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Fall and rise of the man who went bankrupt... and has never been happier
When skylines were transformed by the arrival of modern, luxury apartment blocks, it was supposed to be the dawn of a brave new world.
City centre living was going to affordable. Previously run-down areas on the fringes of city centres were to bask in the reflected glory. With the cycle of boom and bust consigned to history, property development was no longer for the brave monied few, it was open to all.
The boom seems a long time ago now. For Sale signs have become a permanent fixture on many homes, but behind every empty development and every mothballed project lie the stories of those who invested in the property dream and lost it all.
One of them is Lee Betteridge. It was three years ago, following a successful career in banking and running his own business, that he joined the many thousands of amateur developers hoping to make easy money from the buy-to-let market.
Buying three flats off plan, two in Yorkshire and one in Manchester, he was assured that when the builders moved out the properties would already be worth 15 per cent more than he'd paid for them. Easy. However, deadlines for completion came and went and by the time Lee had the keys, the property market had crashed.
"I'd always wanted to work for myself," says the 35-year-old from Leeds. "At the time, everyone seemed to be getting involved in property. It just seemed like a good idea."
Further problems finding tenants meant Lee ended up covering the cost of the various mortgages through credit cards and loans. As the economic situation worsened, he hoped to make-up the shortfall with a series of part-time jobs, but it wasn't long before his personal debts had totalled 66,000. Just when he thought things couldn't get any worse, they did.
When banks began to withdraw the mortgage deals which had fuelled the first-time buyers' market, selling his three flats was impossible and, overnight, developments across the country turned into ghost towns.
"Ironically, part of the problem was having a brilliant credit rating," says Lee. "When things first began to go wrong, banks and credit card companies were falling over themselves to lend me money.
"You convince yourself if you can just get through the next month or the one after that everything will be fine. It wasn't. I was staring at this big black hole and just didn't know what to do."
By Christmas 2006, the situation had reached crisis point. The bailiffs hadn't yet called, but it was only a matter of time and, amid a deluge of bleak financial forecasts, Lee made an appointment with an insolvency practitioner. By the end of the meeting, he had decided to declare himself bankrupt.
Materially, it cost him everything. Seeing his finances spiralling out of control, Lee had managed to get another job in banking, but, with bankruptcy classed as gross misconduct, he was forced to resign. He also lost the three flats, one of which he was still living in – and, forced to hand over control of his bank account to the receivers, at the age of 32 he had to move back home with his mother.
However, personally he insists it was the best thing that ever happened to him.
"Until that day I don't think I had even admitted to myself how bad things had got," he says. "I certainly hadn't told my family.
"Having decided to go down the route of bankruptcy, I drove home with a million questions going round my head. I didn't know how friends would react, I didn't know how things were going to work out, but I did know that I had been given a way out. For the first time in months I could see a light at the end of the tunnel."
With endless forms to fill out and interviews with the official receivers, Lee struggled to find the relevant information to guide him through the financial maze. It's partly why he's now written a guide to surviving personal bankruptcy which he hopes will help individuals and advice agencies faced with an unprecedented amount of calls from those who have found themselves in difficulties.
"For me, the whole process was a way getting everything out in the open," says Lee. "The day I went to court was quite subdued. I didn't even see the judge, the usher came out told me I had just been declared bankrupt and handed me a certificate. It's not the kind you get framed and hang on the wall.
"Obviously there was a sense of relief, but I also felt guilty and foolish. You tell yourself you're not alone, but admitting you
are bankrupt can really damage your self-confidence. Lots of people who I'd thought were good friends suddenly
stopped calling and then there were those who I had never been really close to who were really supportive.
"There's still a lot of stigma surrounding bankruptcy. Even recently, I went to the bank and the manager looked at me like he'd discovered something unpleasant on the bottom of his shoe.
"The fact is it happens and it's going to happen to more people than ever before. Having come out the other side it seemed to make sense to put what I learnt to good use and so I sat down and began to draw all the material together."
It's two-and-a-half years since Lee was declared bankrupt. It will be another three-and-a-half before his credit rating is clear. However, having been forced to go back to basics, he has no desire to return to his old life lived on borrowed money and promised profits.
Driving jobs have allowed him to save enough to publish his guide and, free from monthly statements and interest repayments, he's also recently returned from travelling round Asia.
"It's really empowering knowing the cash in your hand is 100 per cent yours," he says. "Living within your means is liberating and I honestly don't want to go back to relying on credit cards and loans.
"After all that happened, I did need my own space. It took me
a while to save up, but backpacking round Thailand and the Philippines was an experience I probably would never have had if things had worked out with the flats.
"At one point, I found myself on a remote island and for the first time in a long time I really had the chance to think about things. I wrote a children's book and while nothing may ever come of it, I realised that just making money wasn't enough.
"When you're working flat out as so many people do, there's often no opportunity to take time out to see what's really important."
Given that he got his fingers so badly burnt, Lee surprisingly hasn't ruled out another foray into the property market. However, if he does, the next time his eyes will be wide open and his finances strictly controlled.
"Who knows what will happen in a few years? If this experience has taught me anything, it's not to rule anything out," he says.
"However, after struggling to keep my head above water for all those months, I now feel more relaxed and assured than I have in years.
"Bankruptcy was probably the best thing that ever happened to me. Everyone makes mistakes, but everyone also deserves a second chance."
For more details about How to Survive Personal Bankruptcy in England and Wales, visit www.survivebankruptcy.info
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Saturday 26 May 2012
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