Bankrupcy really only option available!

[mammalisa]

Condensed version.

 

Massive debts (50k+) managed over last few years, private payment plan (broken a couple of times but reset).

 

Husband is IT contractor and has been out of work last 18 month. I went back to work full time to try and keep heads above water. Last week I was made redundant (under 12 mths employment so no redundancy payment). We couldn't manage then so we definately can not manage now.

 

Both looking hard for work but pretty hard going.

 

Have decided that after many years of stress and shoestring living we want to sort it all out one and for all.

 

If we sell our property now then we would have about 30k left. Need to pay back parents for money borrowed over last couple of years (they are in their 80's so I am afraid they are my priority). Also will need to put a deposit and 6 months rent in advance for rental accomodation (as a claim for housing benefit will be pending due to us both being unemployed (at present, but not for long I hope it is driving us both mad))

 

Our cars (x2) are both rust buckets but necessary due to where we live.

We have nothing else of value what so ever, sold long ago.

 

Due to the IT market my husbands lack of job success makes us realise that he really needs to get additional training/qualification to return to work - this is also a necessity as without it he won't be able to return to work. Me - I'll take anything that is available.

 

How would bankrupcy work for us, as we are both unemployed at the moment. We have 3 children at home. But we want to get rid of the house, it is too large and the bills are too high for us now.

 

How would it work. If we sold quickly (obviously not realising the same price as if we waited, but we do not have that option available any more). Paid back our elderly parents and settled finances with new landlord. How would the courts take it if we then filled for bankrupcy. There wouldn't be any new cars, boats, holidays. Just repaying parents and paying rent up front.

 

We need to get a grip and get this behind us. No debts are secured on the property. For the last 2 years we haven't been anyway - not even to the beach. I want to able to drive my kiddies to the beach and not have to worry about the cost of petrol. The last holiday we had was 3 years ago, 4 days camping in Lincolnshire. We have really had enough.

 

Or we could file for bankrupcy whilst still in the property but then we wouldn't have any funds to pay a deposit on rented, pay elderly parents back - nothing.

 

Advice would be very, very welcome.

 

Lisa:(

[newstarter]

Can i ask ,what is your mortgage payment per month and how much do your outgoings total please.Are there any arears on the mortgage,and are the other debts secured or unsecured.

[newstarter]

Right i have read through your post.Your outstanding debts are 50k .im assuming you have an agreement to pay this off monthly,then there is the mortgage on top,at the moment you are both currently out of work so im guessing you are both short of cash,and you owe your parents money.Im also assuming there may be arrears on your mortgage as you say you dont have time to sell the property on the open market.

[newstarter]

From the info you have posted it also looks like there is 30-40k equity in your property so there is cash there,its just tied up in bricks and mortar.

[loobyloo85]

Hi there

 

Yes, if you are out of work at the moment, and any benefits received does not leave you with any disposable income at the end of the month to pay into any payment plans, bankruptcy may be a good option for you to go down.

 

Your cars would be looked into, but generally if they are worth less than around £2K the OR would not touch them, as it would not be worth their while.

 

Your property would need to be declared to the OR, and this may be at risk, especially if you have equity. You can appeal to keep your property but this is ultimately down to the OR.

 

You would need to find the upfront cost to bankruptcy though of £600, and with you having no disposable income your bankruptcy should not last any more than 12 months. If you are on benefits though, you can claim court fees back, in the end costing you less than the £600.

 

Please remember though, depending on your ages, that bankruptcy can carry a stigma attached to it, such as it can affect future credit and occupations.

 

Thank you, and hope this helps x

[mammalisa]

Correct. There is, at a push, 30k equity in the property. Our mortgage at the moment is on interest only so very low payments. There is no arrears at the moment, but that is the only debt that is not in arrears. I say we do not have time for sale on the open market because it is only a matter of time before one (or more) of our creditors lay claim to the property. Also we do not have time for a normal sale, if it fell through we would be well and truely stuffed.

 

All other debts are unsecured. Which I suppose is some kind of good luck.

[newstarter]

Loobyloo 85,some excellent advice there,i had not got that far yet as reading between the lines im not sure they would have the 600 up front,just hope they post some more info soon.

[mammalisa]

I know there is stigma attached to bankrupcy, but what really concerns us is whether this would affect my husbands career prospects. He is an IT consultant, whilst he does not work in financial institutions, we are obviously concerned that this would close doors to him.

 

But with our debts at the level they are, and us both being out of work I really do not see any other option.

[mammalisa]

Loobyloo 85,some excellent advice there,i had not got that far yet as reading between the lines im not sure they would have the 600 up front,just hope they post some more info soon.

 

You are right, we do not have the 600 up front payment. But if we sold the house quickly then we would. Also we do not have the deposit for a private rental unless we sell the house.

 

Yes our current interest only mortgage is less that what private rent would be, but what we really do not want to happen is for our property to be taken away from us, us still left with outstanding debts and never getting out of this hole.

 

We need, somehow, to wipe the slate or we are just going to keep going round and round like a goldfish.

[newstarter]

Right,just read your post thanks for the reply. So your mortgage payment is low and your other debts are unsecured.Now,i like many others on this site have come through money problems just as you find yourself in now.The first thing i need to know is why has your husband been out of work for 18 months as an I.T consultant,couldnt he take anything for now,as some money comming in is better than none,i even did fruit picking for a few months to bring in cash.What im getting at here is some job is better than no job,when we were in your position i took on anything at the time.

[newstarter]

With 2 of you working even in low paid jobs,add to that tax credits and working tax credits and maybe a council tax reduction,you would have no need to go down the bankrupcy route,at the moment it may seem like the answer to your problems but its not a one size fits all soloution.I would not advise anyone to go bankrupt,only as a last resort.If all your other debts are unsecured the worst that can happen is they may put a charge on your property,your home would still be safe.

[newstarter]

My advice to you would be this,to the both of you take any employment available for now,golden opertunities happen once in a blue moon you cannot afford to sit around and wait for them.Most caggers on this site have been through or are going through situations not unlike yourselves.so we know what your going through and how worrying it is.We know what its like to scrimp and not save,one step forward two back and so forth.But think about it,even two low paid jobs for now until something better comes along would bring you in what,1600-2000 a month,with benefits you could add on another,what another 600.Thtas the way we got out of our mess by doing exactly as above.What i think your looking for is an easy way out and there isnt one,just read through some of the threads on this site,some are just a few days away from eviction!!! Your just a normal familly finding the going tough at the moment,yes you have debts and yes there are concerns but you have to help yourselves too ie your husband sitting on his backside for 18 months would not have helped and believe me i would have told him so.So,take any work you can,keep your home and claim some benefits to top upand above all stop feeling so sorry for yourselves.

[mammalisa]

Right,just read your post thanks for the reply. So your mortgage payment is low and your other debts are unsecured.Now,i like many others on this site have come through money problems just as you find yourself in now.The first thing i need to know is why has your husband been out of work for 18 months as an I.T consultant,couldnt he take anything for now,as some money comming in is better than none,i even did fruit picking for a few months to bring in cash.What im getting at here is some job is better than no job,when we were in your position i took at the time.

 

If you saw the list of jobs that we have applied for jointly it would block your toilet - because that is all they are worth. The reason he has been out of work is the fact that most major companies cancelled projects and the ones that didnt hired consultancies that operate IOT (inter office transfers) and got all their consultants in from India. Good for them but very bad for consultants over here and believe me there are thousands in the same position as us. He has been applying for jobs right across the board from yes fruit picking to dustman, but there is nothing available here. He is applying for jobs anywhere, and I do mean anywhere from the Uk to Abu Dhabi, no matter what the salary. We have one of the highest populations of immigrants that anywhere else. All the manual jobs are long gone. Plus they have already said to him that they wouldnt employ him because they think as soon as something comes along in IT he will be off.

[newstarter]

Mmmm i think i know were your based, and it must be tough this is where the open door policy to immigration falls down,problem is when you bring up that kind of subject your labelled racist,its almost as if the politicians redefined the word to mean any statement which does not go along with their open door programme.Anyway im going off subject look, i really wouldnt give up like your thinking of doing .Before you loose everything and go bankrupt and have to start from square one again,just take another look at your options,for example have you thought about the mortgage scheme with your local council,where they buy from you and you rent back with the buy back option later down the line?

[newstarter]

Sorry,mortgage rescue scheme.

[mammalisa]

My advice to you would be this,to the both of you take any employment available for now,golden opertunities happen once in a blue moon you cannot afford to sit around and wait for them.Most caggers on this site have been through or are going through situations not unlike yourselves.so we know what your going through and how worrying it is.We know what its like to scrimp and not save,one step forward two back and so forth.But think about it,even two low paid jobs for now until something better comes along would bring you in what,1600-2000 a month,with benefits you could add on another,what another 600.Thtas the way we got out of our mess by doing exactly as above.What i think your looking for is an easy way out and there isnt one,just read through some of the threads on this site,some are just a few days away from eviction!!! Your just a normal familly finding the going tough at the moment,yes you have debts and yes there are concerns but you have to help yourselves too ie your husband sitting on his backside for 18 months would not have helped and believe me i would have told him so.So,take any work you can,keep your home and claim some benefits to top upand above all stop feeling so sorry for yourselves.

 

New Starter - I will be polite here.

 

Yes we are a normal family finding things tough. Agreed. We are also a normal family that have been finding things tough for many, many years. Our repayment plans were started years ago. This is no recent thing believe me. So I do take it personally when you make it sound like we are just trying to find the easy way out and sitting on our butts. We have had agreements, we have made dents in our debts, we have scrimped and scraped. We have been on an interest only mortgage for the last 4 years. We have another 12 years on a mortgage that there is no way we will be able to repay in that term.

 

Also, you may think we are feeling sorry for ourselves. Actually we are not. We have discussed amongst ourselves and professionals what our best option was on many occasions. We always keep up beat and positive. We turn negatives into positives.

 

We live in a property that needs work. The render on the chimneys are falling off into our neighbours garden (it is a very big, high chimneys) this needs doing urgently. Because of the height of the chimney you need scaffolding. The job has been priced up by 4 different companies and will cost in the region of 3,500. And before you ask no we couldnt do it ourselves! It is not covered by insurance, we had it checked out. What would the claim be against us if our neighbours had a 6ft chunk of render land in their lounge! We recently had a new boiler fitted by Warmstart (luckily we qualified) the last quarters bills April) were on the old 25 year old boiler, gas and electric came to over £840. A friend stepped in and paid those for us. It is high council tax band due to the size. The property is a total money drain for anyone. It is a beautiful house and the decision to part company with it was not one taken lightly believe me. ?We cannot afford to live in it anymore.

 

We havent decided definately on bankrupcy but it is an option that we must consider. The mortgage repayments (interest only) a few years ago was over 800, obviously it is not that at the moment but it is only a matter of time until the rates do start going up again, then we are stuck.

 

Quite a few times I have contacted the CCCS amongst others, and most of them stated that Bankrupcy is certainly worth consideration in our circumstances. We always refused to even discuss it. Bankrupcy was, at all times, something that we really did not want to happen. However situations do change.

 

So we are not feeling sorry for ourselves whilst sitting on our backsides. We are just realists and look at all the possible options. Including ones that have been tried in the past. However, there does come a time when sometimes you have to take a deep breath and put your hands in the air and move on. Whilst we havent quite got to that stage, we are certainly aware of it.

 

I actually posted my message on here in case someone could actually offer some points, tips or advice. So suggestions to get off our butts and stop feeling sorry for ourselves was not only incorrect it was not very helpful.

[Papa_Smurf]

According to what I've read on this website you could pay £1 per month to each of your creditors while you're unemployed. Someone more knowledgable might correct me but I don't think the creditors can go after more than the quid a month while you're on benefits and a court would only make you pay a pound a month. Therefore the creditors probably wouldn't go near a court at the moment.

 

At least this might buy some time. I know from my own experience there's enough to worry about while being unemployed without having to deal with debts.

 

When you're working again you could consider setting up another debt management plan or go for bankruptcy. If it was me I would hold out for as long as possible before bankruptcy.

 

Just my thoughts.

[newstarter]

Thanks for the post and all of the info,whilst i do agree with papa smurf i would hold out as long as i could before going bankrupt,if you are considering going down that route (i know i wouldnt) then the first thing you need to think about is getting the 600 up front for a start.Maybe you could borrow a percentage of it and add the rest yourselves to get the ball rolling.Secondly,your house,im guessing that the O.R would probobly make an order for sale,there are companys out there which do buy properties which would offer you a quick sale although you would only get around 75% of its true value which would cancel out any equity you have.Therefore i would let it go under the bankrupcy order.At least that way you stand a chance of getting a fair price,any money left over of course would go to paying your creditors.There is a good chance here that some of these debts would be written off,or full and final offers would be made by the O.R either way i would think your looking at 2 years minimun before you are discharged with slate wiped clean.I would look at finding rental accomodation before you set things in motion as most agents would not go near anyone who is under a bankrupcy order so do this first,sort out rental accomodation,make sure you have a roof over your head for a start,then pay your 600 and let the order take its course.

[newstarter]

As a final thought i wouldnt file while still in the house ,you are at the mercy of the OR and could find yourself without a place to live.Als remember that your court costs will be covered because you are both on benefits this will help to cushion the expence somewhat.The problem is of course finding all this money for down payment of rent and bankrupcy costs which you dont have at the moment,if you can somehow get that money together then,if theres no alternative go for it,but just lay the groundwork before you do.

[newstarter]

Regarding the stigma of bankrupcy and and its concequences for your husband i wouldnt worry too much about that side of things ,its not what it used to be,just take a look at how many small companies have gone down this route,wiped off their debts then started again.I wouldnt be duly concerned with this aspect,sorry if i was a little harsh or sounded insensitive,but try not to give up too easily,you may regret it,thik long and hard before taking this path.

[mammalisa]

Papa Smurf, that is very interesting, I will certainly look into that one this morning!

 

New Starter - We will think long and hard about any decision we make. We were not looking for the easy way out at all. We will be getting advice regarding all options before any decision is made.

 

Thanks

 

Lisa

[newstarter]

Just a quick thought here,have you thought of speaking to your mortgage lender and your other creditors about deferring payments for 12 months, i helped someone do this a short time ago and it did work if you could negotiate a 12 month payment holiday from your creditors this would give you some breathing space.If you explained the situation to them they maybe prepared to accept the fact that at the moment there is no money available.The upshot here is that this option would take the pressure off you,and your creditors would still have the chance of recieving payment in the future,this happens more frequently than you may think i was surprised when i first looked into it for a friend of mine.

[mammalisa]

That is an idea. Don't know if Lloyds will accept though, they have been a pain. I think I will write today to all of them and see what happens. Certainly take the pressure off for a while.

[newstarter]

Yes,i have had past history with Lloyds,however the mortgage protocol issued by the F.S.A to which all lenders are bound by states that all options should be explored before any action takes place,they would have to consider it Lisa,any county court judge would take a dim view of a lender if they had not followed protocol.As for your other creditors just the mention of bankrupcy in my view would be enough to hold them off for 12 months.As i said i helped a friend do this and it was the case that all the creditors agreed as it was for them making the best of a bad situation.

[mammalisa]

What worries me is that if we contact the creditors and ask for a 12 month break due to unemployment and our other option would be to consider bankrupcy, I would be scared that they would panic and put a charge on the house or something. We have really tried hard to stop any charges going on and pretty much always managed to pay them something.

 

/But as you say, with a 12 month holiday at least they may actually start getting payments again, where as with bankrupcy they wouldn't.

 

UUmmmmm food for thought.