Is Bankruptcy The Solution?

[Desperate1980]

Hello all.

 

I've come here looking for a bit of advice. I recently split up from my long term partner and can no longer afford to meet the minimum payments for my debts and see no way out of the situation. I have written to the majority of my creditors informing them of my situation and inability to pay (asking for a reduced repayment rate and interest / charges freeze) but have had no positive response from any of them.

 

To be honest, even if they did accept reduce payments then I can't see me being to afford the payments or ever paying off the debt I am now being phoned at home, on my mobile and on my work number daily (despite sending them letters to stop doing this) and my life has become a stressful nightmare. I cant sleep and on top of this all am struggling to get access to my child so am in a complete downward spiral.

 

I've read a little about bankruptcy but am struggling to understand the full results / process of becoming bankrupt - obviously it means no credit in the future but trust me this would be a god send! Is bankruptcy a viable option for me to wipe my debts and try and move on with my life?

 

I work full time (claiming no benefits - none available for me) and my current income is just under £20,000 a year before tax (so around £1300 a month into my bank) - I am a member of a of a professional body (and need to be registered each year to maintain my current position - I'm not sure if my ability to register would be affected by bankruptcy? My role is not anything to do with finances etc). Although I am currently full time I am suffering from Rheumatoid Disease so becoming part time may be a necessity in the future.

 

My current debts are:

 

Shop direct (Very, K and Co, Woolworths, ISME) in excess of £7000

Bank Overdrafts (2) £3800

Vanquis £1200

Capital One £600

M&S Money £3000

PayPal £400

Provident £500

Studio £250

 

Current expenses:

Rent: £500

Gas and electric: £100

Overdrafts £80

Broadband and Telephone: £20

Child Maintence £160

TV licence £12

Professional Reg Fee £12

House insurance £15

Council Tax £115

Mobile £90 (two contracts)

Sky (in contract) £45

PayPal debt £40

Provident £54

 

So, after paying the above bills even WITHOUT paying for food, petrol or parking or the minimum payments to Shop Direct (£250+), Vanquis (£100), Capital One (£40). Im left with only £57 every month to survive.

 

I understand that it can cost around £500 to be declared bankrupt but this amount has been promised to me by a close friend if needed (although no more assistance can be given).

[fletch70]

Hi

First off I think you should check if bankruptcy would have any impact on your job or registration.

I suppose the next question is when were the accounts opened or more importantly how many , if any were opened prior to April 2007

 

I would personally talk to national debt line and see what they can say. I am afraid the fees for BR are a bit more , about 720 when you count court costs .

If your debts are below 15000 and your seem just a little over there is a much cheaper and easier option called a debt relief order which is like a mini bankruptcy . That I believe only costs about £90.

I do not know what would happen if you managed to get your debts below 15K , maybe something you could look into

[BRIGADIER2JCS]

BR is not always the proper thing to do, see professional advice.

 

 

Check on Debt Relief Orders this may be applicable in your situation.

[Desperate1980]

Thanks for the reply

 

All were opened / started after 2007. When checking the start dates on my credit file I noticed that M&S was actually 'only' £1200 left remaining and PayPal do not show up on there so I guess my debts are under £15,000.

[BRIGADIER2JCS]

Thanks for the reply

 

All were opened / started after 2007. When checking the start dates on my credit file I noticed that M&S was actually 'only' £1200 left remaining and PayPal do not show up on there so I guess my debts are under £15,000.

CA DRO sounds applicable do some research on it.

[sequenci]

You'll need to include all debts within a DRO application - otherwise those excluded creditors could continue to chase you. It's certainly worth double-checking your balances as a DRO is significantly cheaper. Bankruptcy isn't a difficult process to go through - but the court will have expected you to have sought independent advice prior to petitioning.

[Desperate1980]

Just having a quick look at a DRO, when it states a disposable income of no more then £50 a month after expenses does that mean before or after creditor payments. For example, I included my overdraft charges of £80 a month above as an expense but for the purposes of a DRO would I not include that?

 

Thank you

[sequenci]

You wouldn't include the overdraft charges as the overdraft is a debt which would go in to the DRO. The disposable income is the money you have left once you've listed all essential outgoings such as housing costs, bills, travelling costs, housekeeping, clothing etc. Do consider filling in this budget - it's the one that a DRO intermediary would use:

 

https://www.nationaldebtline.org/EW/steps/step2/Pages/Step_2_11.aspx

[Desperate1980]

Okay, having looked into a DRO and using that spreadsheet from the provided link, it appears that a DRO is not going to be an option for me.

 

I have calculated that my income is £1300 and my out goings (assume that none of my creditors would be receiving a payment) would be 1070 - my landlord has been in touch this afternoon and is willing to accept a reduced rate of rent of £365 per month (down from £500). As such, my disposable income would be £230 which is way above the £50 required for a DMO.