A good starting point for bankruptcy questions
By scotty1903
#33280 Hi after a long thought process I have taken the first steps into going bankrupt. I am in debt to the scary amount of 26000 through loans and credit cards. I haven't missed any payments but I am struggling to live from week to week, I work full time rent my house my car is only for getting to work the value of it is about 900.00 I am looking for some genuine honest advice as to what to do next I have read that I should stop all payments to loans and credit cards and start a new basic bank account for wages and utility bills to paid from can someone please help with some real advice.

Thanks in advance Scott
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By Geraldine
#33281 Hi there Scott. Welcome. I am sure we will be able to help.

From what you have said it looks like bankruptcy is a good option for you. Given you are renting your home will not be affected (as long as you continue to pay the rent) and your landlord will not be told. You should also be able to keep your car as it is worth less than £1000.

Once you have made the decision to go ahead then it is correct that you can stop payments to the debts you plan to include. Why? Well basically if you are going bankrupt it stands to reason you cannot afford to continue paying them. You will also need to save all your spare cash to pay for the bankruptcy fee. There is nothing to stop you continuing to pay them if you wish but it will not make any difference to the outcome of your bankruptcy.

Of course when you stop paying your creditors they will start to chase you. Ultimately there is nothing they can do to you that will not be overturned once you are bankrupt. Normally if you tell them you are going bankrupt and ask them to put your account on hold for a month or two to give you time to get things sorted they will be quite helpful.

In terms of your bank account yes you will normally need to open a new one unless the account you use is already a basic one. You can find out more about this here: Bankruptcy and your Bank Account.

I hope this helps. If you need more advice please do not hesitate to come back and ask more questions :)
By scotty1903
#33282 Hi thanks for the reply. Does it affect my wages after I go through with the bankruptcy as in do I have to keep giving them money towards any debts? I am in Scotland also?
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By Hayden
#33283 Hi Scott

The rules regarding Bankruptcy in Scotland are different. However the principles are the same as in England & Wales and the answers that Geraldine has given above still stand.

In terms of debt payments from your wages. When you apply you will have to give information about your income and expenses. If you have any surplus income you will have to pay that towards your debts in the form of an income payment agreement. This will last for 3 years.

There is a guide to how you work out your surplus income here: Calculate your disposable income