So I spoke with James from Beat My Debt at the end of last week and I have to say it was a very interesting and refreshing conversation. At last someone who i feel knows what they are talking about and is on my side…. I feel I have much more clarity on the different debt solutions and how they can apply to me. For one thing I am actually now considering bankruptcy whereas before I never thought it possible because of my house.
I told him that I had been pointed in the direction of a DMP to help with my debts but was unsure as to whether to do this or consider an IVA. We went through my situation, my debts, my income and the fact that I am a homeowner and he asked if I had considered bankruptcy.
I said no way because of my home but he told me a few things I really didn’t know about bankruptcy. I thought that you automatically lost your home if you went bankrupt but he said that this is actually rarer than most people think as you are only forced to sell your house if there is substantial equity in it.
I am not sure how much equity is in my house but James told me before considering bankruptcy I should get a couple of estate agents to value it as a quick sale and just say I am moving due to work but then say the job fell through once I have the valuation in writing. I am trying to arrange this but it’s trying to do it when my wife is not at home!
If we have little or no equity then there is no risk at all unless house prices really start to rise which of course they might. But James said that I can protect against this by paying £1000 at the start of the Bankruptcy. I could potentially do this with the help of my parents but I will see what the actual value is first before worrying about this stage.
I was also worried that my wife would be affected by my bankruptcy but this is not the case, I thought that she would have to pay or lose her jewellery or things but this is not the case and we would not have to sell anything like our TV or furniture! The one concern I do have is our car. If it is worth more than £1000 we may have to sell it. Ours is worth about £3000 I think but there is no way I can get to work without it. James said one option is that we sell it and buy one for less than £1000 and use the rest of the money to pay for our Bankruptcy fee. This is something that will need some thought…..
I also thought that I would be blacklisted if I went bankrupt but it seems that the word blacklisted is a bit of a fallacy used by creditors as scare tactics. My credit rating will be affected for 6 years from the start of my bankruptcy but James said this would be the same if I started an IVA or a DMP so no real difference.
If I started an IVA depending if there was equity in my house it would last 5 -6 years and if there was equity I would be asked to release this at the end and if I could not due to my poor credit rating then my IVA would be extended for another year. If I did a DMP this would last for years and years and there is always the risk that I could charging order on my house still as there is no legal protection.
So I considering bankruptcy and I think I am going to have to talk to my wife tonight because I just can’t keep this from her any longer. At least now I feel there is some light and a way out finally. I am so grateful I made that phone call although it was hard but James was not judgemental he just explained the facts and there was no pressure.
I am going to talk to my wife and then arrange estate agents to come round and value the house. I will then be able to make the decision between bankruptcy and an IVA. Strangely I am hoping that the house does not have a lot of equity in it!
Until next time.