'I've never owed a penny to anyone in my life, but I'm losing everything'

Business is brisk and busy in the bankruptcy courts.

The proceedings last little more than a couple of minutes and are about as arduous as a consultation with an understanding GP.

The treatment meted out to those who find themselves submerged under a mountain of unpayable bills has come a long way since the time of Dickens' Little Dorrit and each day in the final quarter of last year more than 300 people in England and Wales made their way through the bankruptcy courts – a considerable number of them voluntarily. With the deepening recession expected to swell their numbers dramatically over the coming months the courts service and debt charities are braced for an avalanche of insolvencies in 2009.

Bankrupts are barred from certain jobs and professions such as accountancy, they are also forbidden from running their own business. For a year after insolvency they cannot borrow more than £500 without declaring their bankrupt status, while the court order stays on record for six years. For those culpable in their own downfall the penalties are more serious. But for most it is a price worth paying.

The dyslexic father

Harry Cooper, 41 and his former partner Julie, 38, spent most of yesterday at the Citizens Advice Bureau (CAB) at the Royal Courts of Justice where dozens of indebted clients on the point of insolvency seek help each day. The unemployed father of a large family suffers from dyslexia and has scarcely worked since leaving school. He has been on incapacity benefit since before he first came into bitter dispute with a London council over an unpaid poll tax bill back in 1993 which has seen his bank accounts frozen and even resulted in him spending 24 hours in a police cell.

Since then and despite being declared bankrupt in 2006 against his will, he has found his outstanding arrears balloon from more than £2,000 to nearly £80,000 once taxes, professional and legal costs are added. That morning with a CAB adviser, he had spent more than two hours on the phone trying to find an insolvency practitioner who was willing to take his case on legal aid – an increasingly common and frustrating state of affairs for those seeking to climb out of the debt mire.

"I feel very angry about what has happened," says Mr Cooper. "I like to hit out but I know that is not going to make it any better. My ex-partner is losing weight and can't sleep. It has affected the children – they can sense the stress and tension in the household. This case could take another year and we could all be homeless by then. I face losing everything I've ever owned. What makes me so angry is that I never owed the debt in the first place. I have never owed a penny in my life to anyone. If I haven't got the money, I just don't have it."

The pensioner

Frail and unsteady on her feet, Rosemary Hall dragged herself up the stairs of the High Court in London at a painfully slow pace. In her hands she clutched the documents she needed to go bankrupt. At the age of 76 and burdened with a £20,000 debt, the former beautician had been left no option. Nevertheless, she felt little relief that soon her financial burden would be lifted.

"I feel shame, so ashamed. I don't feel relief, just guilty," she said. "I hate this. I didn't want to go bankrupt. I would prefer to solve it myself. I feel I have not done my bit for my country. I just couldn't. It all fell apart," she said.

The retired widow from west Norwood, south London, had first got into trouble a few years ago, gradually building up a debt, helping out her children and seven grandchildren.

"I took out some loans to help my family when they lost their jobs. When you are a mum, what else can you do? That's what mothers do," she said, explaining how the debt had spiralled as she took out more loans to cover her costs. "With my pension (£211 a week) I tried my hardest but it was a vicious circle. Suddenly everything got too much. My sister was ill with cancer and I was caring for her for three months. It was so traumatic, I just could not think straight. There was all the shopping and the funeral expenses. I sat down one day when I got home and I thought, 'what have you done?'"

She tried a variety of debt company solutions, took out consolidation loans and attempted to repay the money over a 10-year period. But she read the small print and realised her children would be burdened with her loans if she died. "The banks shouldn't give credit to the elderly, people over 70. It should be stopped. They shouldn't let them get credit cards, build up debt. I'm not blaming anybody but I think you get to an age when you are too old to have such debt.

"So I have had to swallow my pride and go bankrupt."

The businesswoman

At Leeds County Court yesterday Rachel Brown was looking forward to ending her debt nightmare with mixed feelings. "It is scary and a bit embarrassing," said the 45-year-old businesswoman, who until yesterday owed £40,000. For her the problems started when her husband suffered a severe nervous breakdown. He was treated for bipolar disorder and psychosis and spent six weeks in hospital, but even when he was released his violent behaviour continued to drain the relationship and the family finances. "I have a business and I managed and juggled everything but once you get a bad credit rating that is it," said the mother of two. "I have kept my head above water and I've paid everything on time living on my overdraft of £1,900. But on 23 January the bank called it in. I am a great believer that if you have built up debts you should pay them, but there was nothing I could do."

As the credit lines dried up even the catalogues with which she had an unblemished credit record shopping for the family's clothes pulled the plug on her.

"I have just split up with my husband and I feel like it is a new beginning. I will never let the debts build up again. I spent every day for years looking at my bank account on the internet. It is the most terrible feeling you are fighting this dreadful thing. I wish I had done it years ago."

The security guard with 25 credit cards

Over the years Paulo Mandisie managed to get hold of more than 25 credit cards, accumulating £152,000 in debt. Yesterday, the 38-year-old looked weary as he came before the High Court to make himself bankrupt.

A security warden, he had struggled for months to keep up the interest payments alone but when his company declared they would no longer fund overtime, he was left penniless. After paying his essential bills, he had just £40 a month for the rest of his costs.

"I was so depressed. I still am. I have a wife and two kids to look after. It has really affected my health. They start hounding you with calls. I couldn't answer the phone. I have missed so many important calls because I didn't want to pick up the phone," said Mr Mandisie, from south-east London.

"I was using credit cards to pay off debts."

Just 10 days ago, even as he was preparing for bankruptcy, he was receiving texts from companies offering loans.

"They bombard you with leaflets. Everyone convinces themselves they are going to pay it back but I have struggled for eight months and couldn't cope."

Bankruptcy would offer him the chance to start afresh, he said: "I'll be very happy. I can lead a clean life. I'm not going to touch easy credit again."

The unemployed divorcee

Ivan Grant, an unemployed plasterer, 27, who arrived at York Crown Court this week with his mother, owed various creditors £23,000.

His was one of two cases to be heard that day by the reassuring figure of District Judge Wildsmith who discharged the business of the father of three going bust with a minimum of fuss and no sense or recrimination.

"It all started a couple of years ago," said Mr Grant as he emerged from finalising the details of his bankruptcy over the telephone with the official receiver. "My marriage broke down. My wife used to pay all the bills; she used to control all the money. Then my work dried up as the building trade went into recession. My mother has been helping support me to get me through this period. I wish it hadn't come to this.

"At the moment it feels like a big weight off my shoulders. Now I can start thinking forward again. I can move in with my girlfriend. My advice to anyone in this situation is don't stick your head in the sand like I did. There were so many bills stacking up. As a plasterer you need to run a vehicle. I had to give my wife £350 a month for the children," he said. "I like a drink, which didn't help. The more debt I was in the more I went to the pub. It was a vicious circle."

Some names have been changed

Bankruptcy: The legacy

If bankrupt, you may not:

*Obtain credit for over £250 without telling the lender you are bankrupt

*Act as a company director

*Take any part in the formation or management of a limited company without court permission

*Trade in any business under any other name unless you inform all persons concerned of the bankruptcy

*Practice as a charted accountant or lawyer

*Hold certain public offices, such as being a magistrate

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