Is going bankrupt the answer?

Question

I’m 30, married with one child, and have been self employed for just over 2 yrs.
I have debt on credit cards, loans and my personal bank accounts are in such a mess.
My wife has smaller amounts of debt. Our house is worth approx 100k and we have a mortgage of about 50k left and a loan secured on the house also. I recent had a tax bill for 10k that I just cant pay and have 14 days to come up with a solution.

I have no idea what to do, but cant borrow any more.

Its affecting my health and putting immense pressure on my wife and child.

If I go bankrupt will I lose the house? We have nothing else of value, no savings.

By the way im in the UK, what is CAB like? are they judgemental?

Answer 1

Contact your local citizens advice bureau, they will be able to put you in touch with people who deal with problems like you have.
Good Luck.

Answer 2

I went bankrupt in April of last year and opted for the voluntary route with a full personal interview with the Receiver. To do this, I had to have all my facts and figures correct. This is better because the chances of being discharged earlier are higher. The whole process, including going to court first, took about two hours.

I had first investigated the IVA route but it seemed that this would drag on for years. I now wish I had opted for bankruptcy a year before. It would have saved a year of heartache.

Yes, you will almost certainly lose your house. Your name will be published in your local paper and the Gazette. Get the relevant information pack from your local office of the Official Receiver's Office.

In the end I had to weigh up putting off the inevitable against the neverending stress. Like you, my family were affected and hopefully you can count on their support, but the feeling of release afterwards was worth it.

You and the Receiver will agree an amount of income you are allowed to keep to pay for you and your family until you are discharged.

Don't forget that "tools of your trade" are exempt and can not be seized. As of April last year the cost payable to the court was £475 in CASH.

Good luck.

Answer 3

I know you can't borrow anymore money, but going bankrupt will mean that you won't be able to do many things financially at all for the next six years!

As the others have said, contact your local Citizens Advice Bureau - you can visit the website www.citizensadvice.org.uk.

They're a charity who have expertise in helping people in your situation. They'll set up ways for you to repay your debts without getting you in further debt. Don't contact a debt consolidation company just yet! They're a bit of a risk - wouldn't want to put anymore stress on your plate.

Once you've sorted that out, your health should improve. I know how debilitating money problems can feel! In the mean time, to save what money you do have, visit Martin Lewis' website for free advice:
www.moneysavingexpert.com

Good luck!

Answer 4

Call the creditors that you cannot pay and talk to them. I work in an bank now and have worked in financial services for many years.

Creditors place a value on how certain they are that they will receive debts. If you do not speak to them and miss payments they become very uncertain about you. If you contact them and provide them with information about your situation they will negotiate with you. If you don't they will take you to court.

If the tax bill is the debt with the 14 day ultimatum phone "now" and explain that you cannot pay in 14 days and ask if they can help arrange a payment plan.

All your debt problems are manageable. To go bankrupt is the most extreme and for you the most damaging solution - do not do it unless you have no choice whatsoever.

Answer 5

A friend of mine had serious financial problems like you do, and he had to go to court over it. The court made him use a budgeting agency. When all his debts were cleared he kept the agency on.
I honestly think the suggestions above regarding going to the CAB are good. You definitely need good legal advice.
All I can suggest is you try and get the court to get a budgeting agency to administer your affairs. It might even be worth your while going down to the court to discuss the situation.
If it's any help, contact the local bus company to see if they are looking for drivers.
The reason for a normal job is it guarantee's the budgeting agency is better able to budget your affairs without worrying about bad debts and such like.
I think the first thing is to not worry so much about the house as to worry about your family. I think you need to be honest with your wife as well.

Answer 6

Hi if you should go and see a lawyer and seek advice professionally on this i had a friend who went bankrupt it only lasts 3 years but you cannot have any assets, you are unable to go on holiday and if you have the loan secured on your home they will take it off you, you are not allowed a car unless you live in the country there is usually a way around these kind of things like transferring property or cars into someone elses name but with having the loan secured on your home you will be unable to do thisif you have cars in your name and they are paid outright i would advise you to transfer them into your wifes name if she is not going bankrupt these are the things a lawyer will not tell you. Also if you do go on holiday you have to say that someone else paid it for you there are a lot of complications with going bankrupt, so my advice is to go and see a professional person and seek advice.

Answer 7

Going bankrupt CAN be the answer - it was for me when my bookshop hit rock-bottom in 1997 - but you need advice. When it happened to me, I obtained free, totally impartial, sympathetic and practical advice from The Bankruptcy Association. Contacting them will be the best thing you can do at this stage. Whatever you decide, best of luck - even losing your house and having to start again is better than killing yourself and your marriage by struggling on against overwhelming odds. Link is www.theba.org.uk

Answer 8

Nope, I hope this helps you:

How to Avoid Bankruptcy Explained: With the rising consumerism, aggressive advertising campaigns and increasing incomes, people are living well beyond their means. As a result, they are burdened with heavy debts. If they are unable to repay the dues, they have to file bankruptcy. Bankruptcy is the last resort when you are reeling under financial problems

Answer 9

Go to the C.A.B, write to your creditors (including the tax office) as you will need written records to prove you have tried other avenues/ asked for time - if you go bankrupt you have to ensure your wife has sole ownership of the house or you will lose it as it is an asset. Do not borrow more.

Answer 10

STOP STOP STOP

if you go bankrupt you will lose the house. however MUCH MUCH MUCH more worrying is the fact you CANNOT put tax bills into bankruptcies, or IVAs for that matter.

your only chance - as I see it - would be to remortgage your house, pay everything you can off and get yourself a paid job to cover your outgoings