As the clatter of the letterbox echoed up from downstairs, I hurriedly made my way down to check the mail, knowing another card was due. “Great news, Dan, You’ve been accepted,” a confirmation email from a company that specialised in giving high-interest credit to people already in debt had told me a few days earlier.
A credit limit of up to £1,200 was advertised and I figured I’d be good for maybe £700 or thereabouts. But the letter revealed they’d given me the minimum £200 – not even enough to scrape by for another month.
Sliding towards the end of your twenties is strange. Social media feeds begin to turn from bleary-eyed photos of friends taken at all-night parties into pictures of engagements, weddings, babies, houses, pets, and job promotions. For many, domesticity locks in, and it becomes a time in which people’s movements in life, and their milestones achieved, become most visual. If someone is generally keen to show you a photo of avocado on toast then they’re going to share the hell out of that baby they just spent nine months carrying, or the keys to the house they’ve just spent the last several years saving up a deposit for. It was disconcerting, then, to be moving into that period of my life age-wise and see photos of my friends popping champagne corks on the doorsteps of their new homes, while I was franticly reading the Citizens Advice Bureau site for debt advice.
"Bankruptcy" is not a word I had ever even considered; I didn’t even really fully understand what it entailed. I thought it was what happens to middle-aged people when everything goes to shit: collapsed marriage, business failure, midlife crisis or something catastrophic. It just didn’t seem like something I – a young, moderately successful writer with some credit card and loan debt – would ever have to truly consider. Given I’d essentially been living on credit for several years as it was, I just presumed everything would be OK in the end. There’s always a horizon until suddenly there isn’t. Debt, and your reliability on credit, skewers your judgment terribly; I treated its growing pile a bit like the sun, or Piers Morgan, and tried never to look at it directly for too long. But there’s only so long before naivety and ignorance turn into flat-out stupidity and something has to break.
At 26 I began a transition from full-time regular employment topped up with writing work to full-time writing work topped up with other work. Initially I was mostly free from debt, with the exception of an overdraft I dipped into every once in a while and an outstanding loan of a few grand – all manageable and kept on top of. But by the time I finally went bankrupt four years later, in 2016, I had racked up £35,000 worth of credit card, loan, and overdraft debt in that period. If you want to throw in student loan debt too then call it a sweet, even £60,000 – two grand of debt for each year I’d spent on the planet. (Bankruptcy doesn’t clear your student loan, just in case you’re getting any ideas.)
I never missed a single loan or credit card repayment. I feared the idea of threatening letters so I always paid them on time. Once I had the debt itself I was pretty responsible, aside from the occasional reckless splurge on nights out, holiday spending etc; the problem was that I needed to borrow more money to make the ever-increasing payments, especially if I had a slower month income-wise, and so began the vortex-like cycle that becomes near impossible to break out of. Several monthly loan and credit card repayments can’t wait because people are late paying your invoices, so you borrow to cover the shortfall. Freelancing and rising debt create a tense and volatile partnership.
The mindset that borrowing money creates is a frightening one. When I was 20 and a student I took out a credit card, and after maxing out a grand on cider and drugs and soon becoming unable to make the payments, I vowed I’d never use one again. By 27 I thought I was responsible enough to try again. However, throw in a redundancy and a shift from well-paid regular work to trying to make it as a freelance writer and the credit cards begin to multiply. Max a couple out and then take out a loan to cover them because the interest is better, but keep hold of the cards just in case, and before you know it, the loan is looking thin and the cards are being used again – cards and loans, loans and cards, debt and more debt. You become so used to living in debt and being on credit that you begin to treat a new arrival of credit as actual money, like the arrival of a new £3,000 credit card as a bonus instead of a further deduction.
By the time that last card came through the letterbox, my credit rating was obliterated. Companies could tell I was credit-hungry from my multiple (and refused) applications for other cards and loans and my time was clearly up. Only 18 months earlier I had got a loan of £15,000 with no problem, and now I found myself struggling to get a few hundred quid on high-interest cards. On paper I was no doubt beginning to resemble Gill Gunderson from The Simpsons.
Ironically, I’d reached a stage of relatively good income as a writer – "relatively good" being the key term of course; I imagine to people with "proper" jobs I may as well be getting paid in high fives and rusks – but I needed a good £700–800 a month spare to make my mandatory debt repayments, and this was on top of rent, bills, etc, plus a good 40% of the amount was only covering interest, not really clearing the debt. I essentially needed a consistently high income for several years to dig myself out of the hole, and the term “consistently high income for several years” in the world of freelance arts journalism is as much of an oxymoron as “intelligent racist” or “welcome haemorrhoids”.
After endless research I concluded bankruptcy was my only option, unless some sort of major opportunity to commit crime came my way. To apply for bankruptcy itself costs £680, so I used the last bit of a credit card to pay for it. It’s an online form and is relatively simple but despite all the official advice I read, the pages and pages of websites – I even read Mumsnet message boards for anecdotal experiences – I still felt unsure about what would happen to me. It seemed like there were so many potential outcomes and none I could find related to a young person in my position.
I took a hearty glug of wine, reread my form meticulously – constantly tweaking my income/outcome costs reservedly for fear my application would be rejected if it could be contested – and hit submit. Within 48 hours I had an email from the Insolvency Service confirming that a bankruptcy order had been made in my name, which means they had agreed I was insolvent and my application had been accepted.
The process of bankruptcy is a daunting prospect. It’s built up of so many little aspects and worries, like doing hurdles of fear. I envisioned court dates, and suited thugs kicking down my front door and carrying away my records and books or taking my partner’s car (or anything of hers for that matter). I feared an FBI-scale audit of every penny I had ever spent in the last few years and being forced to provide details of every bit of my behaviour in correlation to it. I have interviewed lifelong heroes, Grammy-winning musicians, and Oscar-winning actors, but nothing filled my gut with such a mudslide of concrete and dread as my interview with the official receiver (the person in charge of your bankruptcy order).
I had a pre-interview with a fairly brusque guy on the phone who led me to believe it was a real possibility that my computers would be seized. These, referred to as my “tools of trade”, would be in the hands of the official receiver; she would decide if I could keep them. My interview with her was via telephone, which created a mild sense of relief as I had read somewhere that straightforward cases were usually done via phone. My official receiver was great: She was kind and I felt she was going out of her way to help me rather than trip me up. The purpose of the interview with the official receiver is to work out how and why you got into the situation and to work out your current income and outgoings, with the idea that you may be assigned an income payment agreement (IPA) to continue to make reduced payments to your creditors (the people you owe money to).
Because I had continued to make all my repayments and had got into debt in a pretty traditional and genuine way, it seemed like I was in fairly good shape. The overwhelming feeling that soon took hold was that if you’re not fraudulent and haven't simply taken out a massive loan, spent it, repaid nothing, and then declared bankruptcy, then you’re generally going to be OK. The problem is you don’t really know this until after the process, which can make it incredibly intimidating.
During bankruptcy, one of the benefits of being a so-called millennial was that I literally owned nothing for them to take away from me. I can’t afford a house, nor ever will be able to without assistance. I don’t own fancy jewellery, a car, or anything else of significant value, and those are the only things they are interested in. In fact, you’re only asked to list individual items you own that are worth over £500 during the process. They worked out that I was earning enough to be able to make an IPA, and I was assigned to pay about 10% of what I had been paying to my various creditors on a monthly basis for the next three years.
I got a basic bank account with a new bank, because your account is immediately frozen when you go bankrupt. For most people, being told that you are not allowed an overdraft or credit card would be a debilitating and frustrating thing. For someone who has lived on nothing but credit and overdrafts for years, it was a profound relief to hear, like being told you’re no longer in need of crutches after a terrible leg break.
I requested my computers be exempt as tools of trade but soon got a letter in the post saying they weren’t. I quickly fired off a panicked email to my case worker, only to be told it had been an administrative error. They had sent the letter that said “we’re going to take all the shit you need to be able to do your job”, whereas they meant to send the letter that said they were not going to do that.
Bit by bit the smoke clears and some tranquillity and normality come into play. While the process from beginning to end was worrying, rife with stress, and full of unknowns, it was far easier, smoother, and kinder than I anticipated. One online application and two phone conversations were the extent of my interaction with the Insolvency Service to have my debts cleared. Nobody kicked down my door, nobody took anything of my partner’s (not something that is ever done, by the way), and nobody went through my bank statements or grilled me under spotlight as to how I could justify that £9 spent at Wetherspoon's two weeks before my bankruptcy.
The outcome of bankruptcy is not without its downfalls and drawbacks, should be researched thoroughly, and will not work in everyone’s favour, but if you’re a young person with unmanageable and rising debt with few real assets, like I was, it might be helpful to know that bankruptcy isn’t just for when your uncle’s lifelong dream of owning his own golf shop goes down the toilet.