Voluntary bankruptcy - has anyone got any advice?

[Misspiggy]

DH and I are in real dire straits money wise. He was unemployed for 2 years and we have just never recovered financially. He found a job 18 months ago and I work full time but the situation hasn't improved at all. The point where the money runs out every month gets earlier and earlier and then the only credit card we have any credit left on comes out which I know is stupid but it is honestly only used for essentials (shopping basically). I read an article in the Observer about people in our situation and one of the things it mentioned was voluntary bankruptcy. It is just about the last thing I want to do but I can't see another solution. Any advice would be really helpful.

My husband and I found ourselves in the same situation just after ds2 arrived. I planned to return to work with a family member looking after ds2 while ds1 was at school and this fell through and we had no other means of childcare (other than private nursery and was no point going back to work to pay over 1000 quid per month nursery fees. We struggled along for about a year robbing Peter to pay Paul and were nearly about to take out one of those homeowner loans but decided to get some more debt advice before we did to see if were could come to some arrangement with our creditors. I contacted citizens advice and they gave me number of a local debt advice office run by our local Council. During our first meeting there we were told about something called a Protected Trust Deed (probably along the same lines as Voluntary Bankrupty. We had to provide details of all our outgoing/incoming etc and prove that we couldnt manage the payments. A Trustee was appointed and we signed the Trust Deed document. This ensure that none of your creditors can take to to court or pursue you for payment of any debts. The Trustee contacts all creditors and advises of your situation and ask them to complete a form detailing what you owe them. Creditors deal directly with Trustees and after we signed the Deed we didnt ever receive a credit card statement again. We are not classed as bankrupt though think just shows we have gone through sequestration. There are a few areas you need to be care of though.... my this is getting long but hope it helps! ......

If you have a substantial amount of equity in your home a Trustee may request that you release this to pay some of the debt. Also same with car / any assets etc. Persons under a Trust Deeds must report to there Trustee every six months advising of change of circumstances regarding income / expenditure so that they can increase the debtors monthly contributions if applicable. Think the least you can pay under a trust deed is 200 per month (100 from each partner).

Just noticed all my typo's - sorry but hope you get jist!

we're currently going thru an IVA which sounds similar to PB's thing, u meet the person who's dealing with your case, and discuss everything, then we sign the forms, they meet our creditors and sign forms, then once that's all done we don't hear from creditors again (just an annual review to make sure all is still OK) but it's legally binding, then after 5 years we'll be debt free (phew) and they send us out a letter which we are to send to experian stating that all our debts are settled then we go back to a zero credit score as if it didn't happen. at least that's how it's been explained to me. It's not bankrupcy, it's the creditors taking some level of responsibilty as well as us, and also it means we can see our debts coming down each month. we pay over one fixed sum each month and they divide it all. will let u know how things progrress. (althou we don't have any assets except a small care which wouldn't cover the debts so our's is being fast tracked)

(changed my name incase anyone I know reads this as we want things v private)

Obviously any form of bankruptcy / sequestration is a complete last resort but it seems so common these days (though I had never heard of it). Apparently some people do it more than once! You make payments to a third party for a certain period of time (with a TD its 36 months)and once this period is over the monies collected and split between creditors based on how much you owe each one. It obviously gives you a bad credit rating but from my point of view that was worth not having the stress of worrying how to pay bills and I know that we wont be applying for any credit in the future. It not a nice thing to have to do and we havent even really told anyone we did it but we didnt have a choice. I would suggest getting some debt management advice. Are you really in a position where this is the only option ? You may be able to come to some sort of repayment plan with your creditors - most of them would rather have something than nothing. Hope at least some of this has helped. As I said I dont even know if what we did is the exact equivalent of what you are talking about but probably not much different. I am sure you will find out by taking some professional debt advice. Good luck.

Phone your local Official Receiver. I worked for one for 11 years. They'll be in the phone book. They'll give you lots of FREE advice, be impartial and helpful. Bankruptcy isn't the end of the world it used to be - and the laws changed a couple of years ago to make things simpler and less stressful for people. It really is worth taking some of their time to ask all the questions and they'll smed you out all the relevant guides, such as what happens next, what happens to you house, pension, wages etc.

meto, there appear to be so many new debt solutions now it shows how common these situations are becoming. We pay make our payments over three years but I think its six years before our credit score returns to normal. Can even think about having debt in the future ! We did have to release some equity in our house but to be honest it was a small price to pay for sleep at night. Good luck with your IVA.

thanks PB, as we don't own a house or anything and the level of our debts (frightenly high) an IVA was offered to us instead of the debt manaegment we were doing. I don't mind payin slightly more over 5 years as I know there will be an end in sight, I think at the end we have to wait 2 months for the letter and then it's square one again, the only debt we'll be having in the future is a morgage for hopefully a small amount (least no more than £300 which is what we pay out now)

good luck with yours thou.

Thanks everyone for taking the time to pass on all your info. I showed your replies to DH who isn't keen on going down the IVA / bankruptcy route (neither am I but on the other hand things can't carry on the way they are!) DH's idea is to approach the credit card companies individually, present them with a financial statement showing our income and outgoings down to the last penny (amazing when you sit down and factor in absolutely everything like kids pocket money, car tax, TV licence etc which don't come immediately to mind when you think of your outgoings - no wonder we're so skint!!)and offer a reduced payment which will help in the short term I suppose but longer term is still a problem. Here's hoping for that lottery win (if only!) I'll have to change my screen name now that DH knows it won't I?! Thanks again.

Misspiggy if you are thinking of doing a statement of affairs (or SOA) you could do worse than start at www.fool.co.uk on their discussion board Dealing with debt. They have a template that will cover most stuff.

That's great Jan - what a brilliant website, thanks very much. We'll have a look at that tonight and make sure that we haven't left anything out.