Advice on what to do next!

[mtm103]

Hi all

I wrote on here before, but a quick summary of the situation is:
My partner has debts totalling around £80k (or maybe even more, too depressed to add it up!) of which £20k is with mbna (his business went bust and he also went through a divore). He can only pay the minimum balance every month, and he stopped paying mbna in January. Before this he had been paying mbna the bare minimum, which never cleared the debt. He stopped paying in January, sent the CAA letter (we are now going backwards and forwards over this, they sent the application form, and then some over T&C, which don’t think were part of the original application form). We have now done a SAR request, still waiting on that. Anyway, debt is still with mbna, just lots of letters. Anyway, he has no assets, mbna don’t even have his current address (with me) and occasionally they call. I have done everything as on here, replied, he never answers his call, he has told noone of his new address.. etc etc. I assume eventually they will pass to a DCA (any idea when?). We both live outside the EU, in the Channel Islands, so if they are going to take him to court it will have to be here (and it will be plastered on the front pages of the local press). Anyway, what does anyone recommend doing? Ideally I would like to get them down to a F&F settlement (we are denying the debt as no CAA) which is around 20% (although could be dreaming). I could get the money together, especially if it gets them off our back! Any recommendations? I am kind of stuck!

[Caspar]

Re: Advice on what to do next!

Not a route I would often recommend thinking about, but have you thought of him coming back over here for a few months to declare himself bankrupt. If he has no assets and that amount of debt, he's going to be repaying it for an awful long time and go through a lot of stress. It may be that for £700 he could clear the lot and make a fresh start. If it was over here it would be no big deal either - BK is no longer published in the local press anyway here.

[mtm103]

Re: Advice on what to do next!

Hi Caspar

Many thanks for this, bankruptcy is certainly something I never thought about. Some of his debts (the 80k are personal in his name, I haven’t even started on the business ones in the name of the business) are with a local finance company, there is no way he can’t pay those, it is a very small community here, and they are very nice when they give you money, but if you don’t pay, things turn nasty. I don’t think they are regulated by anything..
Anyway, I need to look into the bankruptcy thing, does he need to give the county court a list of assets (none) and debts (UK credit cards only preferably and live the local loans out) or do they do their own investigations?
Many thanks

[Caspar]

Re: Advice on what to do next!

Have a read of this:

Bankruptcy Information Centre Bankruptcy Main Menu

[The Debt Star]

Re: Advice on what to do next!

mtm, bankruptcy is no light thing. Think carefully, very carefully about that. £80K is what my debt situation was 5 years ago and now its half that, with a combination of factors ie repayments bringing balances down on interest free arrangements; full and final offers being accepted; PPI and charges claims; compensation on complaints; income tax rebates. It seems a dark period for you both now but it WILL improve. Whereas a bankruptcy will be filed on his credit file for 6 years and, even after that, lenders (eg if you are gettng a mortgage) are allowed to ask the question "Have you ever been made bankrupt?".

Also if you are now financially linked in any way - eg joint accounts, mortgage etc, then it will affect your credit worthiness. You should certainly be arranging your finances as separately from one another as you can, so as to preserve your credit score as a couple that may be a lifeline for you both.

While the stigma is nowhere near where it was in society, lenders etc still treat it differently. As do some employers, even the temping agencies often ask the question.

I feel that negotiating a debt mamagement plan would be the right thing to do as it preserves anonymity.

[Caspar]

Re: Advice on what to do next!

I half agree with you DS. However, I think there are some factual inaccuracies in your post. With regards to your partner, BK would not affect their credit worthiness at all, even if you have a joint account.

Anonimity is also not a problem unless you're very high profile in London or have a lot of friends who plough through these sections as that is the only place you are named nowadays.

You are however correct with regards to employment etc... as it could well have a negative effect on that, depending what you do.

A DMP is all well and good, but with a debt of that size, it could be a very long, uphill struggle to get it repaid.

So £20000 on an MBNA credit card, how is the other £60000 made up?

Without the full facts it is hard to try to suggest the best way forward for you.

I would still keep all options open for the moment, until we know more, and then we can perhaps make better suggestions.

The reason I immediately thought BK was £80K of debt, no assets. He'd be discharged in one year, thus be debt free and free from the stress of it all, could have credit record repaired within another 5 or so if he goes about it the right way - it doesn't happen overnight.

I do however take on board fully DS's comments re employment and he is right.

[mtm103]

Re: Advice on what to do next!

Hey all

Thanks for your help so far. Just a bit more clarification. The business has debts of around £50k (I think) but that is slowly going under/has gone under so I am concentrating on his personal debts of 80k. The biggest individual is mbna, at 20k with a % interest of around 35%. I should point out that he has already approached them on numerous occasions to decrease the interest and they told him to swing it. He had to stop paying although I think he has paid the original amount over and over again, the interest is about £600 a month. There has been a bit of burying head in sand, so I do appreciate that maybe should have acted sooner, but desperate people and so on. The rest is either credit cards with local banks (Barclays in UK is not the same as Barclays here) or local loans. With the local loans, the % interest is a joke (around 20%), but at least he is paying back some of the original capital. Plus he doesn’t want to poo on his own doorstep, quite understandable really, dealing with mbna is OK as they only call, these guys come round and know where you work! The payments to mbna had to stop to pay the other guys. I have been helping him with the rest. But this needs to be sorted. What I was hoping for, that as we live outside the UK in a way, mbna are not going to take him to court here, and it will move to a DCA. I can then sort out some kind of F&F settlement, no way in hell I can ever pay back the full 20k, plus to be honest with you I don’t want to, he has been paying £600 a month to them in interest for 6 years!! That is nearly 45k in interest on a 20k amount which has never reduced.. I know he shouldn’t have got himself in this mess in the first place, but desperate people, plus divorce, plus previous children, plus business going under.. I can see how it can happen. Anyway, thanks all for your help, it is much appreciated.

[SpringerSpaniel]

Re: Advice on what to do next!

As well as the advice on this site, if he is considering bankruptcy or other insolvency-based solutions, the Bankruptcy Association theba.co.uk is very good as a source of both technical /legal advice and personal support in this situation.

[Caspar]

Re: Advice on what to do next!

Sorry to have to ask this, I'm showing my ignorance, but are these debts governed by UK law?

[The Debt Star]

Re: Advice on what to do next!

BK would not affect their credit worthiness at all, even if you have a joint account. .

I find that hard to believe given it will be on his CRFs for at least 6 years. And OP would be financially associated with him.

[Caspar]

Re: Advice on what to do next!

Hi DS,

I made that comment based on a chat last week with someone who was made bankrupt four months ago. They had a joint account and they have found that her credit worthiness has not been adversely affected at all. I agree in theory it should be, but that was someone talking from personal experience.

[The Debt Star]

Re: Advice on what to do next!

Big risk to take

[teaboy2]

Re: Advice on what to do next!

MTM i just had a quick browse through the thread, so sorry if this has been brought up before - But when you say business debts, what kind of business was it i.e. LTD, LLP, Or Sole Trader/Propritership

Sole Trader/Proprietorship is basically self employed where you run your own company on a self employed basis but have a trading name for the business, just like i myself do.

I think its important to find this out as he may not be liable to repay the business debts, depending on what your answer is.

By the way the consumer credit act doers not apply to the Channel Islands so if they CCA was based on the consumer credit act 1974, then the agreement would in my opinion be invalid, unless your OH was living within the UK when he/she applied. Don't qoute me on that though as there is no 100% certainty as jersey lacks its own version so the jersey court would likely look at english law relevant to the agreement anyway. But still they will apply jersey laws to it, and maywell find the agreement unfair based on what amount has already been repaid and MBNA's refusal to freeze interest.

[mtm103]

Re: Advice on what to do next!

Hi all

The original credit card was in 1994 when he was still living in the UK (and had a house, and a job!), but he moved here in 2000. We asked for the original CCA and got a copy of the application form, but I believe that is valid anyway.
The business debts are with the company, and he is a director and shareholder (there is another guy involved, but he has the same problem). We have no joint accounts or anything (although I did name him as secondary cardholder on my Barclaycard, but I don’t think that should affect the credit rating, as I had him down as living at my address, and apart from name, they asked for nothing else) and I am the only person on my mortgage. Having said that, we live in a small place, so if anyone came over it wouldn’t take them very long to get to me! He is keeping everything at his old address (even though he does not live there any more) so noone can make a connection on the credit file. Thanks all so much for your help, it is a bit daunting having to deal with all of this!!

[Caspar]

Re: Advice on what to do next!

I still come back to bankruptcy as a financially inexpensive way to get rid of his debts. Yes it will mess up his credit file, and it may be safer to remove him from your card so there is no financial link at all, but would he want credit after all of this?

A business alternative is a CVA. If you google it you'll find plenty of information, but it's basically the business equivalent of an IVA and used when the only real alternative is liquidation with no chance of the creditors getting their money back.