As a student I was no different to anyone else. With my bank account open, overdraft available and student loan waiting to be signed my journey through university began. I was more than ready for this step into independence and never envisaged the serious debt problems and consequential bankruptcy a few years later.
The course I studied was Electronic Systems Engineering and it lasted for four years. The third year of the course was spent working in industry. The semester breaks were also spent gaining experience and earning money for the following year. In the final year of the course I decided electronics was not for me.
I therefore embarked on a one year self study course to make the transition from Electronics into Finance. There were student loans available each year at university and I had to finance my period of self-study through a bank loan. I didn’t spend outrageously because I could not afford to although I did have a fairly active social life as all students do.
When arriving at university I certainly did not expect to leave with the debt I did. The truth is, the debts would have been a lot less if I went to university sure of the career path I wanted to follow. During the time of my A-levels I wanted to go to university simply because of the perception of a great job and great fun. The promise of a job with great salary prospects made the trap into debt so much easier.
This appeared to be a common misconception amongst students. “Another loan won’t matter. It’s for my education and I’ll easily pay it back after university”. For some this may be the case. For the majority of people it’s just a dangling carrot and the reality couldn’t be further from the truth.
For many, the amount of debt built during university can be serviced through a job paying an average salary. For me the problem came after I finished the four years at university and embarked on the period of self-study. This year added about £10,000 to my debt. Further to this I struggled to find a good job after the course finished. The debt mounted further and when I did manage to find a job there was clothes to buy and bills to pay. It then totalled at £33,000.
I continued to repay my debts on time but I had very little disposable income. When I then started my own business with two partners it remained a struggle at first and then became slightly easier until the market turned and the business became insolvent. It then became impossible to service my personal debt and I also had to contend with the £450,000 of business debt.
Ironically, even though I have been through bankruptcy I still have £8,000 of student loans to repay. I know you used to be able to wipe student loans but unfortunately that loophole was closed before I petitioned for my bankruptcy.
I really feel sorry for students now. It is almost expected that you go to university and the fees are so much higher. If I had my time again I would be questioning whether I would go to university at all. There are so many people who did not go to university and still appear to do well.
Further reading from my bankruptcy site:
Student loans and Bankruptcy
Often associated with bankruptcy is the word “Stigma”. Over the year’s people’s opinion of bankruptcy have certainly changed. Whilst years ago you may have been imprisoned and looked down on it is now a viable and humane option for dealing with debts that you cannot afford to repay.
In line with this was the behaviour of friends and family. Their support has been second to none and I am looked at no differently whatsoever. I have not been judged once. In fact a number of them regularly contact me for business advice and ironically have even offered to lend me money!
My parents have been extremely understanding and helpful throughout this time. Busy with their own business they have given me all the support I needed – both emotionally and financially. They paid for my bankruptcy fees and covered my solicitor costs. For all this I am grateful.
My friends have always been there too. It’s really surprising how easily people understand and are always there to offer advice or just listen.
I have never been one to discuss problems, as I am the type of person who just deals with them and gets on with it. This time it was different and everybody was there. A big thanks to everyone!
It seems strange to say this but when creditors contacted me after the bankruptcy they couldn’t have been nicer! To be honest that was a shock.
Further to this the insolvency service couldn’t have been nicer in carrying out their role in the bankruptcy process. Even the Judge was friendly.
Further reading from Piggy’s website:
Bankruptcy advice
Dealing with debt
My after thoughts of bankruptcy paint a picture of two halves. On one side there is fire and on the other side there is water. Yes, bankruptcy serves its purpose and releases you from those debts you cannot afford to repay. However, contrasting this are the consequences of bankruptcy, which can be extremely damaging.
In my experience the two sides do amalgamate and the smoke does disappear leaving a new house to be built. With it comes some wisdom and a lesson in life.
For some bankruptcy is the only option but whoever we are and whatever our financial position is it’s important to realise that the best way to resolve debt problems is by seeking advice. In my opinion the earlier advice is sought, the lesser the damage caused and the greater the probability that bankruptcy can be avoided.
Within the UK I believe there are three main contributors to the debt problem and increased number of bankruptcies.
- The individual
- The Government
- The lenders
As individuals we certainly have to take responsibility for our actions. After all, nobody forces us to take credit. Yet I also think it is fair to say that the government has not actioned much in the past to educate us in financial management. This has then given the lenders the opportunity to take advantage and debt us to the maximum. The government has also played a role here as a weak regulatory framework existed within the unsecured credit industry allowing the debt culture to run away with itself.
Moving forward I believe the government has recognised that education is required and has since launched the National Strategy for Financial Capability. The purpose of this strategy is to improve the financial capability of people at different stages of their lives. Regulation of the industry is also improving.
The arrival of the Enterprise Act 2002 has also served to modernise the insolvency regime and help promote entrepreneurship within the UK. Whilst persons who have been bankrupt because of honest failure will be discharged sooner, those who have been dishonest or are somewhat to blame for their position will have the restrictions of bankruptcy prolonged.
There is no questioning that there is a debt problem in the UK. The only question is how much damage will be caused. As it stands today:
- Insolvencies are on the increase
- Repossessions are up
- Inflation is up
- Interest rates have increased
- Unemployment is on the up
- Surely house prices are reaching a peak
If these economic factors continue in the same direction and there was a recession what will be the impact? Given the current levels of debt that exist it’s an interesting thought!
Piggy’s Support
Until nine months ago it seemed that as each year went by I was another year older. Now I know. As each year goes by I may add a number to my age but the reality is the age I feel depends not on time.
As I write today my bankruptcy ended just one month ago and right now I feel like a massive weight has been lifted from my shoulders.
Whilst experiencing the stress of the business failure, the bankruptcy, a new job, the relationship breakdown and the death of my grandmother I felt tired. Now I’m feeling young again and I’m ready for action!
I’ve learnt so much about myself since starting the business three years ago. I have absorbed everything, have dealt with it and fully intend to move forward from it!
With a stable job, no debt (student loan excluded) and no partner I feel the world is my oyster. I have some furniture to replace in the house, which will prove difficult without much disposable income. That’s down to me though! Perhaps now I’m feeling myself it is time to take advantage of some work and business propositions put forward to me recently. This will increase my income allowing me to live more comfortably and get a mortgage.
Moving forward financially is a much more pleasant experience. No longer am I considering a burden of debt. Now I am positioning myself for a mortgage and having some kind of contingency in the bank for emergencies.
I have set myself target savings for the next five years, which I will be posting to my blog shortly. I am determined to show one thing to everyone after all this anguish. That is bankruptcy, or indeed any serious debt solution, does not need to inhibit your life ambitions and that it is possible to get back on your own two feet. Watch this space!
As far as relationships go it’s really difficult to comment. I must say that the outcome of my relationship with Miss Piggy has impressed upon me the importance of a strong basis. In a couple of sentences it’s difficult to summarise what I’ve learnt but if I had to try it would be:
“A complete understanding, acceptance, appreciation and trust of each other is essential as a basis for any foreseeable future. While there may be as much common ground as Wimbledon Common, without those four qualities it’s highly likely that the relationship will be damaged during times of difficulty. Above all a relationship will, at some point, involve two people both wanting and sometimes a balance just has to be struck.”
I now look forward to what lies ahead.
Piggy’s Thoughts
You may also wish to visit the after bankruptcy page of my website.
At last things are looking up! The process that the Official Receiver goes through to grant me early discharge from bankruptcy began in early May. Just four months after the bankruptcy order was made.
The letter I received requested that I complete and return another income and expenditure questionnaire. This was to assess my ability to contribute to the bankruptcy debts and it had to be returned within fourteen days. Otherwise, the official receiver will not carry out the necessary action to grant me early discharge. I was also informed that I should not contact the Official Receivers office regarding the early discharge as it could cause a delay.
I completed the questionnaire and returned it. Then, at the beginning of August I received my notice of early discharge. Yippee! All over! In total it took approximately ten weeks from the date of returning the income and expenditure questionnaire to receiving the early discharge notice. The discharge was actually granted by the court in mid July, which meant in total my bankruptcy lasted just six months.
So what now? Well since my discharge I have established that I will not be expected to contribute to my bankruptcy debts. Prior to discharge there was only a very small surplus after meeting my domestic living needs and so an income payment agreement was not viable. As it can only be effected prior to discharge it is no longer a consideration and all future income remains mine.
As for having a bankruptcy restrictions undertaking put forward to me, it is possible yet unlikely. The reason I petitioned for my bankruptcy was that of honest business failure. My behaviour prior to and during bankruptcy was responsible.
It feels good to say that with no bankruptcy and no relationship problems, I’m feeling me again. Financially speaking, I am in a good position as I have no debts apart from the student loan to repay. Ok, my creditworthiness is poor and so it will be expensive for me to obtain credit. This is something I will have to accept and account for during financial planning.
Since starting university in 1997 I have been renting property. I really feel as though it is time to buy a house but with the prices so high and considering the consequence of bankruptcy I am not sure if it is a good idea. I know I will be charged higher interest and the likelihood is I will have to lay down a deposit and pay high broker fees. Given my current income this would be impossible right now but I have done my research and know what I need to achieve to position myself for the mortgage.
Further to this what would happen if I did obtain a mortgage and house prices fell sharply? Negative equity would not be a good thing for someone whose income wouldn’t accommodate increases in interest rates. Am I being pessimistic or is this the responsible view I should be taking?
After Bankruptcy
