bankrupcy

[Greyday]

A friend of mine has spending problems! Now going for her third bankrupcy. She sayes its the only way out. But surely she can get on a debt management plan? Her debts (she tells me) are in region of �20,000

I find it annoying as I have debts (much smaller than hers) yet I am paying back on a debt management plan. Yet by her going bankrupt, apart obviously from the other financial implications, is she not just wiping her debts away again?

[Loosehead]

She may well be able to get on a debt management plan but her real problem is not being addressed, ie she's a spendaholic.

Going bankrupt may well clear debts but it also knackers credit rating whcih should curtail spending at least temporarily.

[Pippa68]

There isn't going to be much sympathy from the court if this is her 3rd bankruptcy. It won't all be plain sailing, & you might want to show her this

http://www.ivillage.co.uk/print/0,9688,164780,00.html

Your friend may well have obtained credit without disclosing the fact that she was bankrupt, & this is against the bankruptcy law. She definately needs a wake-up call! being made bankrupt once is unlucky, twice is very foolish indeed & third? absolute stupidity.

Her spending habits are totally out of control. My husband is a discharged bankrupt (due to his previous marital debts) & certainly wouldn't want to go through it again. He doesn't even want credit now ~ cash is king!

[raysparx]

people like your friend are part of the reason credit card rates sre so high, i know the card companies bring a lot of the problems on themselves by giving cards to anybody but we all pay in the end. It also doesn't make sence to me that when you go bankrupt the card debts are written off, i would think her first step should be citizens advice bureau

[Killerschick]

There's no reason why your friend couldn't go for a debt management plan but she doesn't sound like the kind of person who would be committed to maintaining it. If she's used to habitually spending more than she earns, to have to limit her spending to what she has coming in AND pay something to her creditors could be unmanageable for her.

By going bankrupt your friend is putting her debts into the hands of the Official Receiver but not necessarily wiping them out. If she has disposable income an income payments order can be made against her which can run for up to 3 years even though she might be discharged after 1 year. If she owns a property and there is equity the Trustee in Bankruptcy will force a sale and take equity up to the value of the debts + their costs.

The information on the link in the previous answer is a bit out of date (the Court fee is now �150 & the deposit �310) and bankrupts are normally now discharged after a year. However, when introducing the new regime the government brought in greater sanctions for culpable bankrupts ie those who have gone about it deliberately by taking on debts they knew they couldn't pay. Bankrupts who are found to be at fault can now be made bankrupt for up to 15 years. That said,I have recently had dealings with someone who has just been made bankrupt for the 3rd time (previously in 1998 and 2002) and the Official Receiver has taken no action and he is being discharged after a year as normal.

You might think it's unfair for your friend to get away without paying if she goes bankrupt but there's nothing stopping you from doing the same. Everybody has different ways of dealing with things and some feel more of a moral obligation to pay what they owe, that's admirable and I hope you succeed in getting rid of your debts.

[shawboy]

ive looked into going bankrupt a number of times, think you can only do it twice in a number of years.

[UsAndStuff]

It doesn't help matters when companies advertise the "Individual Voluntary Arrangement (IVA)" as a complete solution to all of life's woe's.
I cringe when I see this, thinking people will get into big debt, stop paying and set one of these up.
I've been in the financial mire, after my wife got made redundant, and my overtime dropped at the same time.
We considered bankrupcy but decided against it.
Please tell your friend that she is doing herself no favours by behaving as she does, she will never have any financial stability, and needs professional help to sort herself out both financially and mentally.

[erimus1]

Since the re-vanp of the Bankruptsy laws, there is no longer the great stigma attached. It is now easier to become Bankrupt, although it is still only made by an order of the court (which may no be made if the court feels that this is just as easy out for the individual).

Many people go bankrupt just to start from scratch.
Bit of a quandy, but i'm sure that if a court feels in inappropriate, they will not issue a Bankruptsy order anyway.
Regards,
Steve

[Greyday]

Thank you all for your replies.

I guess my gripe is, that she again, is washing her hands of her debts.

Doesnt seem fair on me, or thousands of others who try and get their debts cleared. By debt management plans or whatever. She just goes bankrupt.

For example, last week, she knew she was in this position, so she felt fed up, and went and brought herself some new clothes on a new credit card.

Now she worries about going bankrupt again.

Thanks for your replies.