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Why is it best NOT to threaten bankruptcy?


My Way
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As a newcomer I have just read through a good portion of a thread sharing the inner workings of DCA's. In one post the former employee suggested that to threaten bankruptcy was not a good idea but as the thread is closed I'm unable to ask why. My circumstances are that following a business liquidation I am challenged like many on here. Most of my standard consumer debt is managable with the understanding of lenders whom I maintain regular dialogue with. However, the former business bankers are pursuing a large sum based on Personal Guarantee regrettably signed. Without their willingness to consider some negotiation on the amount I am in no position to even consider repayment options sensibly and although I'd prefer to avoid bankruptcy it does seem like the only way forward. In that event the bank would get nothing which is why I would hope they would at least consider an alternative of x pence in the pound. Can anyone enlighten me though as to why this step might not be the right one to take. As I said at the start -an old thread from a DCA insider alluded that it might not be. Any help appreciated.

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Hi My Way and welcome to CAG.

 

A good idea from whose perspective?

 

For a DCA to threaten bankruptcy if you have no assets would not maximise their profits.

 

For you to threaten it is an extreme step and there is more than one way of skinning a cat.

 

What is your underlying concern?

 

Best wishes

 

vic

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Thanks for responding - my underying concern is one of wishing to bring some sense of a way forward. Another part of the same bank has already had a CCJ granted albeit this will be subject to a challenge based on process and value claimed. I'm trying to avoid just rolling over and having the process manage me. The house has very little equity in it so I can't really see the sense in any creditor pursuing CCJ - Enforcement - Bankruptcy. Equally I can't really see a way where I am going to be able to come up with any sensible repayment plan for the Personal Guarantee amount that is being pursued by the bank.

Whilst I have no desire to shirk legitimate debt this particular claim is riddled with issues that I probably have no legal defence against so it feels like my best option is to try and negotiate on the principle and then agree payment plan that is linked to circumstances. However, if they hold firm on the principle then I can see no way in my lifetime of meeting the obligation. Hope that makes sense and thanks again for all input.

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OK May Way

 

First, you can't pay more than you can afford on a sustainable basis.

 

Second, a CCJ is only 'enforced' if you don't comply with its terms and it doesn't equal bankruptcy.

 

A 'sensible repayment plan' is what you can afford; if that's a few quid so be it. Don't play their cards for them and don't assume the worst.

 

You could revisit all your alleged debts to see where you might challenge PPI and charges etc - see all the threads here.

 

If you want to make yourself bankrupt, then that's a different matter, but you should take some advice first: CAB, National Debtline and CCS are all free.

 

Please do ask whatever you like - and read the forum - there is a lot of advice and support here.

 

best wishes

 

vic

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Hi

 

An indication that you are considering the option of bankrupcy often focuses the mind of the creditor when they are considering your offer of payment or reduced settlement, particularly if they are aware that you have no assets (National Debtline gave me this advice ages ago).

 

Never agree to pay anyone more than you can reasonably afford and check out the agreement that this is based on before negociating a settlement.

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At the moment they are accepting token payments but I'm struggling to see what my incentive is to earn more as it feels as though whatever I earn over and above will forever be subject to this bank forcing their claim under the Personal Guarantee. Alternatively if I can get them to agree to a sensible amount and as Coledog notes -I'm hoping that by exposing them to the possibility of this course of action (me going bankrupt) they'll open their eyes and see sense.

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Take some advice about bankruptcy and the consequences first before you start threatening to do this. You never know this might force them to take other enforcement action (if they can) to get the first bite on any money/equity available.

 

Bankruptcy can cause difficulty with all sorts of financial and personal dealings, including being able to rent a house. There are some occupations, where it can also affect employment.

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Agree with Unclebulgaria. Get all the facts including what counts as assets - Life Insurance, some pensions etc as the bank will be aware of anything they could grab. Make them aware of your situation but you do not have to supply them with any personal details as they have no right to see this.

 

Also, understand and challenge exactly what it is they are expecting you to pay. Have you looked at whether there is anything in the claim that you can dispute?

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I'm not sure there's anything about the claim I can dispute -I have the standard PG document that I signed but dont know if it can be challenged. Like many others on here it was all signed last minute and presented late by the bank who by then knew I had no choice -none of which cuts any mustard it seems. Bottom line is I have no assets for the bank to go after but I'd like to negotiate soemthing rather than have it hang over me for the rest of my life.

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I have a relative who had a £30k debt with a bank, with very little in the way of assets. They were able to borrow about £3k from another relative to make a full and final settlement offer, which the bank accepted. From memory the relative had used a solicitor to write to the bank setting out the full financial circumstances and to make the offer. Most creditors would want the letter to come from a solicitor or debt registered charity setting out the situation, rather than take the debtors word for it.

 

It might be worth exploring this as an option.

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