anybody here got any experience of bankruptcy?

[PurpleOne]

is it really worth doing it for 5k debts?

anyone have any personal experience that they wish to share?
not being nosey - it's something i am seriously considering doing in the near future because i cannot get out of this mess. each month it gets worse.
would my letting agent/landlord be classed as a creditor for rent arrears?
what about my bank account that my benefits get put into - will that be frozen until the OR says so?

For that level of debt probably an IVA is a better option.

Go see the citizens advice bureau, they'll point you in the right direction.

Sorry I should say if you are working an IVA is a good option.

Some alternatives

WMMC - no am not working right now.

It very much depends if you have any prospect of paying it back, and what your situation would be afterwards.

If you cleared the £5k, would you have sufficient income to ensure that you could meet all your outgoings without more debt?

If you weren't paying interest charges, could you afford to pay your debt over time?

£5k is a very small amount to file BR over, although not impossible, but you would be wise to look at other options such as administration orders (available if you have a CCJ and small debt) or an IVA first.

In any case you need to get independent, personal advice, from somewhere like CCCS or NationalDebtline. Without that, no judge in the country would sign the BR order, and you would lose your BR fee.

Your landlord would be your creditor, and your bank account would be fine as long as you time it well. You need to file just after a payment, so that you can draw out the cash and put it in the new account you open after you file BR. Either way, the OR can give you permission to use the existing account over the telephone.

Lou, how would the bank account thing work if I have my housing benefit, child tax credit and Income support paid into it? I'd have nothing else to live on!
If the 5k was cleared, I would be debt free. Other outgoings would just be food and utilities and general living expenses. I have 2 defaults and wouldn't have much chance of getting any credit in the near future.

The 5K doesn't get wiped if you go bankrupt! You still have to pay some of this. If you go to the CAB they can arrange a repayment plan and get the interest on these debts frozen. You can technically pay £2 a month if this is all you can afford. Bankruptcy will cost you money as you have to pay to do this and to be honest, 5K is a small amount compared to some.

I went bankrupt. Was slightly more than your 5k but i had no way of making payments plus it would have taken many, many yrs to pay off.
My only problem was my bank account closing. I was told by the CAB that the bank had to give me notice. They didn't.
I was on benefits etc and they agreed to pay by giro until i had a new account set up. Unfortunatly some banks will not give you an account if you are a bankrupt. I am now with Barcleys. Only allowed a basic account but i can do all my direct debits out of it which is all i really needed.

So now i can say i am debt free. The whole dept wiped out.

There is a fee but mine was paid by some british gas trust thing.(can't remember who they were now but had to be a BG customer. CAB helped me with it all)

If you are on benefits then your fee will be waived. I think that CCCS are brilliant and far more helpful, patient and understanding than National Debtline. They will look at your circumstances and walk your through everything.

My debts were massive and I lost my home,but I have to tell you that after 7 months I was released from bankruptcy and I now only spend what I have - no loans or CCs.

Martins Lewis' website moneysavingexpert.com is fantastic. There is a forum with people there virtually 24 hours to help you fill in your forms (they are a nightmare).

I would try there first

The law is due to change in April I think and instead of going bankrupt you will be able to apply for a debt relief order - similar to bankruptcy but without the cost. CAB or CCCS should be able to help you, though their advice may be for you to hang on for a couple of months if you can.

www.citizensadvice.org.uk/index/pressoffice/press_index/press_20061117.htm see here.

I hope I can hang on for a couple of months then. I've had to buy a callerID for my landline and change my mobile number it has been getting that bad. And my DD's know how to spin the line of 'oh, she's not home right now' stuff.

Thankfully I don't have any assets either so could well qualify for the DRO. Thanks for the link scrooged!
Am going to ring CCCS in the morning.

It does get better.

Purpleone, in your case (benefits as only income) the £5k WOULD be wiped completely. We had combined debt of £36k and it was wiped completely.

WRT the bank account, as soon as you get your bankruptcy order, you can walk out of court & apply for a new account, stating you need a basic account for people with adverse credit history, and that you are bankrupt.

By doing this, there will be a delay in opening the account (for us it was 10 days) as your application goes to a special department, so that your credit file doesn't stop the application.

That is why you either need to:

1. Make sure that you set your appointment for after a payment, so that you have time to draw out all cash in your account. OR
2. Phone your benefits people and ask them to pay you by Giro because your account is closing and you are waiting for a new one to be approved. OR
3. If you can't time things well, explain to the OR when the court telephones them that your money is in that account, and he/she will give you permission to use the account until you have a new one.

Regarding the fees, it currently costs £485, £150 court fees & £335 official receiver's deposit. You can get exempted from the court fee, but NOT the deposit.

So £335 will have to be paid. However, the CAB and some utility companies have grants available sometimes, so worth asking them.

If you have had professional advice, and you are definitely going to file, stop paying all debt, and use the cash to keep up with council tax & rent / BR fees.

Excellent advice from Lou there.
Mine was a grant through British gas. Had i not got help through the CAB i wouldn't have know about it.They helped me through all the forms and finantial statement.
Good luck with it. It is a real relief when it is all over. I was dismissed 6mths later.

Thanks for all the advice ladies, it really is helpful.

One question though, I can see how my landlord/letting agents would be classed as a creditor, but surely they wouldn't wipe off all the rent arrears that I owe?
It was partly them that messed all this up in the first place, as the council doesn't pay all of my rent and the letting agents gave me the wrong figures, and I ended up having to pay £80 a month to pay the surplus.
I got a letter from them today, stating that I now owe £1,709 in rent arrears and really cannot see any way out of all this...

Well the debt would become part of the 'estate', so yes it would be wiped. Having said that, it is very unlikely that you would be able to stay with that letting agency.

You might find that you also struggle to find a letting agency that will accept you, to be honest. They normally need references, etc. and previous unpaid debt is not a good start.

Having said that, you need to be aware that the ORs take a very dim view of 'favouring creditors'. This means that you can't stop paying everyone else so that you can pay your debts to your landlord to avoid eviction, because it is favouring your landlord.

You also need to know that it is illegal, once you declare bankruptcy, to pay ANY debt that occurred prior to bankruptcy, even to relatives and so on. It is all officially the 'possession' of the Official Receiver.

You really do need to get professional advice. People can and do rent after bankruptcy, but obviously like everything, it is harder to enter into any financial contract for some time after you file bankruptcy, because the bankruptcy order is basically a sign in the sky that you cannot meet your financial committments.

I am not being harsh, btw. Just very honest. I have been discharged since October 2007, and it has been the best thing I ever did, but I went into it with my eyes wide open.