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Advice needed: Where to go now?


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Hi,

I have been in debt - living with debt management plans etc. for years. Feel like it just goes around in circles... It was 2007 after splitting up with a long term partner and moving out of our house when my debt spiralled out of control - the same week, I lost my job and company car and spent a few months out of work.

Our house was sold but made a slight loss with the early repayment fee we had to pay in order to be released from the mortgage. We had a joint loan of around £20,000 (including interest) with my bank which after a few months my ex-partner decided he was not going to pay his part for anymore. I got debt advice and set up a debt management plan with a company who I later realised were making a fortune out of my situation. I applied for an IVA (August 2008 ) which was rejected by my creditors as they felt my offer was unsustainable (if I offered any less it did not pay a high enough % over 6 yrs). I went onto another debt management plan via a free D.M Co. for around 15 months.

Earlier this year I was made redundant and decided to work for myself offering freelance admin services so am now self employed. I contacted CAB who worked out what I could afford to pay into an IVA and recommended I try applying again. My details were passed onto a specialist co. who work out your projected income etc. (due to the self employment) but at the final stages I rejected the proposal based on the increased payment they said I should make...

I am married to my new partner (we have been together since the end of 2007) - ALL of my debts were accrued prior to us meeting, whilst going through the IVA application and sending in all of my details / info requested I was told I had to prove my partners income and all expenses etc. I queried this at the time because my debt is 100% mine (and some of it my ex-partners), certainly not my husbands. I was told it was to prove that he isn't a pilot or other profession that would earn a huge salary - he isn't, he is on an average salary and just about manages his living costs each month as do most people.

The company the CAB passed my details to increased my surplus income to 3 times that amount the CAB calculated on the basis that my husband should pay more towards our joint living costs (rent etc) as he earns more than me!!

I'm not prepared to make him suffer any more than the fact I have never got any money - why should he pay more because of my past?? I have always paid 50% of our living costs and always will.

I rang the CAB back who after I got quite upset agreed that my situation has been like this for way too long - going round and round in circles but not really getting anywhere... They adv I should seriously consider bankruptcy - if I can find the money to petition...

I wrote to my creditors in August 2010 offering £1 per mth for time being (so I could save money for bankruptcy) - 3 of them accepted but only for 1-3 months - I'm being chased again daily by majority of them and don't know what to do next... I am earning around £1150 per month which after all costs leaves me with around £90 - if I offer them this amount I will never be able to petition for my bankruptcy, it will take me a good 6 months to save enough money - I'm sure they will have already taken further action by then...

My total debt is apx £43,000 (including my ex-partners - he hasn't paid anything for 2-3 yrs now) - I am living in a rented house, use my husband's car and have no assets or nothing of value I could sell!

Sorry to start with such an essay! Hope someone is able to offer some advice..

Thanks

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Hi there.

 

Firstly, so what if the creditors take further action? All they can do is issue a county court claim form, which is a paper exercise if you owe the money. The courts will allow you to pay the judgment at a rate that you can afford - so you should continue to save up for the bankruptcy deposit. It is clear that you've tried lots of different options to get your situation straight. I don't think an IVA is the right route to take if your income fluctuates, as it could fail. As you have no assets you are in a good position to consider the bankruptcy route but be aware that the official reciever may ask for a household breakdown when deciding if an Income Payments Arrangement should be enforced.

 

The alternative option is to consider challenging the legality of your debts, if you have any mis-sold PPI you could try and reclaim it. These ideas take time, I'm not sure if you simply wis hto try and reach theligh at the end of the tunnel - or if you're up for the challenge?!

 

If you do go bankrupt your ex-partner will most certainly be chased again.

 

Best wishes,

 

Seq.

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Becky,

I can totally empathise with your situation. Firstly can I say well done for doing something about this now, that's the hardest step. I too have visited CAB and bankruptcy is the inevitable final outcome. So what have I done?

 

The first thing and major thing for me was to get my head around being made bankrupt and that this is not the end of the world. Quite the opposite in fact, it gives you a nice clean state to start again, with the knowledge from your past not to make certain mistakes again. The second thing I did was get my credit report so I knew exactly what I owed and to whom? Third, stopped paying any non essential debts - make sure you pay the essential ones! Fourthly did an I/E sheet and then wrote to all my creditors asking them to write off the debts due to my extreme hardship and lack of any assets.

 

That's where I am at the moment - what's the point in paying all those £1.00's when you don't need to. Several have written back saying they've written off the debts as they can presumably see they can't get blood out of a stone. The others I'm still waiting for responses from.

 

The final thing that CAB advised me was as long as I could cope with the letters coming through the door from DCA's, just wait until someone makes you bankrupt. There are two benefits to this. Firstly that they pay for it, not you and secondly they may well not do it. I've so far asked about 6 or 7 companies to make me bankrupt - it really backfoots them, it's the last thing they're expecting the customer to say and the last thing they want as they not only get nothing, but lose money if they have to pay out to make you bankrupt.

 

Having got my head round these things I am more relaxed now than I have been in 25 years of being in debt.

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The final thing that CAB advised me was as long as I could cope with the letters coming through the door from DCA's, just wait until someone makes you bankrupt. There are two benefits to this. Firstly that they pay for it, not you and secondly they may well not do it. I've so far asked about 6 or 7 companies to make me bankrupt - it really backfoots them, it's the last thing they're expecting the customer to say and the last thing they want as they not only get nothing, but lose money if they have to pay out to make you bankrupt.

 

It's a great tool to use against a creditor, as you say it really backfoots them. The problem is that creditors very seldom make people bankrupt unless they know that they'll get a return. So, if you're in rented accommodation they are likely to use the traditional county court judgment route instead.

 

I love your approach though. With these 'non-priority' creditors their bark is FAR WORSE than their bite. All they can do is either ask for the money (hence the calls and letters) or use legal action - which invariably results in a court order asking the debtor to pay token payments - often £1 per month. There isn't much else that can happen :)

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Absolutely right! And the normal rule of don't speak on the phone doesn't apply as you let them ramble on then tell them your glad they called and please will they make you bankrupt as it would relieve you of a lot of stress. They're gobsmacked! Letters - ignore. Let them take you to court, what will a judge do? Even the HMC website encourages creditors NOT to take proceedings against people where they know they can't pay. They will to trash your credit record, but the judge will only make you pay what you can afford. That's when a well filled IE sheet comes in making sure you know what the courts allowances are for a person in your situation for each category.

 

Relax! Let them get on with it!

 

ps If they do take you to court, make sure you turn up!

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