going bankrupt - advice needed

[password]

i owe a rather large debt to a collection agency that has been trying to get money out of me for some time regarding a mortgage i had some years ago. i have been to the CAB who advised us on legalities to to with the last point of contact - and it looks like they are entitled to chase us for the money even after all these years. they want an unreasonable amount per month or a lump sum of 4000 pounds. i am not elligable for a mortgage now for the rest of my days and i am sick to death of the whole business.

should i just declare bankruptcy? i dont really know what this means or what is involved or if this would affect my job. i just give up!

I and my dh have spoken in person with a bankruptcy lawyer in the past. I have learned that any creditor can try and collect any money owed to them at any time. I dont know if its the same in every country but in the US most debts on your credit stay on for 7 yrs and then come off automatically. I was told that the creditor can reput the debt on the credit after the seven yrs if not payed. It kind of starts the whole thing over again. If they decide to collect in a number of ways they can through wage garnishment as an example. Not much you can do with that. Its kind of a wait and hope they dont which we are kind of doing right now. A bankruptcy is good only as a last resort. If you feel you have no control or way of repaying any debts. Most lawyers will look at your debts owed and your living expenses to see if itsd even worth filing. They will recommend it depending on the amount of debts you owe. A bankruptcy will stay on the report for 10 yrs and then will come off. But you can start right away to rebuild your credit and in a few years you can purchase just about anything anyone else does. The downside is you will probally have to pay a higher interest rate. Filing will not affect your job in anyway. You cant get fired or you can sue.

We have had things on our credit for years hoping they would leave us alone and after much time had went by we thought they were going to leave us alone they started up again with letters and phone calls. It seems like it will never end. It probally wont unless they decide to give up. Most of the time the creditors will let things come off your credit in the 7 yrs and wont bother you. But a lot of times the bigger things like house foreclosures ans car repoes and LARGE misc loans can come back to haunt you yrs later. I have exp this on 2 car repoes we volunteered on our own due to financial problems. We have thought hard about filing because its a good way to start fresh and not have all the individual neg stuff on our credit verses 1 bankruptcy. Our lawyer said it will probally be better when trying to rebuild. If you do file for this debt I would put all debts in that are allowed by law. They wont show indiv on the credit. Just as one bankruptsy. I was told you might as well do all of it except for what you want to keep paying on for good standing.

I have done this and sometimes it works. Tell them that they need to except blank amount of money or you will have to file. They most likely will except rather then lose all. Its worth a try if you havent already. I think I would rather file then have them garnish my wages. They will di it according to you income. If you owe other debts you can also check into one of those credit repair agencies (non profit). They can contact all those places and try and set up a payment plan in wich you give them the money to send to the creditor. They always work out smaller payments. Also forgot to mention that as soon as you file with the courthjouse for bankruptcy the creditors cant touch you or call or harass you in anyway. Good luck with whatever you decide. Sorry its so long.

Hi password. Firstly, I think The Limitations Act means a debt cannot be collected through the courts once it is over a certain no of years (6 I think) old. Pretty sure this applies to mortgages too although there was some debate about the law on this. Will find details and post in a minute. So the age of the debt is relevant. Many companies will chase anyway, relying on the fact that people don't know this. Whether or not you feel you have a moral obligation to pay is of course up to you.

Secondly, going bankrupt is not something you should undertake lightly. There are lots of implications (future mortgages etc) However, it is also not the end of the world (I have family who have been bankrupt) as the idea is that after a certain no of years you become a discharged bankrupt, i.e you've done your time as a bankrupt and can start again. I'll see if I can find details/a guide for you.

The company chasing the debt cannot insist on an unreasonable amount per month: i.e they have to leave you enough to live on etc and accept reasonable offer of monthly/regular payment. Most companies will anyway. Bear in mind that even if they do have legal recourse if your offer is reasonable and a court would likely accept it based on your circumstances, so will the creditor. So don't despair and don't think that this situation means that you have to leave your job or declare yourself bankrupt.

OK, it's not the best site but it's the best I could find at this time of night and it does give you brief details of The Limitation Act 1980 It's here

And here's a site about managing debt and bankruptcy. Good luck, HTH.

This page has some useful info/links too - Motley Fool on getting help with debt problems , or this one has information on "Individual Voluntary Agreements", which is one step down from a full-blown bankuptcy.

I don't know if it applies to mortgages, but if the company refuses to negotiate a reasonable repayment solution, then if they take you to court, and you show that you have acted reasonably, they often set the repayment figure lower, although you will have a ccj recorded against you for the next 6 years. In 1993 dh had this problem, chose to go to court after the company concerned refused his offer of repayment, and the judge ordered the repayment to be £5 per month! As I said for 6 years it will affect your credit rating, but after then even if the debt has not been paid in full, it will not be noted on your file.

thanks for all the advice - i am still a little confused as to the 6 year and 12 year ruling as i am no legal expert - from what i gathered the 6 year rule is on the interest and the 12 year on the mortgage itself. but i think they are being very reasonable asking for a 4000 lump sum or installments to the full value of 19,000 - only i begrudge paying 19,000 for want of 4,000 cash!
does anyone know if i will be able to buy a property again? - i mean i know in theory i may be able to - but in practise if the mortgage companies are so rigid they can stop a mortgage going through for a CCJ which is what i have heard, then i have no chance! and will i have to wait 12 years from when i pay the last installment? by then i would be in a retirement home.

sorry for all the questions thank you for your help

My sister had the same situation. Basically a mortgage debt lives for 12 years, then is wiped out and should not appear on your credit reference file which is what nmortgage companies, credit card companies etc use to judge whether or not to lend you money.

I totally understand about not wanting to pay nearly 20 grands worth of installments when yuo could get away with just 4 thousand. Could you borrow the money from somewhere, or even some of it? If you could perhaps you could ask the debt collectors if they would accept a lower amount as a lump sum. I think if you begin to make reasonable payments monthly the debt should be cleared from your file too, but if this is what you choose definately only pay what you can afford. Incidentally my sister had a £25k mortgage debt and they accepted a lump sum of just £3k to clear the debt!

If you are worried about getting a mortgage, irrespective of what you choose to do you can always go for a self-certification mortgage, or through a company that specialises in debtors mortgages. You will pay a slightly higher interest rate, but often it's only 1 or 2 percent higher than the high street anyway. So all is not doom and gloom. Good luck!

just had another thought - coulod you go to one of the companies that specialises in lending to people that have debts, ccjs and borrow the 4 grand?

Hi folks,
My boyf defaulted on a £5000 bank loan 4 years ago. I finally convinced him to go see a Solicitor and get it sorted out coz he can't even get a Bank Account! The solicitor told him to declare himself bankrupt. He would be unable to get any credit, his record would be more or less wiped clean after 3 years instead of letting it drag on for many more years. However, the bank stopped chasing for it so he couldn't be declared bankrupt. He now just has to sit and wait..........time is a great healer with respect to debt (allegedly).....this is Scottish law. Does anyone have any advice??

Password - I have 2 CCJ's hanging over me and I got a mortgage no problem. The only hitch was that I couldn't shop around.....I had to go through my own bank. So all is not lost!

thank you so much for your advice - as your sister got to pay a lower lump sum - am going to try and whittle them down a little - they can only say no!

its nice to hear that there is hope - i cant tell you how good that is actually - we keep getting phone calls and letters and imm sick sick sick of it - i just want it to all go away for xmas so am going to get DP to phone them

also what is a self certification mortgage?

again thanksxxxxx

password, there are some FAQs about mortgages here