Bankruptcy: My Own Story

When I was a young man, someone going bankrupt took on the aura of a poor slob with a communicable disease. Insolvent people were shunned by society in general and seen as some sort of waster, or even a criminal. I mean, how could you treat the establishment in this way, to go to court in order to get out of paying your debts? You cad, sir! Even before this epoch, there was no relief for the financially challenged except the workhouse. Charles Dickens vividly writes about these times, and had problems with debts himself.

In 2009, bankruptcy has become much more respectable. In fact, it’s the creditors themselves, such as the banks, who are hanging their heads in shame having forced thousands into penury with draconian bank charges, or even written-off their customer’s savings by going under themselves. As far as paying credit card and personal loan debts to banks who have behaved in this way, people in trouble making the payments often consider bankruptcy as the first line of relief, not the last, as was once the case. Not only does bankruptcy end their current struggle to pay, it stops the bailiff in his tracks. And the sonorous warnings from the financial institutions and the courts, et al, that you won’t be able to get credit for 6 years after being discharged; hey, who needs that either with the sky-high interest charges and the jury still out on whether banks will be able to continue charging these swinish penalties, or have to pay back the billions they have “stolen” already.

I tried other avenues before I decided to take the irrevocable step of declaring myself insolvent in the eyes of friends, family - and the world - as the order will be published in a local paper; along with, depending on your celebrity status, a story on your life and downfall.

I had battled along as many do, paying a bit here and a bit there to the roughly 15 creditors I had; they, in turn, had variously threatened me with legal action; made rude calls to me house, and, the final indignity, promised to send the bailiff to clear out my home. The phone calls, some verging on abusive, were constant. All these companies employ credit staff trained to do just what these fleas were doing, roust the victims enough that they would do anything - even borrow more money and pay-up - to get them off their backs.

I will say at this stage, if I had been living alone, I would have probably muddled along as I was: paying £2 here, £3 there: some of the creditors - particularly Capital One Charge Card - were sympathetic and prepared to let me pay the roughly £3000 I owed them the best way I could. Just as long as some money was coming in regularly. Despite high interest rates, I recommend this credit provider to people looking for a credit card. And the truth was, they would all have had to accept these tiny amounts, even if I would take 20 years or more to pay, as I had nothing that would interest them or the bailiffs if it came down to it; nothing of value they could take and sell

But I wasn’t alone. And I couldn’t take the risk of bailiffs coming to my address and hassling my friend, or attempting to get into my furnished lodgings and perhaps removing something that was not mine, or even taking personal objects with no monetary value, in order to persuade me to somehow come up with the money. In fact, I would have quite enjoyed giving these court appointed swine the double-fingered salute and telling them to help themselves to my personal odds and ends. Might it have done them, and their philistine clients much good!

Anyway, I saw that I would have to declare bankruptcy on a voluntary basis, before the creditors themselves decided to take the initiative and make me bankrupt out of revenge, or call in the hounds for the same reason. First, though, and I pray you are reading this, Halifax Bank, one of the worst in terms of unreasonable penalties and pressuring me to pay, I nipped over to Mexico for a quick holiday in the sun in Baja California, drawing out what funds I could from my card accounts in order to weather the storm ahead. (Make a note of that, might as well get hung for a sheep!).

Hertford County Court staff were as nice as nice can be about my application. I had filled in a Statement of Affairs I downloaded off the internet from the government Insolvency Service and paid my £360, I think it was, fee to the Official Receiver who would be taking my case, (It’s nearer £500 now). I appeared in front of the magistrate about two weeks later, who asked my how I managed to get so much credit card debt. I mumbled some excuse which obviously bored him as he stamped my application without further ado or questions. There are thought to be more than 150,000 people who will declare personal bankruptcy in the UK this year, (there were 120,000 or so in 2008). And this figure doesn’t even include companies - such a General Motors! - which have declared bankruptcy over the last two years..

You will have an interview with a provisional Receiver at the court, after the courts have “approved” your petition, then there is a waiting period while the OR looks into your assets and debts (which you have already listed). He tries to find out if you are hiding anything that you should have declared as an asset, or even if you have concealed any outstanding debts, because you are not allowed to pay some and not others (such as trying to retain your favourite credit card, although many do this I have heard).

Then more time elapses as you wait to be discharged. In the case of simple bankruptcies like mine, this period is a matter of months (mine was only six). But if the bankruptcy is complex and involves a lot of money, etc., it can take several years. Once the judge in County or High court stamps your petition, all credit collection action ceases, including door knocking or worse from bailiffs. If they do call, you have the right to tell them to get stuffed.

Once you get your certificate of discharge from the OR, you should contact this other riffraff, the credit checking agencies, such as Experian, etc., and make sure they show you on their records as having been discharged. They will often ask for a copy (or the original) of your discharge. Then you are free from all the worry and hassles and can get on with your life without all those bloody pieces of plastic.

I worked out that the fees, fines and charges, etc., equalled 1/3 of the amount I declared in my bankruptcy! The banks and their ilk don’t stop adding these crazy penalties, even when you are well in trouble and unable to make the payments.

There is another alternative to doing what I attempted to do: pay in dribs or drabs, or finally going bankrupt. This is to call on one of these agencies who take over management of your debts and arrange payments you can “afford” to your creditors. As far as I can see, they are part and parcel of the same problem. They charge a hefty commission in most cases, and, blatantly, refuse to take you on unless you owe a lot of money. Their interest in you begins if you have debts around £12,000 or more; then they know their cut will be big enough to manage your account. Stinks, doesn’t it? But it may suit some people.

If anyone asked me to describe the first ten years of the Third Millennium, I think it could well be called “The Age of Shamelessness,” or perhaps The “Age of Greed.” The institutions we have grown up with, expecting to trust, the banks, have gambled and lost billions of our money. Then they continues to reward failure by still paying huge bonuses to senior staff, despite that they, or their fellows, have survived due to an injection of billions from the public purse. The Mayor of London, the rumpled and arrogant Boris Johnson, labelled the nearly £200,000 he makes on the side as “Chickenfeed.” Footballers pocket millions in salary and more in payments for advertising or writing books. The government MP’s get caught with their slimy hands in the cookie jar and then hold meetings in the Commons to decide how much their salaries should be raised  to cover the “shortfall” by the loss of their padded expenses.

Meanwhile, the gap between the have’s and have-not’s is larger than ever. Our state pensioners, some 3 million souls, are living on about £12,000 a year, less than one weeks’ wages to a top footballer.

So I suggest you don’t take any crap from these financial institutions who are now your creditors: if you were unwise, they were worse; if you are a few thousand in debt and can’t pay, they did the same with billions in many cases. If bankruptcy is a way out for you and your family, have no shame in using the courts to seek relief. I did, and it was right for me.