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Anyone experienced becoming bankrupt?

(29 Posts)
babber Thu 02-Jul-09 20:54:24

Hi there, I'm currently seriously considering bankruptcy as a solution to my debt problems, and just wondering if theres anyone who has gone through this who may be able to share their experience. do you regret the decision or did it solve youir problems???

I'm currently receiving SMP, and as a result have been unable to pay all my creditors each month since going on maternity leave... they've all rejected my payment offer of £5 a month whic i could afford and i'm in the process of being taken to court by all of them (8 creditors in total, I have about £19000 of debt). Gettiong really stressed out at trying to deal with all the creditors, Debt managemtn companies etc. would love to just get rid of it all in one go!

I suppose i'm just wondering what the after affects may be... I have no assets so nothing really to lose except my credit rating... one day DP and I hope to get a mortgage but can't see this being any time soon.

please help me decide what to do!!!

SparkleandShine Thu 02-Jul-09 21:00:43

The bankruptcy will stay on your credit record for 6 years - so no credit at all for that time unless at an extortionate rate of interest. (sorry - I used to work for a credit reference agency and calculate credit risks so I know how they work...)

babber Thu 02-Jul-09 21:18:24

Thats not necesaril a problem unless we want a mortgage before that time i suppose...
what about after the 6 years? is oit back to normal?
PS: not interested in ANY kind of credit apart from a mortgage in future. have learned my lesson!

Frizbe Thu 02-Jul-09 21:22:26

Get citizens advice to help you, as from what I remember these companies cannot refuse your minimum payments? they have to agree to take what you can afford to give them, when you're in dire straits. Give them a ring in the morning.

MrsGokWan Thu 02-Jul-09 22:56:51

Your first port of call should be to contact one of the Debt Charities; see links below. Their services are free; they have no vested interest to serve; their advisors are professionally trained and the advice they give will be objective and in your best interests only.

CCCS 0800 138 1111 National Debtline 0808 808 4000 Business Debt Line 0800 197 6026 CAB – Contact your local office and ask to speak to a Specialist Financial Advisor.

The above is taken from the Bankruptcy board of Moneysavingexpert.com. The guys on there will help and support you if one of the debt charities say that bankruptcy is your best option and will answer any questions you have about the process.

Bankruptcy and Living With It

DreamingAboutSleep Thu 02-Jul-09 23:10:09

Hi Babber, I have seriously considered this myself in the past but did speak with the CCCS, who were amazingly helpful and really talked me through my options and as MrsGokWan has already said are completely objective.

They will also go through your income/expenditure and approach your creditors with a reasonable repayment amount (that also leaves you enough to live on). Most creditors will accept an offer of payment from an organisation like the CCCS as they are fair and are believed to be offering a reasonable amount on your behalf, however small.

Bankruptcy is something that will have serious implications for such a long time, on everything, including not being able to hold a current account in your name whilst your bankrupt (you have a to have what is called a "basic" account which allows no other function other than deposit, DD, SO and a cashcard) these days you need a current account for many things including accoutns with basic utility services so it isn't just a mortgage that it may impact on.

I would strongly advise speaking with the CCCS as they were able to really help me during a really difficult financial period, I'm sure they would be able to do the same for you!

MrsGokWan Fri 03-Jul-09 09:57:50

Dreamingaboutsleep, the Co-op Cashminder account enables you to have internet and telephone banking, DD's and SO's, you can make deposits into the account via the Post Office and it comes with a Visa Debit card, the only thing it doesn't have is a cheque book and an overdraft and you can quite happily run your life with those.

The Co-op Cashminder and the Barclays Cash account are the only 2 bankrupt friendly accounts there are.

DreamingAboutSleep Fri 03-Jul-09 16:39:04

Sorry MGW, was talking from experiences a while ago and certainly not meaning to give the impression of having any finacial expertise wink - IME Nationwide also offer this service, however it still is not looked on as a "current account" by many major utility or lending companies and certainly not somthing that should be entered into without lots of consideration.

lou031205 Fri 03-Jul-09 17:10:01

I can second the Co-Op Cashminder account. We filed bankruptcy in Jan '07, DH was discharged in Aug '07, I in October '07. Best thing we ever did.

We haven't had any issues with utility companies, and it honestly hasn't made a difference to our day-to-day life, except that we are able to manage our finances. We are debt free, no overdraft. Wouldn't touch credit with a bargepole.

If you contact CCCS or National Debtline, they will tell you if BR is your best option.

MrsGokWan Fri 03-Jul-09 22:27:07

No worries Dreaming. But I have to say Nationwide are very hit and miss in allowing bankrupts to keep their accounts after their bankruptcy.

Babber hope you are ok and have been able to speak to one of the debt charities. At the moment they are all very busy. You're best bet is National Debtline at the moment though you may have to sit with your finger on the redial button for a while. They are open 9am to 9pm Monday to Friday and 9am to 1pm Saturday.

babber Sat 04-Jul-09 18:29:26

hi there, thanks for tyhe responses and advice...
i have actually been getting advice from the national debtline regarding my payment offers to my creditors. They offered to help me with a debt management plan but i needed to have £100 per month minimum spare for that which i don't have, so i have been dealing with creditors by myself - which is a nightmare!
debtline have been through BR with me, and obviously can't tell me one way or the other what to do but have sort of been hinting that it wouldn't be the end of the world for me... just to make sure i had considred all the implications, which is why i posted on here to see if there may be any i hadn't thought of!

in terms of bank account - well i could have wages etc paid into DP's if necessary... i owe cooperative bank and barclays so not sure if they'd be keen to give me another account once bankrupt!

MrsGokWan Sun 05-Jul-09 00:17:09

So pleased to hear you have taken advice. I think if NDL feel that bankruptcy is an option for you then it is probably the best thing to do.

Co-op won't offer you an account but Barclays most likely will if you want one, but using your DP's account will be fine as well.

WingsTHEangel Sun 05-Jul-09 00:23:41

You can get a post office account if nothing else.

In our case the court contacted our bank and suggested that they allow us to keep our account. (we didn't have overdraft or cheque book anyway)

Utilities are not a problem most will send you payment cards so you can pay cash at post offices or over the counter at some shops.

Do you own your house ? or on the mortgage ?

babber Sun 05-Jul-09 10:23:25

DP mentioned post office account actually so could look into that... TBH bank account least of my worries as i know that wages and child benefit can be paid into DP'sd account if necessary. I trust him to give me some spending money!

We rent our house, i don't have my own business or anything like that, and DP and I have kept our finances seperate, so hopefully he won't be affected personally by the decision. Would be nice for us to be facing a debt free future together... without BR, i can't actually see a time when i won't have it hanging over my head. Planning on going back to work PT so i still won't be earning enough to pay creditors even when i am earning a wage again...

MrsGokWan Sun 05-Jul-09 11:26:50

You won't be able to get a Post Office account as they are for those on benefits.

If all your finances are seperate then you should be fine and have no links. When you are bankrupt it would probably be a good idea for your OH to check all his credit files to make sure there isn't any connection any where.

see here to check your files for free

WingsTHEangel Sun 05-Jul-09 15:24:44

Post office accounts can be opened if you get tax credits and when I looked into it you could have wages paid in too. Maybe need to check that out.

You should be fine if the rent is in his name, they sometimes inform your landlord.

posiedullardparker Sun 05-Jul-09 15:43:54

Your credit will be ruined and this will last a lot longer than six years, according to the CAB counsellor I have spoken with.

She recommended that I write to all my creditors and agreed a small amount a month, I chose £5. Always pay mortgage/rent, utilities, council tax and anyone else who can throw you out or cut you off.

Phone the CAB and get advice.

WingsTHEangel Sun 05-Jul-09 15:51:36

Your bankruptcy will be taken off your credit file after six years.

Some places will give you credit but I guess like I was you don't want credit anyway.

lou031205 Sun 05-Jul-09 19:06:41

"Your credit will be ruined and this will last a lot longer than six years, according to the CAB counsellor I have spoken with."

It really isn't like that any more. It used to be that you were bankrupt for 7 years, then the credit file will be affected for a further 6 years, so 13 years till a clear name, so to speak.

Now, it is 1 year bankruptcy at most, unless you have been incredibly reckless, like taking on substantial debts in the clear demonstrable knowledge that you have no way of paying them, or you spent all your money on gambling, etc.

With regards to life after bankruptcy, if you have learned your lesson, you will never want to touch credit with a barge pole. We have a very modest income now, DH earns just over £14000 pa, and we get more in tax credits than wages, but even still I come out in a cold sweat if our bank balance dips below £150. I can't bear the thought of being in debt again.

If you have a surplus income each month of over £100, you are likely to be asked to contribute via an IPA, which is normally 50% of your excess. However, that is an excess after reasonable living expenses are adjusted for. Much more generous than if you were in an IVA.

posiedullardparker Sun 05-Jul-09 19:28:42

lou I got this information from the CAB this week. She said with the credit crunch going bankrupt is a terrible thing to do, lenders will be very very cautious about lending money to people who have been bankrupt.... this was an avenue I had asked about and she advised not to. Obviously if you don't need to rent anywhere, have a mortgage, overdraft or loan ever again this may be an option. For myself and DH we may want to move house in the next few years and so was not an option.

bohemianbint Sun 05-Jul-09 19:37:12

I went bankrupt 2 years ago. Was discharged in just under a year. I can amazingly still get credit and I got to keep my main bank account and another one which I barely use. I kept my debit card and it didn't impact me at all. Oh, except for when I went for a new mobile but DH did it in his name.

I have recently been given a number of store cards (which I have used and cleared as I have no intention of ever using credit again if I can't afford it.)

Have to say it's the best thing I ever did - but then I had nothing to lose and a lot of debt.

Definitely speak to CCCS over any other advice people, they are not for profit and absolutely excellent.

Good luck, it's crap being in debt and being bankrupt hasn't really affected negatively, tbh.

lou031205 Sun 05-Jul-09 21:39:31

posiedullardparker with respect, I am speaking from experience of having been bankrupt, and from several months of extensive research prior to filing. I made it clear that it affects you in the short term. I also made it clear that I am talking with the perspective of wanting to remain debt-free.

Obviously, if you have a mortgage and will want a re-mortgage any time soon, then BR is not a good move. But the OP states:

"one day DP and I hope to get a mortgage but can't see this being any time soon."

Most people who file BR have a rubbish credit score already, because most people file BR once they realise that they can't borrow their way out of their debt.

lou031205 Sun 05-Jul-09 21:42:33

People who have been BR can get mortgages, but they will be stung by the rate and need a hefty deposit to diminish the risk to the lender.

babber Mon 06-Jul-09 11:11:45

Wow- thanks for all the input - its good to hear from people who have actually become bankrupt - especially as it has been a positive thiung for you!
certainly true about not wanting to touch credit ever again after this! I don't even know how i've accumulated so much debt really but i've certainly learned my lesson.
with regards to mortgage etc - as i said i can't see us being able to afford one any time soon with or without my crap credit rating (which wil,l soon have CCJ's all over it anyway which also take 6 years to clear)
have been talking to DP and i think we both agree that BR is the best way forward... bit scary but can't wait to be debt free... nothing like a clean slate is there?

babber Mon 06-Jul-09 11:13:08

ps: thanks for the link MrsGokWan smile

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