Bankruptcy

A question about : Bankruptcy

I wrote on here a few months ago reference my debt and have since confided in my partner as to just how bad things are, she was fantastic and wish I'd been more honest and upfront before, but unfortunately pride got in the way.

Anyway, I have finally come to the decision that the inevitable is that I am going to have to go down the bankruptcy route, we have a son of 2yo and wish to have another child, however with current finances it would be impossible as we can barely support ourselves without continuing to use more debt to live, having looked at the IVA route this wouldn't be able to be a viable solution as we will realistically have to move if we have another child and there are restictions with an IVA that could send it tumbling down.

I know many people will say that I shouldn't be thinking of children if I can't afford to live but this is precisely why I need to go bankrupt, more going out than whats coming in, and I can't look back at my life and say we never had the family we wanted because of debt, we will never be rich but we do want a reasonable way of life through actual income and not having to rely on credit cards, overdrafts or loans. I have learnt my lesson the hard way and literally destroyed the last 9-10 years of my life because of it. Also need to be clear that other than Child Benefit we have never received any state funding at all.

Having worked out through my yearly excel budgeting sheets I have actually paid back Ј49,000 over the last 9 years (for 5 of those years I was working a second job (80-90 hours per week), and my twenties have been destroyed because of this. My debt still stands at Ј34,000.

I feel like it could be perceived as a kop out going bankrupt but I feel now there is no more option, I need to get my life back before I end up at 40 still paying off debt from my twenties.

I dont want to get to my deathbed with regrets and feel I can finally grab my life back after years of being shackled with debt.

Anyway, the reason for the thread is to see if anyone else has stories of bankruptcy and how they dealt with it before, during and after?

Any useful advice you wish you had been given first?

How does it feel to finally receive those discharge papers?

Best answers:

• I was discharged 2013. Of course, it felt great, especially as I hated the scrutiny I was under. I'd done nothing 'wrong' and the Official Receiver was completely professional and sympathetic, but I found the loss of independence difficult.
  Thankfully, my partner was not declared bankrupt as we'd kept our finances separate, and that certainly helped.
  One thing I'd advise is to learn as much as you can about bankruptcy as it will make the journey less daunting. All the Official Receiver guidance notes are online, so you can see exactly what the rules are and how they deal with them.
  By learning how things worked, I managed to avoid a 3-year IPA. Because I was self-employed, I throttled my income so I had no spare money for a year, thus avoiding triggering a 3-year Income Payments Agreement (IPA), allowing me to be free of any obligations in 12 months instead of 36.
  Morally questionable I accept, but within the rules. All my debt was owed to banks and their obnoxious, harassing debt buyers, not small businesses or individuals, so I didn't lose much sleep over avoiding the IPA.
  Post bankruptcy, my business has grown and I've saved quite a bit now. I managed to acquire a credit card with a tiny limit to help build a credit rating again. Of course, I pay it off in full each month, and generally pay for things in cash or with a debit card. I might try and get a mortgage one day.
  Anyhow, being in debt you can't handle absolutely sucks, being free of debt is great and makes for a much less stressful life.
  Good luck.
• My bankruptcy was in November 2008 due to personal guarantees on business debts., I was discharged in July 2009 at age 38 and didn't have to contribute to the IPA due to low income and being a single parent. I also got divorced around that time.
  In terms of living with it, I have been able to make ends meet and have been in the very fortunate position that I was able to borrow from family when I needed a new car etc. My dad also gave me a credit card on his account for emergencies, although I always paid him back. I couldn't have managed without this.
  Over the years I have had credit from catalogues that don't do checks and I recently paid off 1 year on a cashbuilder card . Today I applied for and was accepted for my first credit card, one of the 'bad'ones but I will pay it all off every month.
  In 2013 I married again to someone who had paid off their mortgage on a small house not big enough for the whole family. Last year we bought a house although asking for only 40% mortgage we were turned down so my husband had to take out a mortgage in just his name.
  For me bankruptcy was worth it as I had approx Ј90, 000 debt and I knew I had other places to go to borrow. If you are in your early 30s now and your partner doesn't have to go bankrupt you may be able to still own a home one day.
  The feeling of getting your bankruptcy papers is euphoric, freedom from debt and the opportunity for a fresh start. However there are long term consequences you need to think about. Good luck with whatever you choose to do.
• I agree with The Gardener, planning is essential to make it a smooth and almost painless exercise. For me the following items were important (not necessarily in this order)
  1. Sort bank accounts
  2. Contact stepchange or one of the free services. They will guide you through & having a reference number to give creditors is worth it's weight in gold. It stops harassment.
  3. Stepchange etc will also help with making token payments to creditors thus allowing you to get the fees for BR together.
  4. Sort accommodation if necessary.
  5. Put your SOA up in this forum - you will get great advice on that.
  6. Don't rush. Do it bit by bit.
  It's wonderful to be debt free & have the stress removed.
• For me, the worst part - by far - was how I felt about the whole thing. Because, to be honest, everything else really wasn't that bad.
  When I heard you had to go to court, I imagined it like one of those scenes on TV. With me in the dock and a judge in a red gown and wig and someone yelling at me about what a bad person I was. Ha. Nothing like. I sat in a waiting room for about half an hour. No-one knew why I was there except the officials. Then someone gave me a piece of paper and took me to a room to have a quick phone call with the official receiver. Everyone was friendly and polite. I didn't feel judged at all. (I never saw the actual judge.)
  Then I worried like hell about the telephone interview. "What the hell have you done with this money, you moron?" I expected them to say. Ha. Nothing like. It was all very calm and factual. I hadn't used any of my cards in the last year. I'd just spent about 50% of my income trying to pay them off. No penetrating questions about why I thought it was OK to buy a big screen TV four years earlier.
  Very little changed after all that. Except I had no more debt repayments and I could only buy things if I had the cash in the bank to do so. (No problem getting a bank account with Barclays.) This wasn't so hard. I'd cut back massively during the previous year anyway.
  I didn't have an IPA, which was great because the whole thing was over after a year. (My OR had said he'd recommend me for early discharge, but nothing came of that.) As my discharge date grew closer I grew increasingly worried that I get another interview and they'd try to get me on an IPA. But the phone never rang.
  I told some of my friends. No-one seemed bothered. All my creditors were banks and everyone hates banks!
  I was discharged in 2011. Bankruptcy was absolutely one of the best things I've ever done. I'm now super-careful with money. I save. Last year I bought a second-hand car for a high four-figure sum. And I paid cash, from my savings for it. It's all mine. No credit
  This year I applied for, and got, a credit card with a Ј900 limit. The first thing I did was set up a direct debit for repayment of the full balance. Why did I get one? Because when you buy things with credit cards you get all kinds of legal benefits and protections. And because I'm preparing to repair my creditworthiness as I approach the day when my BR falls off the record. Maybe one day I'll get a mortgage.
  Anyway, OP, I know exactly how you feel. BR was the right thing for me and I have zero regrets. It may well be right for you. Get proper, free advice.
  Good luck.
• Hi RustyB
  Ive been discharged for a couple of months, and I feel like BR was decades ago. My business is picking up again and I'm about to start making a profit. I got a credit card (small limit, use it once a month, pay it in full every month) just 4 weeks after discharge.
  I was lucky that my old current account 'survived' BR, so I have a cheque book again and feel like I've been able to pick up where I left off in terms of banking.
  I said on here at the time that I felt like an utter sh*t not being able to pay my debts, even though BR was the only option.
  Now everything's in the past I love the fact that I don't owe anyone anything. I even like the fact that everything's so clear-cut - if I don't have the money, I don't buy it (and don't even want it). BR sort of re-calibrates your values.
  I still shop at pound shops (and love it). I bought a fab M&S blouse from a charity shop last week. I love my GiffGaff sim card - Ј10 a month for a tariff I used to pay Ј45 for on O2 contract.
  Sometimes I look back at the things I used to spend my money on and cringe. I know the value of a Ј10 note now.
  Having said that, I'm about to issue my first regular invoice to a very decent client of mine, and hubby is due a lump-sum from his pension soon. We're planning to buy a plot of land and build a timber-framed home, without a mortgage. The future is bright, and I'm in good company with my 'BR secret'!
  My worst enemy in BR was guilt, RustyB. I remember someone on here saying to me that "you have the right in law to declare yourself unable to pay your debts", and that BR exists to give someone a second chance. It helped me to come to terms with it.
  Do your homework on here and phone Step Change for help (they're free, great, and they're on your side).
  Good luck & let us know how you're doing.
  NINANinja
• The ONE and ONLY regret I have, after I was declared bankrupt via a creditor, was that I spent SOOOOOO long trying to pay back that debt. I had worked 72 hour weeks to try and pay it back. I missed so much of my children's childhood and all the most important things in life.
  Do what you need to do. Have your family. Love your children. Spend time with them. Mistakes have been made. Your debts are to massive corporations who don't rely on your payments in order to be able to watch their children grow up. They write that risk in to their everyday business.
  Do what you need to do. x NEVER feel ashamed of being a human being with human needs.