AIBU to presume she can pay back the money owed rather than go bankrupt?

[JemimaPyjamas]

Semi posting for traffic, semi asking a genuine AIBU!

A friend I have known for ages, but have only started to see almost daily as she used to live on the other side of the country, is in a self inflicted financial mess.

Despite having an excellent career, she has taken out loans, bought from catalogues, bought new expensive items on HP, not paid utility bills etc etc and now is almost £20,000 in the red.

She has been asking me to help her get out of the mess she is now in (she confided this has happened, to varying degree's, most of her adult life.) So, we worked out her money together and she has just over £420 'spending' after covering her rent, bills, food etc. She now thinks this is 'only just enough' for things like nights out and trips to the hairdressers and isn't really much at all.

I said to her that I think this should go towards the money she owes, and then she said she is 'better off just going bankrupt as it'll take forever to pay off' and it'll mean she can start with a clean slate.

I have told her this is wrong, and I am also not entirely sure she could even do this by choice considering the options she has? (She also works part time, so could earn another £300ish after tax by working 5 days a week as opposed to 3.)

AIBU to presume that she would have to both work full time and pay back what she owes, and they would go through all her spending with a fine tooth comb?

I have been trying to look at answers to these specific questions but everything is a bit more general, or working on the basis that the person in the red has far less spare cash a month.

Thanks in advance!

Pre 2007 lending was nowhere near as restricted as it is now.

I entered into an IVA in 2002 due to a failed business and being £40k in debt on a salary of £16k.

House prices then increased rapidly in our area and I remortgaged to pay off the IVA in 2004 at a rate that was broadly in line with that offered to people with good credit.

Mortgages were also available to bankrupts at fairly decent rates as long as you had a small deposit (5-10%).

I couldn't get a debit card until the IVA had dropped off my credit file 6 years later, but I could get a mortgage, because if I didn't make the mortgage payments, they could just take my house off me, and houses were rapidly increasing in value at the time, so the banks couldn't lose.

Lifelong credit bans should be a concept for really serious offenders, I.e. been in thousands of pounds worth of debt multiple times with different companies and never shown any stability in payments. It would really help the rest of us that actually use credit properly I don't think you understand how bussiness or lending works. Go to any lender and see how many would support "life long credit bans" 😂 @Sanpelle

There are harsher punishments for those who have become bankrupt through reckless spending - www.insolvencydirect.bis.gov.uk/IESdatabase/viewbrobrusummary-new.asp

Don't know but she did. I know she had to get a much higher rate. It might have been a bit longer than 3 years exactly but defiantly no more than 4 as I remember a significant birthday of one of our friends around the time that she bought the house so yes the dates between then and the age of our friend would make that timescale right.
I honestly don't know. But it seems unfair as mentioned above if the debt had been due to poverty/circumstances beyond her control then it is a different story.
M4j4 how has she learnt her lesson? Wrekless self indulgent spending. Written off with barely any negative repercussions for her. It's entirely her choice but morally a bit 'bankrupt'. Each to it's own I suppose.

Barbaraofseville similar time period to my friend.

Step away. She will drag you down

I think that there also needs to be stronger mental health support for those accessing advice 're bankruptcy. It can only help

Barclays allow a basic account for a bankrupt. I have one.

I agree that if you run up massive debts and go bankrupt not once but twice, that you should be banned from credit for life.

Credit limits are set far too high. Nobody should be able to access more than a few thousand so the credit card companies are to blame as well for lending the money, but say you earn £20K and have one card with a £5K limit, that should be it, you shouldn't be able to get access to any more credit cards.

If it can be proven that you have blown the lot on holidays, clothes, hair and nails and not day to day essentials such as food and bills, then yes, a credit ban for life, why not?! Why should the credit card companies provide people with a lifestyle that they cannot afford?

Why should the credit card companies provide people with a lifestyle that they cannot afford?

They do it because they make millions of pounds from doing so.

I know they make loads of money from it and it’s all just so wrong.

Credit is great when used responsibly but awful for people with no control or in desperate times ☹️

That’s why credit should be limited and card companies do have themselves to blame as well for huge debts if they have loaned to people who can’t afford it.

@JemimaPyjamas Daily Fail have picked this up.

www.dailymail.co.uk/femail/article-6430991/Woman-torn-friend-asks-help-getting-20-000-worth-debt.html

Oh fuck!

The other bad thing the credit cards have done over the past 20/25 years is reduce the minimum payment so people paying the minimum often don't realise they are in trouble until they are in much bigger debt.

It used to be 5%, so if you started to struggle when your minimum payment was £500 pm, you were in £10k of debt. Now it can be as low as 1%, so that £500 pm payment equates to £50k worth of debt, which is a whole new level of trouble.

Maybe they should start to increase the minimum payments and also limit the amount of credit limit you can have to significantly less than a persons annual salary. I'm not sure anyone needs access to more than about £5/10k on credit cards?

@JemimaPyjamas The lazy bastards. Should be finding and writing news.

@IchWill very lazy, yes. My DH read it and laughed at how crap it was, screenshots mainly with a small bit of copied text.