Sticky Situation - Advice Really Appreciated !!!!

laney79

Hi All,

I am new to this forum and have just started to consider my options and was wondering as to whether anyone would be kind enough to offer me some advice as to the best course of action.

I started my own business in 2003 and it took off very quickly, the business continued to grow until early 2007 by which time the business was turning over £1.5m p/a. Part of the business manufactured hands free kits and in mid 2007 one of the products failed in the field due to a manufacturing issue beyond our control. As a result the business incurred £170k worth of engineering costs in resolving this issue in the field which needed to be done in order to try and obtain substantial payment from clients and avoid legal action.

This cost also prevented me from taking legal action in the European courts against the Polish manufacturer. The delay in client’s payments being received despite the rectification of these issues meant the business started to have serious cashflow difficulties eventually resulting in the liquidation of the business in Jan 2008. The business went down owing the Barclays around £50k, £30k of which I have a PG for although it is unlikely to get called upon as the £80k debtor book and their debenture should cover it.

There is also a £10k facility from HSBC of which there is £3.5k outstanding which they will probably chase me for as I had to give a PG on it.

There was also £110k of family money that was injected in 2007 to try and save the business that I will have to try and pay back personally as soon as I am able.

In addition to this I also had PGs on the 8 months remaining on the lease of the former premises and the landlord has started a county court claim against me personally for £22k.

I also have a Tomlin order for £8k a finance company for a phone system the company leased which will not be called upon unless the company that I have managed to take over system and the lease defaults on payment.

And last but not least I also have £20k of personal credit card debt between 5 cards, most of which relates to business expenses and using the cards in lue of salary during the last six months of the business.

I have managed to find myself a job earning £36k P/A or £2200 p/m which leaves me after living expenses £250 p/m short of being able to make all of the minimum payments on cards and I have been juggling the keep my head above water for the last six months. With the landlords ccj pending and likely bailiff action shortly after coupled with the fact that I have not been able to make an impact on paying off my debts due to credit card interest etc, I am looking to consider IVA or BR.

Asset wise I have a flat in my name only which has a £136,500 buy to let interest only mortgage and has a value currently of £135k. The tenants cover the mortgage and ground rent and I don’t make any money on it. All mortgage payments are paid up to date. When the fixed rate term comes to an end in Jan 09 the recent rise in interest rates will mean it would cost me approx £200 per month to keep it. I am not concerned about losing the flat but not sure what action to take if any?


I have a joint mortgage on a house which I purchased jointly with my long term GF Jan 08 as I needed to get away from threats from angry creditors relating to the business and to be with in walking distance of my new job as I sold my car six months ago to put the money in to the business. The house was purchased for £212k in Jan and has £192,500 mortgage outstanding. I spoke to the estate agent who I purchased the property from and asked them to revalue it and they have advised that I should put it on the market at £205k with a view to taking £195k. One of my neighbour’s properties recently sold at £195k. My relationship with my GF has already been tested for obvious reasons and losing the house would finish it off. I really do not want to lose my relationship / house at all costs. There is a negligible amount of equity in it and that being the case I am wondering whether I would be made to sell it if I was to declare myself BR.

My gut instinct is to go BR rather than IVA.


Considering all of the above I have the following questions:

1. Are my likely to lose the house if I declare myself BR?
   
   
2. What would be the most likely outcome with regard to the flat & should I continue to pay the mortgage if I am likely to lose it?
   
   
3. Should I continue to pay the mortgage on the flat?
   
   
4. How are my partners wages taken in to consideration as she is self employed and does not earn anywhere near as much as me?
   
   
5. When looking to renew my mortgage assuming I get the keep the house in the future is BR looked upon much less favourably than an IVA?
   
   
6. Is it even possible with the current financial climate to get a mortgage deal if you have been declared BR?
   
   
7. I was advised that with an IVA if you have a 5 year agreement for example it’s another 5 years after that before it comes off your record. Also if you default on it for any reason even if it is towards the end of the agreement then you can still be made BR?
   
   
8. My understanding of keeping your house when you become BR if the property is owned jointly, the house remains in your names and you can make an offer to buy back 50% of the interest in the property. With house prices falling my 50% is currently worth £1 - 2k. Does anyone know whether a written valuation from an estate agent is considered to be acceptable or whether the valuation has to done by a surveyor? Also does anyone know whether the O.R has to accept this offer? Also at what point in the BR proceedings the valuation is carried out?
   
   
9. I also would like to confirm the roll of the I.P in BR, my understanding is the I.P manages your case and information and presents your case to the O.R. Does anyone know whether the O.R’s generally go with the recommendations of the I.P?
   
   
10. Bearing in mind that I earn approx £200 above my basic living costs, is it likely that I will have a Restriction Order placed on me?

Thanks very much for reading my post and I would really appreciate any advice that anyone is able to offer.


Laney

dalip

Laney
Welcome
I am totally lost but you need to ring NDL business helpline asap. I do not have the number,but i am sure some other kind person will have it for you. Good luck in sorting out that mess.D

philnicandamy

Business Debtline
0800-197-6027

dalip

I knew a kind person would come along;) .Thankyou phil

laney79

I have spoken with the business debt helpline and they were very knowledgeable and helpful... There advice was to negotiate a token payment on credit cards for next 4 - 6 months, wait and see what happens with regard to CCJ’s and then look at taking BR action after if my situation does not improve. There are a few complications with property etc however i guess that’s the risk that you take with BR.

tigerfeet2006

All the best for the future Laney.

May I suggest you post on the DFW board and ask them to look at your statement of affairs (soa) and see if they can help you save some money to throw at these bills.

shadowdragon

laney79 wrote: »

Hi All,

I am new to this forum and have just started to consider my options and was wondering as to whether anyone would be kind enough to offer me some advice as to the best course of action.

I started my own business in 2003 and it took off very quickly, the business continued to grow until early 2007 by which time the business was turning over £1.5m p/a. Part of the business manufactured hands free kits and in mid 2007 one of the products failed in the field due to a manufacturing issue beyond our control. As a result the business incurred £170k worth of engineering costs in resolving this issue in the field which needed to be done in order to try and obtain substantial payment from clients and avoid legal action.

This cost also prevented me from taking legal action in the European courts against the Polish manufacturer. The delay in client’s payments being received despite the rectification of these issues meant the business started to have serious cashflow difficulties eventually resulting in the liquidation of the business in Jan 2008. The business went down owing the Barclays around £50k, £30k of which I have a PG for although it is unlikely to get called upon as the £80k debtor book and their debenture should cover it.

There is also a £10k facility from HSBC of which there is £3.5k outstanding which they will probably chase me for as I had to give a PG on it.

There was also £110k of family money that was injected in 2007 to try and save the business that I will have to try and pay back personally as soon as I am able.

In addition to this I also had PGs on the 8 months remaining on the lease of the former premises and the landlord has started a county court claim against me personally for £22k.

I also have a Tomlin order for £8k a finance company for a phone system the company leased which will not be called upon unless the company that I have managed to take over system and the lease defaults on payment.

And last but not least I also have £20k of personal credit card debt between 5 cards, most of which relates to business expenses and using the cards in lue of salary during the last six months of the business.

I have managed to find myself a job earning £36k P/A or £2200 p/m which leaves me after living expenses £250 p/m short of being able to make all of the minimum payments on cards and I have been juggling the keep my head above water for the last six months. With the landlords ccj pending and likely bailiff action shortly after coupled with the fact that I have not been able to make an impact on paying off my debts due to credit card interest etc, I am looking to consider IVA or BR.

Asset wise I have a flat in my name only which has a £136,500 buy to let interest only mortgage and has a value currently of £135k. The tenants cover the mortgage and ground rent and I don’t make any money on it. All mortgage payments are paid up to date. When the fixed rate term comes to an end in Jan 09 the recent rise in interest rates will mean it would cost me approx £200 per month to keep it. I am not concerned about losing the flat but not sure what action to take if any?


I have a joint mortgage on a house which I purchased jointly with my long term GF Jan 08 as I needed to get away from threats from angry creditors relating to the business and to be with in walking distance of my new job as I sold my car six months ago to put the money in to the business. The house was purchased for £212k in Jan and has £192,500 mortgage outstanding. I spoke to the estate agent who I purchased the property from and asked them to revalue it and they have advised that I should put it on the market at £205k with a view to taking £195k. One of my neighbour’s properties recently sold at £195k. My relationship with my GF has already been tested for obvious reasons and losing the house would finish it off. I really do not want to lose my relationship / house at all costs. There is a negligible amount of equity in it and that being the case I am wondering whether I would be made to sell it if I was to declare myself BR.

My gut instinct is to go BR rather than IVA.


Considering all of the above I have the following questions:

1. Are my likely to lose the house if I declare myself BR? depends if theres Neg. Equity your GF could buy the Beneficial Interest in the house for £250 + £1
   
   
2. What would be the most likely outcome with regard to the flat & should I continue to pay the mortgage if I am likely to lose it? I would imagine this would be sold/reposessed and any neg equity added to your bankruptcy.
   
   
3. Should I continue to pay the mortgage on the flat? A lot of people stop paying there creditors when they decide to go BC so they can pay for BC costs/Renting Bond/Rent ect.
   
   
4. How are my partners wages taken in to consideration as she is self employed and does not earn anywhere near as much as me?You will have to show what contribution your GF makes to the General Expendatures you make (gas elec food ect)
   
   
5. When looking to renew my mortgage assuming I get the keep the house in the future is BR looked upon much less favourably than an IVA? Dont know but its been mentioned before that your credit is knackerd for six years for BC but for an IVA is the length of the IVA + Six years.
   
   
6. Is it even possible with the current financial climate to get a mortgage deal if you have been declared BR? Thats upto the banks/building societys, but I have read that there are BC freindly Mortgages out there but they sting you on interest and costs.
   
   
7. I was advised that with an IVA if you have a 5 year agreement for example it’s another 5 years after that before it comes off your record. Also if you default on it for any reason even if it is towards the end of the agreement then you can still be made BR? Thats correct as far as I know, and also they can take any equity from your home towards the end of the IVA
   
   
8. My understanding of keeping your house when you become BR if the property is owned jointly, the house remains in your names and you can make an offer to buy back 50% of the interest in the property. With house prices falling my 50% is currently worth £1 - 2k. Does anyone know whether a written valuation from an estate agent is considered to be acceptable or whether the valuation has to done by a surveyor? Also does anyone know whether the O.R has to accept this offer? Also at what point in the BR proceedings the valuation is carried out?
   
   
9. I also would like to confirm the roll of the I.P in BR, my understanding is the I.P manages your case and information and presents your case to the O.R. Does anyone know whether the O.R’s generally go with the recommendations of the I.P?
   
   
10. Bearing in mind that I earn approx £200 above my basic living costs, is it likely that I will have a Restriction Order placed on me? NO but you may get a Payment order, which means you pay a % of any spare monies you have over £99.
    

Thanks very much for reading my post and I would really appreciate any advice that anyone is able to offer.


Laney

I have answered the ones I can to the best of my knowledge, Im sure people will point out if I have made any errors.

Keep your chin up, and welcome aboard.