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I think I need to bankrupt myself. Desperate lone parent. Advice please.

(28 Posts)
pylonic Mon 07-Jan-13 22:04:08

My financial situation has hit rock bottom and will begin burrowing under the seabed if I let it contshavings I feel having exhausted all avenues I only have one choice left. Bankruptcy.

However, would I be eligible? I am a single parent with two children aged 5.5 and 3.5, I intend to start work this Autumn when my youngest starts school, but the last 3 years particularly have seen me gain debt and eviction at an horrific rate of knots.

The debt is all past utility bills arrears and the social fund loans I have taken out over the last 5 years to pay for deposit/rent advances. I don't have any catalogue, etc debts, no current rent arrears. I don't smoke, drink, socialise, drive, holiday, have satellite tele or other luxuries.

I have £28 in my bank, am right up to my £500 overdraft limit, have no savings left now after Christmas and no credit facility to take out consolidation loans or whatever they're called.

All my debts are currently deducted from my income support before it's paid into my bank leaving me £22 a week for the foreseeable future, although Imdo receive child tax credit and child benefit.

Their father pretends he doesn't work and so only pays £2.50 a week maintenance.

I have sold virtually everything I can on eBay to raise cash.

Anytime benefits are paid in, because money is auto deducted, the debts are being paid off regularly but it's going to take several years at this rate, so it always feels like one step forwards two steps back. I just can't seem to get the overdraw status down no matter what I do. I just want to be able to get back in the black and have a 2 or £300 healthy balance in my current account again so I can actually start budgeting. But I can't even budget because it's pointless, there's nothing in there to budget with.

As I will never get credit in the future anyway, being bankrupted and the blacklisting that entails isn't significant to me, but it's the only way I can think of to shift the heavy debt once and for all and start from scratch. The burden of it is killing me to the point I am struggling to cope mentally.

Can anyone please advise me if I could be eligible to be become bankrupt and who I should go to if so, ie to my bank or to a solicitor?

Thank you in advance.

FamiliesShareGerms Mon 07-Jan-13 22:10:27

I don't know the answer to your question, but have you been to the Citizens Advice Bureau for some proper advice? Eg to help reduce your debt repayments so that you have more cash to help you get back into the black?

HugAndRoll Mon 07-Jan-13 22:18:16

You have to pay to become bankrupt and its not a quick fix situation.

I would contact cccs (now called step change I think) and ask them to do a financial declaration with you. They will also renegotiate with your creditors so your payments are more affordable. I would also open a new basic bank account to have your money paid into which doesn't have an overdraft facility etc.

Are you receiving all benefits you are entitled to? CAB can help with that by ime (through my line of work) they're not great at debt help.

CogitoErgoSometimes Mon 07-Jan-13 22:36:18

You should contact one of the free debt advisory services.... CAB, CCCS or National Debtline and get some information. If you've no realistic chance of paying back the debts, no income & no assets then you may find bankruptcy is the best way forward. But the debt advisory people will walk you through the options available and give you the pros and cons of each one. Good luck

WeAreEternal Mon 07-Jan-13 22:53:10

I don’t have any practical advice but I do have a friend that was in a similar situation to you last year.
She owed several thousand pounds in utility debts and bank charges (no loans, credit cards or store cards, ETC, not borrowed money just unpaid bills)

She was basically screwed, she had already had loans from the job centre and because of the massive utility arrears her gas/electricity payments were being taken direct from her benefits (agreeing to this was the only way they would not cut off her supply. Even with two small kids) their rate was extortionate, £35 per week to cover usage and minimum repayments of the debt. With that plus the repayments for the crisis loan she had she was only receiving £15 per week in benefits (plus CB and tax benefit)
She was really struggling, she couldn’t afford to eat properly or heat her house, she could barely afford to live, I felt so sorry for her.
After nearly a year of living in poverty she eventually decided she couldn’t cope anymore and bankruptcy was her only option and went to CAB to discuss it. They recommended a partial bankruptcy for her and she took it, she was even able to get the fee waved because of the dire situation.
Everything worked out for her and she is now much happier and in a really good place.

I really think your best bet is to go and speak to CAB they will tell you everything that you need to know.

Good luck

pylonic Mon 07-Jan-13 22:57:15

CAB were unable to offer any advice I haven't already tried.

Social Fund loans are non negotiable they are being paid back at the minimum rate as it is, along with an overpayment of housing benefit, and again with the utility debts, all minimum repayments, I can't negotiate any lower.

Meanwhile I have no cash to start paying the current set of utility bills that are stacking up since I moved here 3 months ago.

I am not looking at bankruptcy as a quick fix at all, I have thought long and hard about it. It seems like my only choice. I just cannot escape from this one step forward two steps back scenario :/ The stress of it on top of other significantly problems I have with a contact/custody case and school admission is just getting too much for me to deal with any longer, I feel like getting my children and running away from everything, something I have form for, not since having children, but Imwas certainly a bolter in my 20s for running away from problems.

pylonic Mon 07-Jan-13 23:05:02

WeAreEternal thank you your friend's situation does sound exactly like mine, to the letter in fact, even the part about the extortionate rates the utility companies are charging me.

I will try CAB again, perhaps a different volunteer may have more experience and advice to offer me this time.

My situation is just worsening on a daily basis, I need to do something quickly.

Loquace Mon 07-Jan-13 23:09:30

Love, try this forum they have all sorts of issue specific experts posting there and a wealth of BTDT posters.

That lot should be able to help you work out the ifs, buts and hows.

Avuncular Mon 07-Jan-13 23:27:58

I once worked as a co-ordinator / first port of call for a Christian debt advice charity. Did the DA training but won't offer any advice here.

However you might ask around for local alternatives to CAB. Other charities might help / guide you through the immediate sticky patch.

If all else fails phone The Willows in Swindon; they may have links with similar organisations in your part of the country, and may be able to give you some 'first aid' advice.

RedHelenB Tue 08-Jan-13 07:22:20

If it's less than 15,000 & you don't own your own home or have other assets it's a Debt Reklief Order that you want.

keli5325 Tue 08-Jan-13 09:42:46

It does sound like you meet the criteria for a DRO

To apply for a Debt Relief Order as opposed to bankruptcy, you must be unable to pay your debts and meet clearly defined criteria including:

Live in England or Wales or in the last 3 years have been resident or carrying on business in England and Wales
Total value of unsecured debt is less than £15,000
Monthly disposable income of less than £50
Gross value of assets less than £300
If a car is owned then it must be worth less than £1000 (exemptions include trade vehicles or vehicles adapted for physical impairment)
Must not have applied for a Debt Relief Order within the last 6 years
Must not be currently involved in some other insolvency procedure(including; bankruptcy itself, an Individual Voluntary Arrangement, or another Debt Relief Order)

Have a chat to PayPlan on 0800 2802816

onadifferentplanet Tue 08-Jan-13 11:40:32

Do you live in a HA property ? When I had some problems last year I contacted their financial advice team and a really nice helpful and totally non judgemental man came to visit me gave me lots of advice and contacted people on my behalf.

pylonic Tue 08-Jan-13 18:09:56

Thank you I'll look into the debt relief order.

No, I live in private rented housing.

pylonic Tue 08-Jan-13 18:13:49

I'll look into,the debt relief order thank you.

No, I live in private rented.

analisa Tue 08-Jan-13 23:12:33

Speak to your bank asap. They should be able to put you through to dept for people in financial difficulty. bankruptcy bad option. good luck

pylonic Wed 09-Jan-13 00:37:53

Thank you everyone. I've spent the evening researching the debt relief order and it seems a viable option for me, which I can hopefully start proceedings with in the next few days.

ShiningBright Wed 09-Jan-13 21:04:31

I really want to share my experience with you. Bankrupcy was the best thing I ever did. I didn't own my own home and the only reason I delayed so long was that I was a company director until I had DS. (My debts were personal, not business). Then I had to dissolve the company so it no longer mattered. I was even allowed to keep my car because I lived out of town. It was really painless and it was ended in less than a year. I am free from all debts and gradually rebuilding my credit rating just in case I ever get the opportunity to buy my home.

I don't know your situation, but do take advice and make sure its free from a charity, or the like, not a company that wants to make money from you.

BTW, why the partial bankrupcy? If pride has anything to do with it, don't let that stop you from wiping the slate clean. If you're anything like me, your mental health will thank you for it and then you can take better control in future.

expatinscotland Wed 09-Jan-13 21:14:26

Get onto the bankrupcy forum on MoneySavingExpert's site. Excellent, free advice there and no judging.

RedHelenB Thu 10-Jan-13 08:17:47

A DRO does completely wipe your debts & it's cheaper & simpler to do. Remember as a bankrupt that you have to declare it for life - it is a big undertaking & really should be a last resort.

MadamGazelleIsMyMum Thu 10-Jan-13 08:21:16

OP please feel free to PM me if you need to - am a solicitor specialising in this area and would be happy to help. Otherwise, CCCS are excellent and free. There is a solution, but take some time to find the correct one for you and which you fully understand, both practically how to achieve it, and also what the consequences of any decision will be.

platesofcheese Thu 10-Jan-13 12:25:30

I've went bankrupt a few years ago, was also a LP so I know where you're coming from. It still has quite a stigma in general society but in practical legal terms I've found it's been fine. I was still able to use a bank account, I could keep my car and domestic belongings and I could continue to work. Almost all professions no longer have restrictions against bankrupts after discharge (which happens after a year) - you can even work in law or accountancy now. I had a lot more disposable income after my bankruptcy as I was no longer servicing those debts. Due to my income I wasn't required to pay out anything to my creditors, it was all written off. If you have surplus income, you may be required to pay that to creditors for three years - that may be tricky once you start work, as it means that any extra money you get from being in work might just go towards the payments. If you're on benefits/tax credits with no other income, you won't have to pay anything.

It's true you have to declare it for the rest of your life, but there are very few cases where anyone will ask tbh. For some reason some home insurance providers ask about it, but if you look online there are some good companies which don't ask so I just stick to those. One way it might affect you is that some landlords carry out a credit check, so if you need to find a new private rental that may be difficult. If you think you might have to move in the near future, it's best to get that out the way before declaring, so you can pass the credit check. Also, I think Social Fund loans are exempt from bankruptcy now, so they won't be written off. If you have any student loans, they also don't get written off.

The actual process was quite simple. I am in London so I went to the High Court to declare. No appointments needed, all the paperwork sorted in a day, then a one hour telephone interview a few weeks later. I didn't have to deal with any of my creditors, my OR got in touch with them. All the staff I dealt with were really helpful and non-judgemental - you are more likely to face judgy attitudes from casual acquaintances than anyone you'll deal with officially. I just didn't tell most people, even my siblings don't know. It is listed in the London Gazette paper/website, but most people won't be reading that! And now it's fallen off my credit record (after six years) I've been able to put it all behind me. It's quite hard to search for it online as the results can't be found via Google as well. As far as I'm concerned it's part of a difficult period in my past but it has virtually no impact on my current life.

I used CCCS who were excellent - they have been renamed Stepchange now. I didn't find the CAB that helpful, as their advisor wasn't a specialist and also our local CAB is in so much demand it was hard to organise appointments and get hold of an advisor. I expect that's even more true now there have been so many cutbacks.

pylonic Fri 18-Jan-13 16:22:06

Thankyou everyone. I have an appt with tje CAB next week (and you're right, boy are they busy).

SortingItOut Wed 23-Jan-13 16:41:40

Any debt owed to DWP for a social fund loan is not included in a DRO (the rules changed last year as so many people had included them and the cynical me thinks the Government did not like it so changed the rules)

I am not sure why you are paying utility debts via your benefits and not paying your current.

Utility debts are only allowed to be taken from your benefits for the property you currently live at - your old supplier won't tell the DWP because they want your money but you can so ring your local office and ask for a call back from Third Party Deductions and tell them.

Then if you are not able to budget for your current utility bills you could have direct deductions for them.

DoodlesNoodles Wed 23-Jan-13 23:44:28

Stepchange Debt Charity

JpFinance Wed 25-Jun-14 03:04:51

Message deleted by MNHQ. Here's a link to our Talk Guidelines.

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