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  • FIRST POST
    • Greg_
    • By Greg_ 9th Feb 18, 10:26 AM
    • 2Posts
    • 0Thanks
    Greg_
    Worried about bankruptcy
    • #1
    • 9th Feb 18, 10:26 AM
    Worried about bankruptcy 9th Feb 18 at 10:26 AM
    Morning guys. Iíve just joined the forum after reading up on lots of posts regarding bankruptcy.

    Due to my business failing and a personal guarantee on a business loan, I am faced with having to go bankrupt. I have spoken with an IP and it is their recommendation that I do so.

    I cannot explain the complete fear I have with the thought of going bankrupt. I have searched for other forum users personal stories of the process but I couldnít really find the answers I was looking for.

    One of my main worries is what actually happens during bankruptcy and for how long ? Does the bulk of my income go towards the bankruptcy with just a basic amount left to keep a roof over my head , or would there be any leftover money that i could put into savings etc ?

    How long would I be paying back towards bankruptcy ?

    And finally , for those of you who have unfortunately had to go bankrupt , how did you find getting a mortgage etc once your bankruptcy was over ?

    Sorry for the long winded thread and hope you are able to offer some advice.

    Thanks in advance.
Page 1
    • luvchocolate
    • By luvchocolate 9th Feb 18, 11:16 AM
    • 1,532 Posts
    • 1,398 Thanks
    luvchocolate
    • #2
    • 9th Feb 18, 11:16 AM
    • #2
    • 9th Feb 18, 11:16 AM
    Hi read all the stickies and the welcome thread.. loads of info on there.
    When you go B.R you fill in your S.O.A and any surplus income of £20 plus 100% of this goes to the O.R in an I.P.A which lasts for 3 years this payment can go up or down as your circumstances change.

    Its advisable to open a basic bank account away from any you owe money to, the banks will usually close any accounts other than a basic one upon notification from the O.R
    I would also suggest you call business debt line for advice.
    Plenty of people have got a mortgage 3 years after B.R. A large deposit will help.
    Keep in touch and good luck
  • National Debtline
    • #3
    • 9th Feb 18, 4:46 PM
    • #3
    • 9th Feb 18, 4:46 PM
    Hi Greg

    Welcome to forum. I understand bankruptcy is daunting, but it can also be a good way to get a fresh start if there is no other realistic way to repay your debts. luvchocolate has covered some of your questions above, and I agree contacting Business Debtline for some independent advice is a good idea.


    You will need to apply for bankruptcy online and pay the £680 fee before submitting. You'll generally be notified in a couple of days if the order has been made, and this is followed shortly after by contact from the Official Receiver (OR). They will interview you, either in person or over the phone, to discuss all the information you've put in your application.


    The OR's role is to run the bankruptcy, including deciding if you should have an income payment arrangement (IPA) and if you have assets that can be sold. You're discharged (and your debts are written off) after 12 months but the IPA can last for 3 years. There are lots of people on the board who have been through the process and I'm sure will share how they got on. Good luck with it all.


    Susie
    @natdebtline

    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
    • TownCalledAlice
    • By TownCalledAlice 9th Feb 18, 8:15 PM
    • 1 Posts
    • 2 Thanks
    TownCalledAlice
    • #4
    • 9th Feb 18, 8:15 PM
    • #4
    • 9th Feb 18, 8:15 PM
    Hi Greg

    Definitely have a look around at IPAs. I was astonished to see what sort of things would be accepted - a decent food budget, allowance for clothes etc. We had been living penny to penny for so long that it felt like a luxury to consider things like that. I then read that bankruptcy is about having a fresh start, not punishment, and it began to make sense.

    The process of bankruptcy has been so straightforward. I applied to a local fund to cover my fee. I havenít had to go anywhere near a court room - just an online application and a telephone call.

    Tally
    • Greg_
    • By Greg_ 31st Mar 18, 10:36 AM
    • 2 Posts
    • 0 Thanks
    Greg_
    • #5
    • 31st Mar 18, 10:36 AM
    • #5
    • 31st Mar 18, 10:36 AM
    Hi there ,

    Thanks for your replies and sorry Iím just coming back to you.

    This is still ongoing and Iíve made no decision yet on what Iíll do, but the threatening letters have begun so I really need to decide soon on what to do. Iíve organised to meet an insolvency firm next week to go over my options.

    I really do want to get this sorted. Losing so much sleep but have so many concerns , such as how Iíll get by on what is deemed my allowance each month , especially knowing Iíll be on limited money for the next 4 years.

    I earn 35k in my new job , but I assume most of this will be swallowed up in the IPA that has been mentioned. I find it all so confusing. Itís a position I never thought Iíd end up in.
    • TheGardener
    • By TheGardener 31st Mar 18, 11:25 AM
    • 2,284 Posts
    • 2,175 Thanks
    TheGardener
    • #6
    • 31st Mar 18, 11:25 AM
    • #6
    • 31st Mar 18, 11:25 AM
    No - most of your salary will not be 'swallowed up'. An IPA will reflect your normal outgoings and living costs so unless you live alone you are not even guaranteed to have an IPA. Even if you do have one, IPA's are 3 years, not 4.
    Do an SOA and post it here there is a good one at http://www.stoozing.com/calculator/soa.php so we can offer more advice. When compiling your SOA don't try and skimp on your living costs - be honest and remember BR allows for normal living costs - not scrimp and starve mode.

    Importantly - Are you paying into your new employers pension scheme? If not then arrange to do so as fast possible (before BR) - anything upto about 7 or 8% is acceptable and not only benefits you considerably - it also shows you are taking a responsible approach to you future finances and of course reduces the 'disposable income' element of your take home pay available for an IPA.

    Don't lose sleep - remember this is you taking control of your finances and planning for a responsible and solvent future. Take comfort from the fact YOU are in charge now.
    Last edited by TheGardener; 31-03-2018 at 12:01 PM.
    • haggis0073
    • By haggis0073 31st Mar 18, 12:06 PM
    • 157 Posts
    • 116 Thanks
    haggis0073
    • #7
    • 31st Mar 18, 12:06 PM
    • #7
    • 31st Mar 18, 12:06 PM
    Is the insolvency firm you are seeing free or do they charge for their service, if they do charge then it could potentially be wasted money.

    The members on this forum are full of knowledge, and most people on here who give advice have been through the process of bankruptcy and will almost certainly have an answer for any of your questions

    When it comes to IPA's, as gardner mentioned above, post up your SOA and we can advise from there, you will be possibly surprised on how much you can put down for expenses
    • Tarambor
    • By Tarambor 31st Mar 18, 3:58 PM
    • 2,711 Posts
    • 1,946 Thanks
    Tarambor
    • #8
    • 31st Mar 18, 3:58 PM
    • #8
    • 31st Mar 18, 3:58 PM
    . Losing so much sleep but have so many concerns , such as how Iíll get by on what is deemed my allowance each month , especially knowing Iíll be on limited money for the next 4 years.

    I earn 35k in my new job , but I assume most of this will be swallowed up in the IPA that has been mentioned. I find it all so confusing. Itís a position I never thought Iíd end up in.
    Originally posted by Greg_
    Well for a start you'll not have all the debts you're currently having to service to worry about. You'll not have a car on finance. When you get down to the basic outgoings - mortgage/rent, council tax, TV license, gas/electric, phone/internet, food and clothing it is quite surprising just how little you can live on. One thing it does do is force you to examine your spending and hopefully unlearns the bad habits you've gained in the past such as not thinking about the odd couple of quid here and there you spend on coffees and the like which quickly rack up to £1000s a year.

    It is stressful now but once you've gone through the process and the OR meeting it'll be like the weight of the world has been lifted from your shoulders.
    • sourcrates
    • By sourcrates 31st Mar 18, 6:29 PM
    • 13,782 Posts
    • 13,098 Thanks
    sourcrates
    • #9
    • 31st Mar 18, 6:29 PM
    • #9
    • 31st Mar 18, 6:29 PM

    Due to my business failing and a personal guarantee on a business loan, I am faced with having to go bankrupt. I have spoken with an IP and it is their recommendation that I do so.

    I cannot explain the complete fear I have with the thought of going bankrupt. I have searched for other forum users personal stories of the process but I couldnít really find the answers I was looking for.

    One of my main worries is what actually happens during bankruptcy and for how long ? Does the bulk of my income go towards the bankruptcy with just a basic amount left to keep a roof over my head , or would there be any leftover money that i could put into savings etc ?

    How long would I be paying back towards bankruptcy ?
    .
    Originally posted by Greg_
    Iíve organised to meet an insolvency firm next week to go over my options.
    .
    Originally posted by Greg_
    Hi,

    Bankruptcy is not the beast from the east it once was, nowadays it is all done online and by post, you pay your fee, if the OR has no objections, then you go bankrupt........very quick, very easy, no need to appear in court any longer, all very simple.

    An IPA lasts for 3 years, and is only payable if you have £20 or more disposable income left, so it is essential, and i stress essential, that you budget correctly for every single thing you spend money on.

    You mention your meeting with an insolvency firm next week, do they charges for their service ?

    I am assuming they do, if its advice about your company going bankrupt, then business debt line can help you for free, bankruptcy fees are high enough, so try to avoid any further unnecessary legal costs.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • coolcait
    • By coolcait 31st Mar 18, 6:34 PM
    • 4,184 Posts
    • 13,338 Thanks
    coolcait
    If Greg is in Scotland, the IPA - or Debtor Contribution Order - will last for four years.
    • sourcrates
    • By sourcrates 31st Mar 18, 11:10 PM
    • 13,782 Posts
    • 13,098 Thanks
    sourcrates
    If Greg is in Scotland, the IPA - or Debtor Contribution Order - will last for four years.
    Originally posted by coolcait
    Good pick up, but If that were the case, surely he would of referred to it as sequestration and sherif court, instead of bankruptcy and OR ?
    Last edited by sourcrates; 31-03-2018 at 11:13 PM.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Free Legal advice see : http://legalbeagles.info/
    • coolcait
    • By coolcait 1st Apr 18, 12:17 AM
    • 4,184 Posts
    • 13,338 Thanks
    coolcait
    Good pick up, but If that were the case, surely he would of referred to it as sequestration and sherif court, instead of bankruptcy and OR ?
    Originally posted by sourcrates
    Who knows? There's a lot of jargon for people to deal with - at a time when they're already stressed out their boxes dealing with everything else

    So, if a person in Scotland talks about the 'OR' - because that's what everyone else on here talks about - I can understand that they mean the 'Trustee' in the Scottish system.

    And I've picked up enough about the English approach to bankruptcy to know that the 'Trustee' in the English system isn't the same as the 'Trustee' in the Scottish system - though there may be some areas of overlap.

    Bankruptcy in Scotland is sometimes/often called sequestration. More and more, though, it is called bankruptcy.

    There's no Sheriff Court involvement if you're applying for your own bankruptcy (creditors do still have to petition through the courts).

    As you have to get advice from a qualified money adviser or Insolvency Practitioner before you apply for bankruptcy, most people just let the adviser or IP do the application for them.

    The Accountant in Bankruptcy - Scottish civil service organisation, so closest equivalent to the OR - will be your trustee, unless you nominate an IP to do the job, and they confirm in writing that they accept the nomination.

    A lot of people need a Certificate for Sequestration before they apply for bankruptcy. IPs are one of the groups which can issue this certificate.

    I don't know whether Greg is in Scotland or not - but the 'four year IPA*' comment made me think that it was worth checking it out.

    * Technically it's now a DCO - but lots of people do still talk about an IPA. Or the even older 'contribution'.
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