BANKRUPTCY!! Pushed to the edge....

[anotherbrokepilot]

bankruptcy and job prospects

I am CPL/IR holder with all the trimmings, MCC, Instructor ratings, etc. Basically done everything financially I can do to get that oh-so-elusive first airline job. Everything that is except pay for a type-rating. My debts now top 40 big ones. On credit cards and loans.
Basically I've gone past the swimming in debt stage and am rapidly moving towards the drowning stage.

I am considering declaring bankruptcy.

My question to anybody that may have a clue about these things is :

What impact could this have on my employability as an airline pilot ? I know its not a question on the application form but what about the reference checking side of things. The nightmare scenario that I want to avoid is getting an interview, passing the sim ride etc and then not getting the position if they were to find out that I was a bankruptee.

Is this likely or do they just do criminal checks and normal references from past employers ?

Declaring bankrupt is stressfull enough without thinking it could mess up my chance of finally getting the job I want.

Any ideas ?

[Hufty]

Hi - sorry to hear about your situation. Not sure about the recruitment impact, but to add my view, why don't you approach your main lender and tell them you're in difficulty?

If you declare yourself bankrupt, your lenders will lose everything. It is now going to be in their interests to help you out. I have heard of people in similar situations actually being given MORE credit by their bank to enable them to pay off high interest credit cards and re-finance all their debt with their main lender at a lower rate of interest. Banks can also extend the term of the debt too to lower your payments. If you're paying off £40k over (say) 10 years at around (say) 7%, your monthly outgoings aren't going to be that bad - possibly around GBP450. Even working part-time in McDs you'll be able to cover that. Banks are all out to make money and they can make more money from you by doing this than if they let you walk away from your debt.

An Independent Financial Adviser might be a good place to go - there may be other ways to re-finance or specialist lenders etc.

I don't know what the impact of bankruptcy will be on the rest of your life, but it might be harder for you to get ANY kind of credit in the future.

Good luck...

[SkidSolo]

I wrote some blurb earlier but for some reason hasn't submitted but the post above touched on some of it.

Have you heard of IVA? Insolvency Voluntary Agreement I think it stands for. Basically, a company like KPMG will sit down and work out your outgoings and what you can pay back over 3 years regardless of what is left after that period all debt is cleared (they will get their money back because its underwritten, the Chancellor had to introduce it because of the huge debt mountain being produced). Is anything secured? If so, it can't be included. You can keep your home and car with an IVA.
The other setback is any hike in salary e.g. getting a command will be snatched up but in 3 years where is that likely to happen! Also, your credit rating is 0 but reset after those 3 years. I recommend it. I tried to pay my way for 18 months but eventually they [credit card companies] forced me into it and it certainly hasn't held me back in interviews, sim checks etc, its never brought up and, quite frankly, shouldn't.

Jeremy Vine on the radio spent some time on it last week and there were some horrendous stories. The expert has an advisory site with loads of tips and links, its www.moneysavingsexpert.com

That should get you started.

Regards
SS

[Little Friend]

Mate,
I am afraid that I can not help you with a nugget of wisdom-only to agree with the above post-talking early when you encounter problems usually solves them-don't be a prisoner to your own fears.

Your first job is always a hard one...and so is the second and third. I have been in the industry 10 years and am a jet Capt. but still find it difficult to find the perfect job. Preception changes as you mature with the vocation.

All I can say is that EVERYONE I know who has started down this difficult and costly road has succeded.

Keep going-it could change tommorow-thats flying.

LF

[Gassbag]

My deepest sympathy. I owe £35k and a few grand on plastic.
Be totally honest with your Bank Manager. Like the others say it is in his interest to help you.
And as Skidsolo says sign up to Moneysavingexpert.com there are plenty of ways on the site and so many tips to help you save a bit here and there. As well as a a lot of knowledge in this area in the forum section.
Good Luck
GB

[topgundom]

anotherbrokepilot

Don't kill yourself. That's my advice.

I'm in exactly the same position regards qualifications, plus the good old student loan but I didn't put any debt on credit cards. They are very bad news and clearing those should be your main priority after eating food and drinking water. (tapwater, that is)

I got my money from kind relatives who no longer wish to speak to me and who run screaming when I go to their houses to say hello. I also sold my grandmother but I didn't get very much for her.

I have done stupid rubbish jobs as stop gaps which is not fun at all and have now come to the conclusion that I should have tried to get the best highest paying job I could (that wasn't flying) earlier on, in order to salvage the situation, regardless of how long it takes for aviation to sort its sorry life out again.

In terms of negative equity, I am the poorest person I know by miles (and that includes qualified med students and other friends with flippin' mortgages) , and sometimes I have to stop myself trying to explain to homeless people why I can't SPARE ANY CHANGE for them. it's a ridiculous situation.

I think that perspective is important in our situation. Today I went to a rememberance service for a friend of mine who died suddenly five years ago at the grand old age of seventeen.

Unfortunately we live in a world where, in a rather contradictory way, money is essential but isn't necessary. This is a paradox and so we can't remain philosophical without playing the game of money in this life.

There is no quick fix to this problem except hard work, determination, and time. If you are prepared for positive developments and you are working hard at something then you are in the best possible situation you can be in. Set yourself realistic repayment targets but in the immortal words of gold leader from star wars, STAY ON TARGET.........STAY ON TARGET......STAY ON TARGET.....



And hopefully, soon you will get that X-Wing job and be apart of the rebel alliance as and when this disturbance in the force has disappeared for the forseeable future.

Seriously though, good luck to all at this difficult time. It is getting better, but slowly...

[DeltaT]

If you would like to ask questions of someone who is a bankrupt because of the situation just as you describe then PM me.
Yes I was given more credit with a drop of a hat, and I went back to the bank many times over A YEAR to try and get proper refinancing help. I think they finally got the message when the court notice turned up on their desk.

[Aero Sid]

Debt solutions

From another broke pilot.

Try looking at www.moneysavingexpert.com (think the earlier web link you were given was incorrect).
This site is written by Martin Lewis and is really worth a look. I'm also looking into IVA, has anyone done gone down this path????

[Cat IIIC]

AnotherBrokePilot,

From Another Broke Pilot,

You've got to try your best to keep your head above water mate. I left instructing last year after 2 1/2 years simply because I couldn't afford to do it. Since then I've done no flying but I can pay off those loans. I dont think bankruptcy is the answer, you'll shoot yourself in the foot for later on in life(Mortgage) and although Im no expert I'm sure I remember something about a criminal record. (If I'm wrong I don't want abusing by smart arses!). It seems that the people getting jobs work in OPS, keeps you in the business and the money is usually ok to survive on. I owe £50K cuz I've lived the jetset lifestyle on the piston wage and I still manage to make it, just!!

Chin up, it won't last forever

[Sally Cinnamon]

With the new bankruptcy laws coming into force in April, there has never been a better time to declare yourself bankrupt. Anyone going ahead between now and April 2004 will be discharged April 2005. Anybody going ahead after 1st April will be discharged after 12 months maximum and in the most simple cases this can be reduced to as little as 1 month. You will be debt free from the moment you hand in your debtors petition form, and if an income order is made then you will only have to pay a maximum of 60% of your available income after all your essential living costs have been taken out.Obtaining a mortgage as a discharged bankrupt is now a pretty straight forward process, although typically you may have to pay 1 - 2% above the base rate. For somebody owing over £40,000 bankruptcy would probably be the best option, unless you had considerable assets to protect. Criminal law is not concerned with bankruptcy unless fraud is suspected, even then less than 1% of bankrupts a year are prosecuted. These are usually gambling related.

[Ethansa]

Sally Cinnamon

where do you obtain your sources from?

How reliable is your source and is the implication of being cleared of bankrupcy, actually mean that your CLEARED? will later on down the line a little note at the side of the page state:

'bankrupt 2004, however cleared 2005; no longer on record as being banrupt'

Thus not actually being cleared of any suspicion of being squeeky clean.

Ethan.

[Sally Cinnamon]

Ethansa, you can pick up a 'debtors petition pack' from any county court which will confirm that the information I have offered is correct. The present fee to present your petition is £390 but this increases to £450 in April. Previously the period was 36 months but as I have stated this has now been reduced considerably to a maximum of 12 months . As an undischarged bankrupt you are still able to obtain banking facilities, many banks offer basic bank accounts to undiscarged bankrupts (The Nationwide offer a good account I believe) and you would be able to open one of these on the same day you present your petition. Once you are discharged you will be listed on your credit file as being a discharged bankrupt. Once a period of 6 years has elapsed you can apply to have this removed from your credit file. So initially it will be more difficult to obtain certain credit facilities but as a way of clearing large debts and being able to make a fresh start in most cases this is the best thing to do. I suspect a visit to any decent financial advisor will confirm this, and the advice would be to go ahead as soon as possible.

[Aero Sid]

Debt!!!

Many thanks for your suggestions, Sally do you know of anyone who has followed this route? I suspect with the current job market there could be alot of unemployed pilots needing help.

[anotherbrokepilot]

I can confirm what Sally Cinnamon says.

This is all true and the reason why I am looking into the whole subject as deeply as possible. The key is the reduction from 3 years to 1 year (and possibly less if you are lucky ) to become "discharged". I have yet to get professional advice and I obviously will before I take the leap.

Many thanks for the replies, to refer back to my first post; does anybody know what the implications could be recruitment wise ? My head says nothing, my paranoia says something else...

I may have come to the end of the road financially but I don't want to give up my dream !!

[Evo]

So initially it will be more difficult to obtain certain credit facilities but as a way of clearing large debts and being able to make a fresh start in most cases this is the best thing to do. I suspect a visit to any decent financial advisor will confirm this, and the advice would be to go ahead as soon as possible.

Bankruptcy should be the last option - it can screw you up for life. Go to the Motley Fool website - www.fool.co.uk - and the Dealing With Debt board. You'll get some excellent advice

[Sally Cinnamon]

Aero Sid,

yes I know 2 CPL/IR holders who have been down the bankruptcy route. Their petition's were dealt with under the old legislation and both are still undischarged. One has turned his back on aviation for good, which I think is a shame after all his hard work. The other has found work as a flying instructor and has been able to make a fresh start, debt free. Some good advice that I did pick up, was that car hire purchase can be a good way of helping to repair your credit record. As an undiscarged bankrupt, you are only allowed to own a vehicle with a value of approx £1500. If your vehicle has an auction value of greater than £1500 then you are likely to lose it unless you can prove it is essential for your work. If you are already tied into an hp deal then the finance company is highly unlikely to reposses the vehicle (from an undischarged bankrupt) provided the payments are met. So you end up driving a much more reliable vehicle, the hp payment itself can be counted as part of your essential living costs and therefore offset against any income order, and finally the fact that you are maintaning your payments will look better on your credit file than having no credit at all.

I think you are right Aero Sid when you say other unemployed pilots could need help. With the huge sums of money that people are now prepared to borrow this is probably inevitable. We are now way way past the stage where we are borrowing with a good chance of earning the money back. With the increasing trend of people borrowing massive sums for type ratings this can only continue. How long before we start seeing on pprune threads from people stating they have bought a Boeing type raing and can't get a job, now they are going to buy an Airbus one? Surely this is the logical progression. By that point we would be looking at a training cost in the region of £100k with little chance of earning that back.

"Bankruptcy can screw you up for life", so can debt! Only last week one of the tabloids ran a front page story about some poor bloke who had killed himself due to owing £70,000 of unsecured credit, with £50,000 of this being in interest payments alone. Unfortunately there is a great deal of scaremongery associated with bankruptcy from the layman. Bankruptcy still carries with it a social stigma although perhaps not as much as it once did, due to our nations increasing debt problem. The problem at the moment is that the courts are full of debtors wanting to petition so it can be difficult getting an appointment. Over 4000 people a week in the UK are now petitioning for bankruptcy. The new legislation has made things much easier for people to get back on their feet. I hope you get the fresh start you are looking for 'anotherbrokepilot'. Please let us know how you get on.

[Evo]

Bankruptcy is an option, but shouldn't be the first one you look at. If you do nothing else, read this

http://boards.fool.co.uk/Message.asp?mid=8370973

[Cruise Alt]

BEWARE OF BANKRUPTCY.

I am exceptionally lucky in that I was in your position and survived several times by the skin of my teeth. I considred bankruptcy but was talked out of it by a friend who is a discharged bankrupt. I am very glad now that he did. This is partr of my present contract:

...the Company may terminate your employment immediately.....commit any act of bankruptcy or take advantage of any statute for the time being in force offering relief for insolvent debtors;

I do not know what the effect on my employment would be if I was already in that position but please make sure of the consequences if you do go that way. Perhaps you could ring an airline chief pilot and ask him.

Good luck and hang in there.

[fly-half]

I would seriously consider calling BALPA for a chat with one of their people.

[Aero Sid]

The Citizens Advice

Cruise Alt

Thanks for that intresting part of your contract. I have been in touch with The Citizens Advice Bureau who have been fantastic.
They get in touch with the banks and talk to them for you. Far easier and would advise anyone with debt problems to talk to them.

Sally thanks for your help too.

A slightly more relaxed Aero Sid.