Filing for bankruptcy in your twenties

[peachweach]

I am 27, have been absolutely stupid with money and have ended up tons of credit card and payday loan debt built over the last 5 years, where I've had to keep borrowing to stay on top of my minimum repayments and monthly bills.

I was made redundant before I found out I was pregnant with DD who is now 1 and I am currently a SAHM, I don't claim anything apart from child benefit as I'm not entitled to anything. My partner works full time and his wages, although decent, just scrape us through after we've paid debts, even though we're living with his family and pay very little rent. We can't afford to move out on just his wages, but if I go back to work the nursery fees for DD would cost more than I could earn! So we're in this never ending, depressing circle, and it's been wearing me down for a few years now.

I've been on anti depressants and am starting to spiral down again as it's becoming so hard to keep on top of the debt whilst saving to pay it all off and move back out. I feel so envious of people I know who are my age and are enjoying holidays, buying homes etc. I hate myself for making awful decisions so young and basically wasting my twenties time pre-child and now with my DD on having no money and a stressful life filled with worry due to debt. Something has got to give.

I'm in repayment plans with my creditors but it's becoming a struggle to juggle everything as I have no personal income apart from child benefit, just whatever spare my partner has each week after all of the bills are paid. We have been together for 10 years, he is brilliant and we got into this together, he also has debt that we need to clear which is higher than mine but we haven't considered any repayment plans, bankruptcy etc for him as we figured one of us should maintain a credit record for rental credit searches etc? We share his wages with no issue at all, but it's getting harder making them stretch.

Does anyone have any advice on bankruptcy? I know that there is a stigma that comes with it, and I am prepared for my credit rating to be shot, I realise that it is all completely my fault, but I feel so desperate for a new start and a bit of hope for me and for my family

There’s a debt charity called Step Change, perhaps you could speak to them and get some impartial advice? There are lasting implications of bankruptcy like it can make extremely difficult to rent a house, get a mortgage, you can’t work in certain sectors like financial services etc. I wish you the best of luck and hope things get better for you and your family soon.

Another vote for step change they will be able to advise you on how best to sort out your debt. They are a charity, avoid other organisations who look like they want to help, but will charge you.

How much is your debt? Unless it’s REALLY high, I doubt they will suggest bankruptcy, a DMP (debt management plan) more likely. This is where you ask your creditors to freeze interest and you pay off your debt at an affordable rate each month.

I got advice from Stepchange when I filed for bankruptcy - they were very helpful. I went bankrupt five years ago and my credit rating is still poor, but I'm hoping it will improve once it comes off my credit record next year. I do have some credit cards which I'm using to rebuild my record - I was able to get approved for these about a year after the bankruptcy.

I didn't have any problems with renting as I have a council tenancy which wasn't affected at all. I'm unlikely to ever get a mortgage anyway (since I live in London), and I've never had aspirations to work in finance or law so it's not had any impact on a career for me. Overall it's been positive, it was a relief to make a fresh start and have the weight of debt lifted from me, and it's not had much of an impact on my daily life (I have a bank account with debit card and online banking, I just can't get a chequebook).

If your debts are less than £20,000 you can apply through CAB for a debt relief order. Your debts will be set aside for 12 months. Then after the 12 month period, your debts will be written off.

You'll still have a six year wait before your credit file is restored which will take further time.

You'll have to be on a low income with a disposable income of no more than £50 per month after all your costs have been paid.

As you're in 20s, youve enough time to turn it around, you'll have breathing space and it's an opportunity to rebuild your life debt-free.

It costs £90. CAB can support you through it.

I would also recommend Stepchange. They have an online tool on their website you can enter all your details into and it will give you your options. They can also process a debt relief order if you qualify.

The problem is no one can tell you what is best for you without knowing your full circumstances.

Bankruptcy will affect your credit rating but CCJs will too. It might be worth getting a copy of yours and your DPs credit rating. CAB can help you with this.

Are you on the Council’s Housing list?