Bankruptcy Question

Former MemberFormer Member Posts: 1,876,329 The Mix Honorary Guru
I'm hoping for a bit of advice if someone can provide

I've managed to get myself in a major amount of debt and can't actually see a way of getting out of it. I've been trying to pay it off with my weekly wage but I just don't earn enough

I don't quite know what to do next but am thinking of declaring myself bankrupt

any one got any advice on how I go about this or anything else I can try?

Comments

  • Former MemberFormer Member Posts: 1,876,329 The Mix Honorary Guru
    you done a statement of affairs, listing who you owe what to and show your incomings etc..?

    thats probably the first place to start.

    theres lots of help over at www.moneysavingexpert.com

    but im sure there will be people over here with a bit more help tho.
  • Former MemberFormer Member Posts: 1,876,329 The Mix Honorary Guru
    I would consider an IVA.
  • Former MemberFormer Member Posts: 1,876,329 The Mix Honorary Guru
    Kermy or Sharpy are the peeps to talk too :)
  • Former MemberFormer Member Posts: 1,876,329 The Mix Honorary Guru
    First of all, an Individual Voluntary Arrangement (IVA) is rarely the best option. An IVA is a semi-formal alternative to bankruptcy, where you pay a certain amount of money into the scheme every month and at the end a proportion of your debts are written off. An IVA will usually last for five years. The problem with an IVA is that the insolvency practitioner who sets up your IVA charges a fee for the work they do. The fee often runs into the thousands, which you pay before your creditors get their money. In order to start an IVA 70% of creditors have to agree to the IVA starting, and creditors are less likely to accept IVAs because of the fees charged. To repay £20,000 of debts an IVA company would typically ask you to pay about £300 per month into the agreement.

    An IVA is really only an option if you have a job that you would lose if you went bankrupt (e.g. you are a police officer, solicitor or soldier).

    Bankruptcy is not an easy way out of debts and is really only a last resort. The cost of bankruptcy is fairly high- you need to find a court fee of £150 and a deposit fee of £335 before you can go bankrupt (although you can sometimes get the court fee waived). If you are in full time work the bankruptcy trustee (who takes control of the financial affairs of bankrupts) will often ask for an income payment order, which means that a proportion of your wages will be taken to repay your debts. If you go for bankruptcy you will usually be bankrupt for 12 months, and after this time you will be discharged, with any outstanding debts written off. An income payment order can run long after discharge. Any assets that you have (such as a decent car) will usually be taken and sold to repay your debts.

    If you are working and have some money to contribute towards your debts, a Debt Management Plan (DMP) may be the best option. It's an informal agreement with your creditors where you agree to repay a certain amount each month to get rid of your debt; in exchange, interest and charges will usually be frozen.

    Don't make any rash decisions and get proper financial advice from an expert. There are plenty of free experts about so if you are asked to pay a fee then the agency you are dealing with are rip-off merchants.

    Your best bet would be to make an appointment with the Consumer Credit Counselling Service (CCCS), who are a charity offering free debt advice. They can even set up a DMP for you. Their income comes from the banking industry and you don't pay a penny- everything you pay into the DMP goes towards your debts. You can contact the CCCS on 0800 138 1111.

    Alternatively you can get advice from Community Legal Advice on 0845 345 4345, or from a local advice agency such as the CAB. CAB advice can be hit-and-miss and you'll be best off contacting the CCCS.

    Just to repeat, for 99% of people an IVA is the worst thing they can do, so don't be tempted by any agency telling you about "little known Government legislation that can wipe out your debts"- they're talking about an IVA.

    Feel free to PM me or GWST about your problems if you want a bit more personalised advice; we both work as debt advisers for charities.
  • Former MemberFormer Member Posts: 1,876,329 The Mix Honorary Guru
    Welsh Jemz wrote: »
    any one got any advice on how I go about this or anything else I can try?

    negotiate with those you owe money to and try to reduce your monthly/weekly payments to them. contact your local CAB for advice too. but generally, declaring yourself bankrupt is the extreme last resort and has a hell of a lot of consequences that go along with it for a very long time.
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