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

Moderators: TalbotWoods, JaneClack

By hubblebubble
#4866 Hiya, have posted before about my debt and just had a few questions in regards to bankruptcy as I am thinking it might be a route that I may go down..
Am 23 have about £16,000 worth of debt, through credit cards, loans etc..

Just wondered..
Does it affect if you want to rent somewhere at the moment am living with my mum but would like to move out at the moment i cant afford to as am paying out so much for my debts..
How much do you have to be earning for them to take money off you for three years after being bankrupt? I was chatting to a friend from work earlier and he was made bankrupt about 9 years ago and said they took £150 a month off him for three years when he was earning £700 a month (which is what im earning now)
Will it affect my mums house where i am living now or my mums credit score?
How will it affect me getting a mortgage, not now but say 5 or 6 years down the line?
How will it affect me getting credit? (not that i want to get loans or anything but in regards to say getting a car or something on 0% finance for a year, or something like that)
My mum is really worried about me going bankrupt i know she really doesn't want me to do it but at the moment i cant really see any other option, if i carry on paying out the amount i do each month on the wages that i am, ill be about 30 by the time ive paid it all off, will have no chance of saving up money to buy my own place or even moving out to rent..
I guess i just want to know all the cons against all the pros..
Does it really wipe out your debts from day 1? (as ive been told)
Also say i filled out the forms tomorrow how long would it take to go bankrupt and do you stil pay your creditors in between filing the forms and actually going to court (im with payplan at the moment so am paying my creditors monthly)
Thanks for any replies!
By skint1
#4880 Hi.
I can't answer all your questions but I will try and answer some.
I'm sure others will step in and correct me if I'm wrong :)

You can rent but you will probably need to give a larger deposit.
It really depends on the landlord.
I have been lucky.I was already renting and my tenancy does not mention bankrupcy so my landlords don't know.

It should not affect your mum's address,but if you have any joint debt or are a second card holder ect. you would have a 'financial link' with her and that could affect her credit rating.

With regard to bankrupcy and surplus income.The OR looks at your income and what your expenses are each month.Then if there is a resonable amount left (surplus)the OR can take between 50 and 70% of this surplus for 3 years.

I found that I only had a surplus of £50 and I haven't been asked for anything at the moment.If you have a surplus of less than 100 it can cost more for the OR to administer and would not be worth doing.(But you can never be sure.)

Your debt will be wiped out immediately if you declare yourself bankrupt.There are some debts that are excluded.Court fines,parking fines,student loans and some others.

Hope this helps.
By skint1
#4881 Sorry forgot to answer the morgage question.

For 6 years bankrupcy will be shown on your credit file.Then your credit file will be started fresh.
If asked you will have to tell a company you have been bankrupt.But there are alot of lenders out there who will consider you still.
You will probably only be able to get a 85% morgage and it might be at 1% high interest.
But it is no different if you have a bad credit rating with ccj's or on debt management plan.
By hubblebubble
#4882 hi skint1
thanks for your reply! I havn't got any joint debt with me mum so dont have to worry about affecting her credit score in that way, when you're working out how much income/expenditure and surplas you have left over are there figures that they will accept for example you can only say you spend £20 a month on clothes and do you have to prove how much rent etc you're paying? I pay my mum rent in cash so dont have any "proof" as such as to how much i give her
By hubblebubble
#4883 Also another quick question..
When i was reading up some info on bankruptcy it says they wont let you if youve shown reckless spending,what do they classify as this?
I wouldnt say ive been reckless, just really naive in taking out credit and thinking i can pay it back and not realising how interest and charges accrue so damn quickly!
Would it affect if i say, wanted to go to university at some point in the future?
thanks again..
User avatar
By JaneClack
#4884 Hi Hubble Bubble - Skint1 has given you some very good advice - from the horse's mouth so to speak (she knows whereof she speaks!).

Reckless spending is basically gambling or deliberately taking out credit you know you won't be able to pay back - you do not seem to be one of these and it doesn't stop you going bankrupt but would have meant a bankruptcy restriction order which would have extended some of the ramifications of bankruptcy and this would not apply to you.

Student loans are looked upon differently - I know of people at university who have been bankrupt and got a student loan. As these are backed by the government there are different rules - they want everyone to have a degree if possible.

I don't think you ought to worry!
By skint1
#4901 When filling in the forms for expnses you put what you spend.

Clothing £30 a month should be ok if you need smart clothes for work more.

If you pay your mum rent for bills ect put how much you give her.
It could be useful to get a letter from your mum saying how much you give her.

From what I can understand you put down what you spend and as long as you are prepared to back it up if necessary.
The OR isa lot more generous than creditors if your on a debt management plan.

This is the sort of thing you really don't need to worry about until you have decided what you are going to do.

Any more questions just ask :)