Questions you have before making a decision to go Bankrupt and the Bankruptcy process

Moderators: TalbotWoods, JaneClack

By Collie
Nicky wrote:Did you inform Payplan regarding your reduced income?

No I thought I could manage, I am to be honest they havent been very helpful. Plus northern rock will not accept the reduced payments so I have had to keep paying that as normal. :cry:
#2472 Hi Collie

I sympathise with your situation.

If PayPlan you are not giving you the help and support you need perhaps you should seek help/advice elsewhere.

Bankruptcy could be a solution, it is a very dramatic step to take. Personally I would write a list of the pro's and con's - eg pro debts written off, so won't have to worry if your circumstances change, con could effect employment, you have to pay £450 court fee. The OR is more likely to be generous with what you're allowed to live on than your creditors.

With regards to the car - if it is a 'tool of the trade' ie 100% essential for you to do your job not just get to and from your workplace then there is a very small chance you could keep it, but what is more likely to happen is that it would be sold and you would be given a smaller amount of money to buy a cheap car.

Lastly, you mention you are still paying Northern Rock the full amount because they will not accept smaller payments? I thought one of the 'rules' of a DMP was that you're not supposed to 'favour' one creditor over the other?

Whatever you do, you need to get impartial advice - you could try Natonal Debtline (who are great) or a debt case worker at the CAB.
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By Nicky
#2473 The first thing you need to do is inform Payplan of the reduction of your income. They will then re assess your finances so that you are paying what you can afford so that you wont be needing to borrow monies off anyone else each month. You thought you could manage, you have found out you cannot.

Secondly, its always up to the creditors whether they will accept an offer or not, the thing is, whether they do or not, you should still only be paying the amount offered according to your income and expenditure. If a creditor rejects an offer, they will eventually pass the debt on to an agency who will be more flexable with the offer you can afford. The worse thing that can happen would be a CCJ, however, you are then able to make your offer of payment through the courts, so basically, its not worth a creditor going for a CCJ in the first place. If you give in and pay your creditors what they ask, then there is no point going with any DMC let alone Payplan because your situation will not be resolved.

What you should be aware of is, every time a creditor requests a reassessement of your financial situation, they see what you owe other creditors so that it justifies your offer to each of them. Northern Rocks balance will of course be alot lower than what it should be because you have been paying them the contractual amount, if one of your other creditors spots this, you can be sure they will not be too chuffed about it as you have prioritised Northern Rock over everybody else, and they could in turn, make life difficult and reject your offers and continue adding interest to your accounts.

I know full well Payplan would not encourage you to keep on paying Northern Rock. Its a hard thing when someone is dealing with your finances, but, I think you should try and put a little more trust into the people who are trying to help you, take their advice and run with what they are asking you to do. They know what they are doing, and have an idea of creditors responses to situations. It would appear that they are not fully aware of what is going on in your situation right now which is probably why they are appearing unhelpful to you. You cant help in a situation if you are not fully aware of what is going on.

Of course, it might be that once you have you finances looked at again with the changes in your income, that they may say to you bankruptcy is an option. It really depends on how things look once your finances have been looked at properly, knowing the full facts.

You are struggling because of the reduction in your income and because you are paying more than you should be to Northern Rock. You are still trying to handle the situation on your own and have not fully given it over to Payplan. All with good intentions of course, I do understand its not an easy thing to do, especially when it is something so personal and you have creditors breathing down your neck trying to intimidate you can probably scare you into paying, you really need to decide, do you want help, or are you going to deal with things yourself, a bit of both in this situation doesn't work unfortunately.

Good luck.