Should I go bankrupt?

[Fieryfighter]

I have debts totally about 30k, I'm on a small not far off minimum wage and have been for ages (very little work here or prospects). I have two children and exh pays no maintenance (own business, earns nothing on paper - you know the story)

When exh left I could no longer pay the mortgage or all the bills on my own, my house was repossessed and once the mortgage company sold it there was a shortfall of abut 25k. There was also joint credit card debt of any 5k. My exh went bankrupt so all of the debt lies solely on my shoulders. I didn't even want to buy a house at the time as our relationship was rocky but I was caught up in a very difficult pregnancy and he was very persuasive so I just went along with things, my fault I know for not sticking up for myself but he was so difficulty to disagree with and would wear me down so much. Most of the credit card spending was his apart from near the end where I had to use them to buy food at times. It was a terrible time.

I went to payplan and set up payment arrangements with all the creditors and have for some time paid very small monthly payments to them all as agreed. My only option realistically is to go bankrupt but i never have had enough money to pay for it as we very much live hand to mouth. To be honest I've just been paying these small payments and assumed that I will do for the rest of my life.

I've recently found out that a relative plans to leave me money in their will, I'm not exactly sure how much but led to believe in the 20/30k region. They're a fit and healthy 70 years old.

I literally can't imagine how life changing this sum of money would be for us, I cried when I found out. I would be able to help the kids through uni must importantly and finally not lie in bed every night worrying about money and bills.

However I've realised in my current situation if I inherit it will literally all be swallowed up by these debts, I won't see a penny and won't be any better off monthly anyway as I pay such small amounts. It's heartbreaking, especially as half of these debts belong to exh but he's no longer liable.

Should I somehow find the money (would have to somehow borrow it) to go bankrupt now?

I think there's a way of appealing to get at least a part of the fee waived - if you call StepChange they'll be able to talk you through the process and tell you what your options are.

To be honest if you're already being regularly hassled (and you absolutely shouldn't be) then I'd be tempted to just tell them to take a hike. If your eldest is old enough to stay home alone, is he old enough (emotionally) for you to explain at least some of the situation and agree with him that he doesn't open the door to anyone unless you're there telling him to?

They can not hassle you once you are in a debt plan but they will- tell them you know they are not allowed to. Phone their companies and shout at them.

Your credit rating can't get any lower and isn't in the slightest bit important unless you want to borrow money -you have secure housing and a job. 6 years will pass quickly. If you try and pay off this debt in 6 years you'll be exactly where you are now.

Stop paying the repayments and let the mortgage company make you bankrupt - they're probably amazed you haven't already.

Well done for dealing with this

Sod immoral, your ex has hardly been moral and it hasn't hurt him

Regardless of whether your relative lives another 25 years I think bankruptcy is definitely an option- in your current situation you're not gong to be applying for a mortgage anytime soon so if it takes a while to discharge what's the difference?

Now I'm being totally immoral, but would your relative consider leaving the potential inheritance to your children rather than you? Then whatever happens it won't be swallowed up by debts that aren't all yours

If you didn't know about the inheritance then bankruptcy would be your best bet.
Knowing about it makes no difference...if I were you I'd go bankrupt and all that entails which surely must be better than the situation you're in now. Wipe the slate clean.
If you still get the inheritance then great. If not, it doesn't matter...you'll be at zero and able to start again.
I've been majorly in debt in the past. Zero is actually a wonderful place to be!

He's definitely old enough (15) and mature enough to understand but I think I might worry myself sick and the kids rounds here are always knocking for ds2 to go and play and I might have daily heart attacks from the doorbell.

I'm looking at step change now, think would be a good idea to contact them

you're monthly repayments are less than £30, so it sounds like your debt is not the reason you're living hand to mouth. . . have you looked at where else you can cut costs?

Also, if you do go bankrupt, this will affect you if you try to rent somewhere. lettings agents may reject you outright, or you may need a guarantor. So you should bear this in mind if you are thinking of moving in the near future.

hellmouth I've spent the last 9 years cutting costs! I take home just under a grand a month, after paying all the bills, buying food, paying rent, council tax, house insurance, car insurance, running a car at etc plus bringing up two kids for whom I have no help whatsoever there is nothing spare!

Sorry if i sound frustrated but I sure as heck am not living it up. I budget all the time and have monthly spreadsheets keeping track of things

OP is in a housing association property. She'll just have to stay there for 6 years

Are you sure you're not due some
Tax credits?!

I do get since tax credits yes

Also, if you do go bankrupt, this will affect you if you try to rent somewhere

Equally a poor credit rating will do the exact same. If you go bankrupt you can at some point get a credit rating back, if you don't you are stuck with what you have.
Do you want to keep going on like you are for ever? Bankruptcy draws a line under it and lets you start again.

I don't think people really understand about credit ratings. Once you've had a house repossessed it's as bad as its going to get anyway. It's also only relevant if you want credit. If you do need to be credit checked you sadly are forced to deal with it by renting from a landlord who doesn't care or subletting etc. Luckily OP is already in secure rented housing.

You're credit file really isn't a reason not to go bankrupt. It is so minor by the time you've got to the situation the OP is in .

Going bankrupt you'll know that in 6 years all the debt issue will be done with, if you carry on as you are 6 years worth of payments will hardly have dented it.

If you're in a housing association property is that secure? Sorry, I don't know anything about how that works but if you can stay there until the bankruptcy is discharged it won't matter that you can't rent elsewhere

My credit rating hasn't bothered me for ages, I was in Dorothy Perkins on Friday and the lady at the till asked me if I wanted to open a DP's account and save 20% and I just smiled and said "honestly it would be a waste of your time"

(And for anyone wondering at me squandering money on clothes it was a £12 top and I can't even remember last time I bought anything new... It's eBay all the way for my stuff!)

Housing totally secure so no worries there

Totally agree with the others who say do it now. This is exactly what bankruptcy is for, those people who have large debts with no realistic means to pay it off.

Lots of people go bankrupt after a repossession. Usually it's better to do it earlier than later.

OP, I went bankrupt 8 years ago now. It was the best thing I could have done to be honest. Before anyone shouts me down, it came about after I was raped and I became too scared to leave the house and work. I was drowning in debt, wasn't sleeping and couldn't see anyway out.

I kept my house that I own with my ex as it was in negative equity (and still is) but that took a really long time to sort out. I changed bank account to a co-op account that had no overdraft, and was able to keep a phone contract throughout as well.

The relief when I walked out that court was incredible. I literally felt like I could start my life again. I have now got a credit card, business accounts with overdrafts and my credit rating is good. I am saving for a deposit but expect to be able to get a mortgage (though I wouldn't be shocked if it was at a higher interest rate)

Put your self and your family first, you need to draw a line under this and move forward. It is incredibly stressful, humbling position to be in - but I wanted to post to show that there is another side at the end of it.

Wishing you luck for the future.

I am another one who has been through bankruptcy and come out the other side. I had a secure council tenancy as well and it hasn't affected my housing in any way. I kept my phone contract throughout and daily life wasn't really affected at all. My credit rating like yours was shot to pieces and there was no prospect of getting any loans anyway, so I didn't have much to lose at that point. I now have several current accounts (all with internet banking and debit cards but no overdraft or cheque book), and also have two credit cards which are just used for credit rebuilding. I expect I'll be able to get a mortgage at some point, although I'm not in a financial position right now.

I wold definitely do as much research as possible, there are lots of specialist blogs and forums out there, just make sure you get up to date information as there's a lot of misinformation out there, and there have been recent changes as well for example you don't have to go to a court these days, you can file for bankruptcy online. I stopped all payments for a year before I finally went bankrupt and I didn't get any home visits at all - I got some phone calls but it was to my mobile so I just got a call blocker app to reject them. The letters I didn't really worry about as I knew I would be going through bankruptcy and there was nothing they could do. The bankruptcy fee is high but I was able to withdraw cash from my credit card to pay it (I was advised to do this by the CAB and the official receiver didn't question it at all).

It sounds like bankruptcy would be the best option, but have a look on moneysavingexpert's bankruptcy board for definitive advice and help putting together a budget.

Chances are that the way you are going, you'll never be able to repay the debt - £30 pm off £30k would take decades to pay off - I'm surprised that payplan advised you to bother with a debt management plan - that's terrible advice when you have no assets - they should have advised you to go bankrupt when the house was repossessed.

Forget about the inheritence - your relative could live for many years or spend all their assets on care in their later years, so unless they plan to leave you everything they have when they are down to the limit for not paying care fees, which is about £23k, there might not be the amount you say left anyway.

And if you do receive the inheritence while you are bankrupt, I don't think you have to pay all of it in, maybe a percentage.

What ties do you have to the area you live in - would it be possible to move somewhere with better work prospects and/or cheaper housing?

Even an extra £100/200 pm after housing costs would probably make a significant difference to your financial wellbeing.

It sounds like bankruptcy might be the best thing for your situation. It's not always the worst option and is often the chance to start over and some of these posts show a total lack of understanding about what bankruptcy is and its purpose.

I think you need to put yourself and children first for once. That's the moral thing to do.

Hope things get easier for you

I would get onto going bankrupt right now. Free yourself from that debt whilst you are in secure housing. It's a no brainer.