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  • FIRST POST
    • adrian2768
    • By adrian2768 10th Apr 18, 3:07 PM
    • 6Posts
    • 0Thanks
    adrian2768
    Cars and BR
    • #1
    • 10th Apr 18, 3:07 PM
    Cars and BR 10th Apr 18 at 3:07 PM
    Just, what I hope is a quick question. We are getting towards the point where BR seems an inevitability, but as this was not exactly planned there are couple of complications that may well be a bit of a pain.

    The main problem being, that both the household cars are in my name, when one of the cars is used mainly by my wife. Annoyingly, just to be a double PITA the insurances are also reversed as we are names drivers on each others policies and one car is 5 door (on my insurance) the other 3 door (my wife's insurance), just having just had a baby she obviously uses the 5 door car.

    Can that kind of mess be easily sorted out? there is probably around 2000 of equity in the 5 door and -4000 in the 3 door.

    The 3 door has 2 years left to pay, with a balloon at the end. The 5 door is worth around 5, but has 2.3k outstanding (so there is some equity), but if was sold obviously would get less than top price. It is certainly worth more to my wife than that.

    I am currently the only earner, and all debt is in my name. In 2 years we will be in trouble anyway because we would never be able to meet the balloon payment, and we would never get credit to replace it, so that's kind of a future problem.

    So yeah, it's really just a question about transfer of assets, and being above board about these things. Does the OR take my wife's need to take my son to appointments and various activities, as well as to the grandparents as well? They live 38 miles away, and I work 10 miles in the opposite direction so I need some transport to get to my place of work. I bought the little Renault Zoe to save money vs the Insignia it replaced (given the the gearbox died), as the insurance is half, the tax is free and I leech electricity from work by charging it there for her on a day she's not using it so the running costs are low.

    The other car is just a 3 door astra, nothing special, and purchased 52% off RRP, so I thought it might be the first car I'd ever bought that might not be negative equity all the way through. Wrong, apparently, according to the garage I wanted to sell it to, it lost 72% of it's value in the first two years, which seems pretty epic. Anyhow I digress.

    If I want to un-pickle this, how would I go about it. If I'm made to sell it, obviously I would stand zero chance of getting anything to replace it.

    I don't know if it makes much of a difference, but it is highly likely that I will be able to pay back a considerable sum back to my creditors. At the moment, everything is paid, but we are just very slowly slipping backwards and with a broken fridge, and a washing machine that tears all our clothes, and to top it all off every month there will be some kind of disaster that seems to occur. Last month was a seized gearbox on our main car. But I imagine I'd be able to pay back best part of 1k per month to my creditors.
Page 1
  • National Debtline
    • #2
    • 10th Apr 18, 5:16 PM
    • #2
    • 10th Apr 18, 5:16 PM
    Hi Adrian,


    First of all, I would need to ask you to clarify what sort of finance the cars are subject to. Unfortunately, they sound like they could be on hire purchase, which means you may struggle to keep them when you go bankrupt (irrespective of the equity in them). You will need to check the terms and conditions of the agreement but there may be a clause in the HP agreement that terminates the contract in light of the bankruptcy. Which means the cars will be returned and the remaining finance written off.


    You also need to be aware, if they are on HP then you cannot sell them without written permission from the HP company.


    It would help if you could post more details about your situation, because if you have 1000 surplus per month, you will also have an Income Payment Arrangement (IPA) as part of the bankruptcy. Your budget is evaluated by the Official Receiver and if you are deemed to have 20+ per month they can take 100% of your surplus for up to 3 years under an IPA.


    Just these two points may be enough to consider whether or not this is the best option for you, but please post more details so future posters can help you.


    Laura
    @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
    • adrian2768
    • By adrian2768 10th Apr 18, 6:49 PM
    • 6 Posts
    • 0 Thanks
    adrian2768
    • #3
    • 10th Apr 18, 6:49 PM
    • #3
    • 10th Apr 18, 6:49 PM
    Yeah, sure happy to supply more information.

    I'll give you the background first:

    I am employed, I earn 71,250 p/a. My wife was employed but, upon quitting work to start a new job found out she was pregnant (somewhat of a miracle really considering we had been together 15 years without contraception), and her vocation disallows working whilst pregnant, so a week before she was supposed to start that plan was turned on its head.

    So for the last 14 months, we have been around 1.2k down per month, on what we had come to enjoy. Couple that with some serious bad luck and some poor decisions and we are where we are.

    I owe 55k (or close enough), all unsecured on credit cards. It has been slowly creeping up over the past few years, but accelerated this last year.

    Both cars are on HP, one I can sell no problem, but it won't net a huge amount to go back into the pot. The other can't be sold as it's worth too little vs the outstanding finance.

    I have to drive to my place of work as we are very remote and the only bus that heads in the right direction is a school bus, and often doesn't stop for normal people if full and obviously only runs term time.

    My take home pay is 4080 p/m, there are some deductions for 1% pension (cut it right back and have already cashed one of them in to pay of some debt), a small tax burden for healthcare and dental (still have huge excesses).

    I am fully expecting to pay an IPA, and am perfectly happy to pay it. I did look at an IVA, but the length of time might be an issue. Long story short, I once got Into a relatively small about of trouble back in 2005, and a company sold me an IVA. Once I had realised that these very aggressive debt chasers were not coming round (thanks to forums like this), and they certainly did not talk with my neighbours and various such claims, I stopped it, and spent the next couple of years paying them back having stood up to them on some of the stronger charges they were trying to push through.

    So I have already had my credit record smashed to pieces before, I know how that ends. But I also remember how impossible it was to rent anywhere, and at this precise moment a roof over my wife and sons head and food on the table is the only thing I care about. BR would be over in 12 months, if our landlord decides he wants us out to charge someone else more (has happened many times now), then we could very much end up in real trouble. And with a 5 year span, I can absolutely see that happening. Whereas once you are discharged you have some, albeit limited, options. And I think I can hang on here for 12 moths with no problem as we pay way under the market rate for the area, I might even offer him bit more if he signs a 2 year deal.

    Ultimately, as child number 1 was a surprise, my wife is thinking we should go straight for number 2 (as she is an only child and is desperate for that not to happen to our son), to minimise the block of time she is not working. So part of that is taking a very cold look at the situation we are in, the problems we have to overcome and the best possible way to get to the end of it all.

    I have been paying off around 1500 p/m over the past year and we are just ever so slowly creeping into the credit more and more. Everything non-essential has been cancelled, all insurances have been shopped for and gotten cheaper. I bought a smaller cheaper car to run as I can charge it at work and then my wife's journeys are all free, insurance is half that of the car it replaced and zero road tax. The only luxury we have is a Spotify subscription and a Netflix subscription. And to be honest, I think the Spotify might go within the next few weeks too. Every single bill we have has been lowered to try and claw back as much as possible, but as I now need a new fridge & washing machine I just smile to myself like a crazy person.

    To pay off my debts at this speed would take, probably best part of 10-14 years, depending on how Brexit plants it's ugly spanner in the works. Getting a mortgage is still difficult (even a few years back) because of that eternal question "Have you ever ......".

    So, having not bought myself any clothes for several years or shoes (really need some new ones), it would be nice to have just a little extra to buy a few new t-shirts and maybe have a haircut, as recently al my money has been buying nappies, baby clothes, bassinets, car seats etc....

    Back to my debts: The amount I am paying are basically the minimums, I was largely taking good progress until Halifax quadrupled (if not more) my overdraft borrowing costs and then added 9% to the interest rate on my CC by bumping me to another card, which they transferred the balance, then said I couldn't have the deal so it is set at something around 25% with 10k on it, and removed all offers for 0% transfers which was allowing me to reduce the debt. Then when I made the minimum payment for two months in a row, they immediately wrote to me saying they had re-evaluated and reduced my credit limit over and over again, which hurt as it was my buffer to buy food at the time.

    Barclaycard on the other had have been outstanding, understanding and flexible. But all the cards with the Lloyds group have been borderline appalling in their sudden ramping up of rates and sudden computer decisions to alleviate risk by forcing people into corners.



    Anyhow, I hope that provides more background information.
    Last edited by adrian2768; 10-04-2018 at 6:54 PM.
  • National Debtline
    • #4
    • 11th Apr 18, 11:01 AM
    • #4
    • 11th Apr 18, 11:01 AM
    Hello again,


    I owe 55k (or close enough), all unsecured on credit cards. It has been slowly creeping up over the past few years, but accelerated this last year.

    Both cars are on HP, one I can sell no problem, but it won't net a huge amount to go back into the pot. Please remember, that you must have written consent to do this. The vehicle is not yours to sell, and selling it without consent can be considered theft. I appreciate you are saying the sale price should clear the finance, but you should still get the consent. The other can't be sold as it's worth too little vs the outstanding finance. As above.

    I have to drive to my place of work as we are very remote and the only bus that heads in the right direction is a school bus, and often doesn't stop for normal people if full and obviously only runs term time. Unfortunately, if there is an insolvency clause in the HP agreements, causing them to be terminated in the event of bankruptcy, the agreements can be cancelled no matter how essential they are. One option to try and save a car would be to discuss with the HP company if they would allow the agreement to continue - irrespective of the bankruptcy - and if they consent, and a third party agrees to make the payments for you (as the OR is very unlikely to let you continue with them) you may be able to keep one. Whether you can do this for both would depend on the HP company and who is willing to make the payments.

    I am fully expecting to pay an IPA, and am perfectly happy to pay it... Whereas once you are discharged you have some, albeit limited, options. And I think I can hang on here for 12 moths with no problem...Remember that an IPA is for 3 years, not 12 months.

    I have been paying off around 1500 p/m over the past year and we are just ever so slowly creeping into the credit more and more. Everything non-essential has been cancelled, all insurances have been shopped for and gotten cheaper. I bought a smaller cheaper car to run as I can charge it at work and then my wife's journeys are all free, insurance is half that of the car it replaced and zero road tax. The only luxury we have is a Spotify subscription and a Netflix subscription. And to be honest, I think the Spotify might go within the next few weeks too. Every single bill we have has been lowered to try and claw back as much as possible, but as I now need a new fridge & washing machine I just smile to myself like a crazy person. It sounds like you have taken some positive steps on your SOA but you may have taken it too far. Your SOA should be realistic and sustainable and you should be able to use your surplus to clear the debts, without using the credit again in the same month. If this isn't possible at the moment, that doesn't automatically mean you need to go bankrupt, there are other options.

    To pay off my debts at this speed would take, probably best part of 10-14 years, depending on how Brexit plants it's ugly spanner in the works. Getting a mortgage is still difficult (even a few years back) because of that eternal question "Have you ever ......". If you were to consider a free DMP, and you had, for example, a 1000 surplus (as you say 1500 is too much) that could mean you are debt free in around 4.5 years, without any of the consequences of bankruptcy, or issues with the cars.

    So, having not bought myself any clothes for several years or shoes (really need some new ones), it would be nice to have just a little extra to buy a few new t-shirts and maybe have a haircut, as recently al my money has been buying nappies, baby clothes, bassinets, car seats etc.... Remember, make your budget sustainable and then look at your options based on your surplus.
    Originally posted by adrian2768

    I would also add, that I am not saying you cannot go bankrupt, however, based on the information provided so far, there seems to be quite a few draw backs for you as a family, so it is important to look at all options first. I would suggest calling one of the free debt charities to go through your SOA and discuss the impacts of each option for you in more detail before you make your final decision.


    Laura
    @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
    • adrian2768
    • By adrian2768 11th Apr 18, 11:30 AM
    • 6 Posts
    • 0 Thanks
    adrian2768
    • #5
    • 11th Apr 18, 11:30 AM
    • #5
    • 11th Apr 18, 11:30 AM
    Thank you for for feedback, and I agree. I was going to get in contact with someone to go through it all. Largely, although I guess in my mind it is a done deal, I'm mainly information gathering to identify all the pitfalls that could make a bad situation deeply sucky! Because I can be convinced a few options are available realistically.

    Thanks for your time.
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