a 4 year old daughter. We live in a 4 bed townhouse which we have a mortgage for. We have other debts too both secured and unsecured

Assets/Debts

Our newest mortgage statement shows that we owe £171K, we also owe £65k on one secure loan with Firstplus and £20k on another secure loan with Welcome. We also have 20k of unsecure debt, much of which is subject to DMPs. However, our house is worth £185k, which leaves us in a massive state of negative equity. Currently, our monthly outgoings outweigh our incomings which has been the case for a long time.

Current Situation

Our house has been on the market for about a year - we have accepted an offer recently for 185k as described above. We have seen a rental property which we are desperate to get into. It is a more modest two bed property, which would reduce outgoings by a good couple of hundred quid - it is also walking distance from my wife's school and also in the catchment area of said school for my daughter (she has currently been turned down because of where we live altho there really is no way my wife can be in two places at once to teach and drop my daughter off).
However, we have heard from Firstplus that they will not release the deeds unless we can come up with at least 50% of the shortfall. That is if we are lucky, stated the patronising telephonist earlier as we begged them to come to some agreement, allowing us to move.

Because of all the red tape that seems to suggest that we should be trapped inside our current house paying bills we can't afford, we have considered drastic methods. We have asked for the credit checks to be done on the rental property with the idea of moving in. We are aware that we might need 6 months upfront but we are thinking of selling one of our two cars to finance this - as the move would no longer require my wife driving to her school!

Questions:
1) We are considering (if approved) moving into rental and cancelling all our mortgage/secure direct debit. This seems to be a tactic used quite a bit here if no interest remains in the current owned property.
If we do this, is it worth surrending keys - and if so, to what lender - or is it worth just declaring BR straight away instead?
2) Is it correct, if timed correctly, that the secure debt (shortfall) can actually be included in the bankruptcy without it ever coming back to haunt us?
3) Take a look at our job titles? Do we have anything to worry from going BR? I gather there have been a few teachers on here before who have had no effects. However, does the banruptcy have to be shown in the local paper or would the OR have any sympathy with my wife not wanting to be recognised by teachers, pupils and parents alike.
And with me, my job is 'a bit' finance related although I have not seen that payroll qualifications are included with the affected professions. If there is a problem, would I be alright if I got my skates on so I could be discharged before I qualify? Jobwise itself, I have practically told my immediate boss who actually doesn't care - she trusts my own personal integrity which is all that matters to her.
4) Living expenses - I gather that for 3 years we may be subject to an IPA. We earn about 3 grand between us. I gather we are allowed to deduct reasonable living costs and then 50-70% of the excess may be claimed? However, if this is the case, it is still more than we have to live on now!
5) Future rental - How much will this be an issue? Is it likely to stop us renting in future, or will putting 6 months in advance often be OK.
6) How much does the OR get involved with every day life? Is it once a month, daily, or does he/she leave you alone if you are paying your IPA?
7) As you can see from above, we already have a buyer. If we went down repossession route, could they sell to the buyers already in place? I can't see that they would get a better price!
8) Would there be any come back on us just moving into rented and cancelling the direct debits on our current house? Would the debt go up until sold - or would the debt stop immediately if we went BR.
9) If we did sell a car to finance the 6 months rent as detailed above, would this be OK when declaring financial dealings with OR? Surely its swings and roundabouts as this will leave more disposable income to base an IPA on.
10) How quickly does everything happen after applying for BR?

I think that will do for now. Do you think BR is the best route for us? I seriously think it's an improvement on our current living conditions.

I'm also going to phone either National Debtline or CCCS for help and advice tomorrow too.

Any invaluable advice or answers to the above questions though will be much appreciated.

Persolv0

Hello
Just wanted to welcome you to the board and wish you well(you ll get lots of advice and support here)

Just one point for now is that CCCS have an online form to fill out which helps them help you reach a decision so a good idea to fill it out tonight or in the morning before you phone.

best wishes

FeelingLow

welcome to the forum, firstly you really do need to get some advice from one of the debt charities, once you have done that & made the decission as to which route you are going to take, you will get lots of support here.

personally we stopped paying our mortgage & loans so we could get the bond & deposit together for our rental property i am not saying this is the right thing to do but we had no choice & our OR seemed ok with it, as for the keys we still have ours & we went BR in feb & haven't lived in the house since december,

good luck with what ever route you take & let us know how you get on when you speak to one of the debt charities xx

tigerfeet2006

Rosey321 wrote: »

Questions:
1) We are considering (if approved) moving into rental and cancelling all our mortgage/secure direct debit. This seems to be a tactic used quite a bit here if no interest remains in the current owned property.
If we do this, is it worth surrending keys - and if so, to what lender - or is it worth just declaring BR straight away instead? This is up to you when you send the keys back. You've already read Scarletts Diary so you know her approach and FL has replied. You surrender to the mortgage supplier.
2) Is it correct, if timed correctly, that the secure debt (shortfall) can actually be included in the bankruptcy without it ever coming back to haunt us? Yes! If you have given the house back and go BR then that's it.
3) Take a look at our job titles? Do we have anything to worry from going BR? I gather there have been a few teachers on here before who have had no effects. However, does the banruptcy have to be shown in the local paper or would the OR have any sympathy with my wife not wanting to be recognised by teachers, pupils and parents alike.Sorry it will go in the paper. The only reason it wouldn't is if you were in danger of assault from someone if they found out where you live. Question, have you ever seen a BR in the paper? Do you know where to find them?
And with me, my job is 'a bit' finance related although I have not seen that payroll qualifications are included with the affected professions. If there is a problem, would I be alright if I got my skates on so I could be discharged before I qualify? Jobwise itself, I have practically told my immediate boss who actually doesn't care - she trusts my own personal integrity which is all that matters to her. This only tends to be a problem if your governed by the FSA. But an anonymous call to your personel department will confirm if it is a problem.
4) Living expenses - I gather that for 3 years we may be subject to an IPA. We earn about 3 grand between us. I gather we are allowed to deduct reasonable living costs and then 50-70% of the excess may be claimed? However, if this is the case, it is still more than we have to live on now! This is true. If you pop your I&E when you are ready there are people who will help.
5) Future rental - How much will this be an issue? Is it likely to stop us renting in future, or will putting 6 months in advance often be OK. Once you are established as paying on time, good tennants etc. things tend to settle down. Though if you pat 6 months in advance you can then put the money aside each month to pay another 6 months.
6) How much does the OR get involved with every day life? Is it once a month, daily, or does he/she leave you alone if you are paying your IPA? He leaves you alone fairly much if you are paying the IPA on time. He is only interested in your affairs up to BR.
7) As you can see from above, we already have a buyer. If we went down repossession route, could they sell to the buyers already in place? I can't see that they would get a better price! Not sure Sorry.
8) Would there be any come back on us just moving into rented and cancelling the direct debits on our current house? Would the debt go up until sold - or would the debt stop immediately if we went BR. After you go BR you don't have to worry what the banks etc. do. If they want to carry on adding charges then more fool them. If you are going BR soon then just pay essential bills like utilities and don't pay debts and save for the deposit and BR fee's.
9) If we did sell a car to finance the 6 months rent as detailed above, would this be OK when declaring financial dealings with OR? Surely its swings and roundabouts as this will leave more disposable income to base an IPA on. I think you will be fine as it is essential living expenses.
10) How quickly does everything happen after applying for BR? You ring your county court and see what system they operate. Whether it is just walk in or appointment. Book appointment or decide what day you are going in. Ask them to send the forms or fill out on line. Go to court. Get your petition stamped. Hey! presto you are BR. That's it in simple terms.

I think that will do for now. Do you think BR is the best route for us? I seriously think it's an improvement on our current living conditions.

I'm also going to phone either National Debtline or CCCS for help and advice tomorrow too.

Any invaluable advice or answers to the above questions though will be much appreciated.

With the difficulties of the house it is always best to seek professional advice via NDL or CCCS which you are going to do, so good luck with your call and look forward to hearing what they say.

Also meant to say welcome to the board and well done for starting taking those steps to get your life back under control.

Rosey321

Well, started the first steps this morning.

Phoned the National Debtline this morning. Was on the phone for about an hour to a brilliant bloke who was really knew his stuff.
I gathered he considered that this was the best option for us too - he also gave me some great advice on cutting down the BR cost, by using an exemption form because we get a child tax credit, it eradicates the £150 portion. Also, he said our utility supplier would cover one of the £345 payments thorugh their energy trust scheme. He said he would set that up for me.

I'm so glad I did a bit of homework first too so I was able to speak in jargon a little bit too and I had plenty of questions ready for him.

Pretty much, he gave all the same responses to the questions that I had already had. Employment wise, he just said check contracts - lettingwise, he recommended using private landlords in future if need be. I was also unaware that you don't get taxed while you are BR!

Otherwise, we have lots of stuff coming in the post to read.

We tried to open a post office account today in readiment but they told us they don't actually do those kinds of accounts any more - certainly not the kind wages get paid into. I think that just leaves us with Co-op (I was pretty much told that Barclays would not be an option because I have a 1k overdraft on a different Barclays account which would be swallowed up by BR, therefore they might not want to know me!)

My wife has just broken the news of our possible intentions to her Mum & Dad. They are devastated, as his her sister who has given my wife a good grilling. My wife has just gone round to console her mum who I think feels disappointed (and maybe a bit ashamed?)

I think they have read all the scary aspects and are obviously worried at the moment and can't see that a few years up the line, our quality of life will be a hundred times better than it is now. I actually think our quality of life will be better two months up the line. I think they obviously don't live in our current situation, don't see the stress, the unhappiness etc. and they don't think that we have done our homework on this, and that it is surely not as simple as we make out? I actually think that instead of being a cop out, it really is a situation where I can grow some balls, take control of the situation and lead us out of this mess.

For the future happiness of my wife and future stability of our daughter, I honestly think it is the best way now - and we can really start afresh.
I think it would make their retirement a happier one too as we wouldn't need to lean on them anywhere as much as we do now. They are the best in-laws I could ever wish for and I love them as if they were my own blood. They have done so much for us that I understand their disappointment, but also I think we need to try and make them aware that this is the best thing now - the pros massively outweigh the cons in my opinion. Anyone else had family disapprovals in the past - any good lines we can use to make them see that this is the way forward?

Thanks again for all input - any further advice always greatfully received.

Happy_Girl_2

Hi

Just a quick message as I am on my way out, but wanted to say that if you are a student member of a governing body whilst studying for your payroll quals (ie AAT) you will have to declare your Bankruptcy and more than likely your membership will be revoked.

Personally, I would get your skates on an qualify as they won't take the qualification away, only the right to be a member of the body

They do deal with this on a case by case basis, so you may not have your membership revoked, but it's worth trying to be one step ahead

Welcome to the board, and I'll keep my eye out for your updates

skylight

My Mum was the same! She was adamant that I was going to prison... And still moans about how she wouldn't be able to sleep at night owing so much money and how embarrassing for me to have my name in the papers (not that she noticed). I have to rebuke with the fact that actually I do not owe any money. Not a penny - she owes far more than I do on her one credit card and 2xBTL's and I then have to switch the conversation to the housing market and credit crunch!

I wasn't going to tell her first of all - but decided that I had better. Afterall this is going to affect the rest of my life and I wouldn't want it coming out at a later time; then there would be hell to pay!

My Dad was great. He was concerned though that I hadn't thought this through - I do have a habit of just going ahead and doing something just because it seems like a good idea at the time (EG once I went out to buy a new pair of trousers but came back with a car and when I was much younger (18) I phoned him from Gatwick airport when I had only popped into town to do some shopping but a travel agent were offering this fantastic last minute holiday at less than £70....) I have REALLY digressed here......

I had thought it through. It took me nearly 2 years to actually do it and I still think sometimes whether or not it was the right thing. I know it was the right thing to do - I can have a life again in a few years without the stress or worry.

Scarlett.1974

Hi Rosey321

Congratulations on taking those first steps, it can and will, only get better from now on

I had some serious family disapproval to deal with and yes, it was hard. The main issues were, as you seem to be experiencing too, that they really didn't understand. My mum initially seemed to take the news quite well, but unfortunately she 'blew up' at me a few days later and it was awful. She said she was shocked, disappointed, disgusted with us that we had let things to get this stage, losing the childrens' home etc etc etc...... it was not pretty. She did get over it eventually, she asked lots of questions and I think we were able to put her mind at rest a bit.

Relations with my brother and SiL have been rather strained too....... they seem to think we have 'took the easy way out', that we ran up a load of debt and then thought "ooooh, I know, we'll just not pay it, we'll go BR instead".

At the end of the day though, as long as you can justify to yourself that you are doing the right thing for you and your family you don't need to justify it to anyone else

LilyBart

Oh Rosey,
Just wishing you the best of luck.
Lily

Rosey321

Thanks all for support. I'm in really good company here!

My wife has just come back from her mums who has calmed down quite a bit now. I still gather I personally may be in for a good grilling tomorrow as the main person who claims to know all the ins and outs. I'm going to put together a little presentation I think - show things like our disposable income now and what it would be like after BR, how I see our lives panning out in the next few years in both scenarios whether we did or didn't go BR. I'm sure they will see the rosier side in the event that we do go BR!

Apparently, they are not ashamed as such - they just 'can't believe that all debt can be eradicated that easily - and therefore why isn't everyone doing it. Surely there must be a catch?'.
I will explain that yes, of course there's a catch, there's implications - in fact the implications stop people from doing it willy-nilly. However, there is a point when you can't carry on as you are, and when you have gone so far past a line that the implications themselves just seem like bliss compared to standard of life as it stands. Also, I will press home that understandably, lots of people don't wanna go BR because they don't want to lose their homes. In our case, we are more than willing to pack up and go renting. I'm sure come tomorrow we will have their full support!

Scarlett.1974

Rosey321 wrote: »

Thanks all for support. I'm in really good company here!

My wife has just come back from her mums who has calmed down quite a bit now. I still gather I personally may be in for a good grilling tomorrow as the main person who claims to know all the ins and outs. I'm going to put together a little presentation I think - show things like our disposable income now and what it would be like after BR, how I see our lives panning out in the next few years in both scenarios whether we did or didn't go BR. I'm sure they will see the rosier side in the event that we do go BR!

Apparently, they are not ashamed as such - they just 'can't believe that all debt can be eradicated that easily - and therefore why isn't everyone doing it. Surely there must be a catch?'.
I will explain that yes, of course there's a catch, there's implications - in fact the implications stop people from doing it willy-nilly. However, there is a point when you can't carry on as you are, and when you have gone so far past a line that the implications themselves just seem like bliss compared to standard of life as it stands. Also, I will press home that understandably, lots of people don't wanna go BR because they don't want to lose their homes. In our case, we are more than willing to pack up and go renting. I'm sure come tomorrow we will have their full support!

Oooooh, I'm liking the sound of a "presentation"..... wish I'd done that. I could have had a flip chart and one of those long stick-things.

Or... OR... how about a power point presentation?

Sorry.....