Living off credit - what happens when credit gone?

A_A_Mole · 9 October 2019 at 9:58AM

I'm not ready to go bankrupt yet, but am doing some research.

At the moment I often transfer money from a credit card to pay my rent.

Then I try and pay the money back the following month when I've been paid etc.

This isn't ideal as I pay to borrow this money.

But it does help me keep a roof over our heads.

If I went bankrupt, I'm guessing this line of credit would be gone and my options for paying my rent reduced?

Did anyone live like this before going 'rupt and if so, how did you adjust?

Anything else to consider regarding paying rent after bankrupcty?

Thanks!

MEM62 · 9 October 2019 at 10:34AM

You are playing with cash-flow here. If this is because the burden of servicing your debts is not leaving you sufficient money for your monthly living expenses that should change once you are BR. If you are not currently making debt repayments and it is a simple case of your income not covering your outgoings then you have a different and more challenging problem.

Post an SOA and you will receive some constructive advice.

terrence45 · 9 October 2019 at 6:13PM

A_A_Mole wrote: »

At the moment I often transfer money from a credit card to pay my rent.

Then I try and pay the money back the following month when I've been paid etc.

This isn't ideal as I pay to borrow this money.

No wonder you're in trouble. The question is 'why are you paying your rent with credit, and how would going bankrupt help you out of this situation?'

If your income isn't enough to pay your rent/bills/other costs even if all your debts are wiped, then bankruptcy alone will not help. You'll probably not be prevented from going bankrupt, though..

A_A_Mole · 12 October 2019 at 10:23AM

Thanks. Yes, the debt repayments aren't the only reason I'm having trouble paying the rent. My outgoings are too high in general.

But if I had no access to credit, I think it might force me to live more realistically.

If the credit isn't there, I couldn't spend it. Going bankrupt would sort that out I presume.

But I rent privately so going bankrupt isn't really an option at the moment, at least not while I still have more credit to rely on.

Plus I'm self employed so I think that makes it more complicated as the business has money?

Also, as I put money aside for tax, I would start spending that if I had no credit available to me, which would get me in trouble with HMRC which is probably more serious than credit card debt?

Bit of a mess really...

fatbelly · 12 October 2019 at 12:01PM

I think it's going to be difficult for anyone to advise without looking at the numbers.

You could post a statement of affairs (link is to a calculator) on the debt free wanabee board and see what people think.

Or run the situation past someone with no axe to grind/product to sell, like National Debtline, or in your case probably Business Debtline (same organisation, different bit).

enthusiasticsaver · 12 October 2019 at 1:56PM

It is unsustainable to live the way you are. If for any reason they withdrew your lines of credit then you would really be stuck. You need to start looking at this another way. Pay your priority bills first when you get paid which is rent, council tax and utilities. Put aside money for food, fuel and other essential outgoings. If what is left does not cover your debt repayments then you need to consider a debt solution which could be a DMP, IVA, DRO or last ditch solution bankruptcy. All of those will impact your credit rating but if you have a lot of debt think of that as a positive. You will have your interest frozen and be able to arrange a sustainable repayment programme and the debt would not rise any further. You would also be living within your means and maybe even be able to save. Would that not be better than living the hand to mouth existence you do at the moment relying on banks goodwill to be able to pay your rent?

sourcrates · 13 October 2019 at 1:50PM

Agree with above post, you need to stop, draw a line in the sand, and start again, this time prioritising essential payments, living costs etc, and forget all credit payments for the time being, I had to do exactly the same thing a number of years ago now, in order to see what a mess i was in, you must do the same.

Only once you have a balanced budget can you look for a debt solution, living on credit, as so many do these days, can only delay the enevitable fact that you are basically insolvent and must change your ways.

A_A_Mole · 16 October 2019 at 10:47AM

Thanks. When you say, "forget all credit payments for the time being" what does that involve?

A_A_Mole · 16 October 2019 at 10:49AM

enthusiasticsaver wrote: »

All of those will impact your credit rating but if you have a lot of debt think of that as a positive.

If I didn't rent privately I would do go bankrupt in a heartbeat.

I'm worried about messing up my rating then having to move and not being accepted for any where and making the kids homeless!

foxy-stoat · 16 October 2019 at 11:39AM

A_A_Mole wrote: »

If I didn't rent privately I would do go bankrupt in a heartbeat.

I'm worried about messing up my rating then having to move and not being accepted for any where and making the kids homeless!

You cannot continue - you know that.

Your interest is being added each month and you are not even touching the capital.

I would look at IVA rather than BR - as running your own company while a bankrupt may be harder than if you are in an IVA.

PasturesNew · 16 October 2019 at 11:45AM

It's easy to find yourself where you're at - and then go "spending blind" to everything you're buying/spending because "I'm in a big hole anyway, this won't make any difference".

You need to do an SoA and let people show you if you're overspending/how to cut back so you get yourself straight and can then see the wood for the trees.

Living off credit - what happens when credit gone?

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