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

Moderators: TalbotWoods, JaneClack

By catface1
#2829 Can anyone advise on my situation?
I am a full time student , I have a student loan of over 10000.00, I also have other debts totaling over 30,000.00 in the form of credit cards and unsecured loans , I rent a room and don't own a car -just a laptop that I use for college and will use for work when I finish- I will be self employed in the field I am studying or will work for a friend .
I currently work for a credit card company in a backoffice job - no access to cardaccounts, this is part time and I cant meet my monthly outgoings - I really am at my wits end as to how I can go on . I have basically messed up my life - I am at the age now where I have to decide wether to have kids or not and I can't see a way foward with this debit that I cant pay . I need to know what would be the best course for me to take ?
any advise would be gratly received.
#2831 Hello

One important thing to check is whether your company's policy would allow you to keep your job if you went B, and also check stuff like there is no clause in the tennancy agreement for the room you went that means you'd be evicted, etc.

Okay - if you go for an IVA and it goes ahead, you'll be paying all your surplus income for around the next five years, then any remaining debt is wiped out . The IVA will be on your credit file for 6 years from the date it is set up.

If you go bankrupt, your debts (apart from the student loans which cannot be included!) will be written off. You'll have to go to court to petition of course (which is a lot less pa inful than it sounds), have an interview with the OR (again lot less painful than it sounds). As long as you haven't acted fraudulently etc you'll usually be bankrupt for 1 year, or even less. Your bank account will probably be frozen - but as many UBs will testify, there are several reasonable bank accounts available.

Whatever you think you may do, you need to take advice - I would recommend calling National Debtline, they're very helpful. If you were to go for bankruptcy you will be asked whether you have taken advice anyway.

Hope this helps to start with....

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By JaneClack
#2835 Bottom line from what you have said is you cannot afford an IVA as you would need surplus income to fund it and as a student you do not have it! Just pay your unsecured creditors a token £1 per month until you have finished your studies - as you know Student Loans cannot be included in bankruptcies or IVAs - and then go bankrupt as long as your job description doesn't preclude this as banks often do - and have a complete fresh start!
By catface1
#2849 Thanks for the speedy reply,I will call the National Debtline and I like the idea to l offer the creditcards the 1.00pound option and reassess when I have finished college, - if I start to earn enough money to pay off in larger installments what happens ? will I still be in bad credit for years due to this even if I don't end up bankrupt?
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By JaneClack
#2862 Whenever anyone asks me about credit rating I feel uneasy!

The bottom line for this is because when one is worried about one's credit rating it is because they - subconsciously - want to be able to take out more credit which is the reason they are having problems. :wink: But don't get cross because I have said so!

Whenever you make reduced payments to your creditors it sends a signal that you are having money problems and as soon as a default is issued it will go onto your credit file where it will remain for 6 years. Once the debt is repaid however that will also be reflected on the file. Bankruptcy too will stay on file for 6 years.

Now as to getting a mortgage later on - do not worry. There are plenty of subprime mortgage providers out there and indeed the majority of mortgages today are got from them which shows that A LOT of people have had periods of adverse credit rating. Do not let this worry stop you sorting it out - you cannot afford to pay them and you need the money to live on at the moment!

Good luck :lol:
By catface1
#2896 I am not angry!
the reason I am concerned about my credit facility is because when I graduate I will be setting up my Garden Design business, I know that sometimes I will need to buy plants etc or even show my business bank detail to obtain credit at a Nursary , I don't know how it will impact just the setting up and running iteself - any ideas of where to go for information on this would be greatly appreciated-
but I guess I will have to find another way round this if I go bankrupt, I am waiting for a info pack from the debt helpline , I admit I frightened of bankruptcy - it seems to have been drilled into us from birth that a failure and decietful person you must be to get into this situation, I mean its not even as though I have tried to run a business and found that it didn't work- I conciously decided to become a mature student and then failed to budget and live within my means. What if they think I have been decietful etc and I don't get discharged for 15 years? How will that affect my setting up a Design business?
sorry to go on but I can't seem to see the wood for the trees at the moment.
I didnt mention earlier that I actually share with my boyfriend - our arrangement is that I don't pay him rent as its his tennancy but I pay the water , gas and electrisity each month instead, - would I still be in the right position to do this - sorry that I didn't make it clear before . Other than this I pay my own way - would I have to cancell these direct debits before going bankrupt and set them up in his name , and start to pay him rent instead?
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By JaneClack
#2898 Either is OK. If he pays the rent and you pay those other things it should be pretty obvious. However, if you say it is rent you would need a letter from him to say that was what it was. Just remember to put down what you spend - your boyfriend is not responsible for your debts so should not have to have his money taken into account. Just make sure the payments on all these are up to date before petitioning for the bankruptcy.

I see your point re the credit rating but have to say it will be affected as you know. However, once the debts are out of the way you can start to work on savings and building credit rating again! It will take time but it will return!

Good luck!