Advice needed

Hi there,

Sorry to hear that you've fallen on what appears to be hard times, and especially with somewhat of a high personal debt against your name.

I know the feeling with regards to carrying out a lot of debt for years and years on end, I've been there myself and I'm still only young (late 20's). Though you live and learn as they say, and I certainly did (well, still learning as I go along!). Just a bit of background into my story.

I went bankrupt in July 2016 with debts totalling to £20,000 that were spread across 5 creditors. These were basically a couple of loans, a credit card, a small HMRC tax credits claim and a mobile phone contract. My debt first started and stemmed back to 2009 when I had to take a loan out on a new car, and as the years have gone by the borrowing slowly increased for a variety of reasons and life changes.

In July 2015 my debts pretty much peaked and I had no option but to then enter a DMP as my monthly outgoings on debts was getting more ridiculous, and I was paying out more on them than what I was in rent and utility bills combined. The DMP worked well but as a result my credit report took a leap due to a couple of the creditors defaulting on the DMP arrangements which in a way was expected but it kept the payments lower.

Fast forward to around June last year, me and my partner discovered that we were going to be expecting our first baby which was wonderful and exciting news... however, not long after my Mrs lost her job unfortunately and as a result we both had to solely rely on my income. At the same time it suddenly dawned on me that it was in a way time for me to clean up my act and grow up in a number of ways - one of which and most importantly was financially, I was also finally sick of carrying around the burden of debt around constantly and having to scrimp and scrape every month just to tie me over. With bringing a baby into this world and having to manage financially, I had to sort it out otherwise it wouldn't work. I researched into bankruptcy thoroughly for weeks, obtained advice from various places, made preparations, saved up for the bankruptcy fee, had a couple of sleepless nights of deliberation before then filling out the form online and then submitting it off.

Since then things have got steadily easier, and in back in Feb my Mrs gave birth to a lovely little girl. Financially I have learned a lot since and I have changed my ways for the better, and I aim to never get in silly debt ever again. In fact I have said to myself that if I do get in any form of debt in the future - it will only be for a mortgage, years after my bankruptcy is behind me. Nothing else.

Applying for the bankruptcy was fairly straight forward online, I was approved the next day, then followed a telephone conversation with my appointed official receiver a couple of days later to confirm things and to get the ball rolling.

In my case and circumstances financially, I have not been subjected to a 3 year IPA so far (I'm still just over 2 months away from my discharge date, my official receiver could still impose one before the discharge date if they wished though they informed me at the beginning that for me it would be very unlikely). However, they did put me on an NT tax IPA arrangement instead at the beginning where the tax on my earnings is paid to the Insolvency Service until the next tax year, in turn the contribution is spread & shared out to my creditors (I've literally just completed it), and then after that you start paying tax on your earnings again.

My advise for yourself would be to study and research thoroughly into the bankruptcy before you proceed, the downsides that may follow, the positive side to it as well, how it may affect your way of living moving forward as you won't be able to obtain any more suitable credit / lending for the best part of up to 6 years, and most importantly - the restrictions / rules that may be put in place while being bankrupt (if you do go bankrupt, your official receiver will advise on this and anything else that you need answering to be sure).

Keep us informed on how you get on as time goes on.

Liam.

Rosebud, from what you say in your post, bankruptcy is the option.

Read up on it - National Debtline have a factsheet here

and Debt Camel who is a CAB debt specialist, like me, has info here:

https://debtcamel.co.uk/debt-options/bankruptcy/

and here (but note the fee is now £680)

https://debtcamel.co.uk/debt-options/bankruptcy2/

Bankcruptcy i would say.

My rule of thumb is if it's going to take you longer than 6yr to repay via other methods, you have no assets to protect and it's more than 20k then bankcruptcy is usually the best option.

DMP - will be something silly like 15yrs to repay
Iva - no job, no assets, can fail
DRO - your debt is more than 20k

So bankcrupty seems best. Read up get your ducks in order plan it before doing it, if your off work you won't get a IPA - you may get one once you start earning, if you could take 12 months out to train/college etc you can avoid the 3yr IPA .