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Long and complex - bankruptcy vs other options
Tuscan99
Posts: 4 Newbie
Ok long and complex post apologies in advance! Unfortunately all of these issues seem to be interrelated, and its difficult to ask for advice without people being aware of the full picture.
Over the past 12 months I have attempted to deal with a combination of a divorce, the tax office deciding that I have been underpaying for 4 years, and in January of this year being made redundant.
As a result I have been balancing a number of demands and finally seem to have run out of options.
Current Debts:
Current debts total circa £44k – not including any potential negative equity in the property.
This is broadly made up from:
£12k – Joint loan currently around £1400 in arrears.
£1400 – Overdraft (£750 limit)
£6000 – Mortgage arrears (6 months, £750 unsecured – mortgage product included an unsecured loan element)
£14k – Income Tax Liability caused by incorrect tax code
£10k –Two Credit Cards – one transferred to debt collection, other in process.
£600 – Arrears on Council Tax
Although the divorce is still underway, the house has been transferred into my name (as we mutually agreed). Initially this was in counterpoint to me agreeing to keep paying the Joint loan and using other cash at the time to pay various bills. It was anticipated however at the time that the house would have positive value on sale.
Outgoings:
£250 –Board and lodging (Temporary, will need to fund own living costs and rental in the very near future. Includes all bills etc.)
£350 – Credit Cards
£247 – Joint Loan
£1240 – Mortgage
£147 – Council Tax
£300 – Income tax deficit – this has not yet been agreed to, but I see no alternative!
Total: £2534
No allowance has been made for any form of social life, spending money etc at this point!
A number of other expenses that are essential to the ltd company are registered to it, such as internet access and mobile phone. As the company is relatively new it has only paid me a minimum wage (and on some months nothing) and I transferred my IT assets into it on formation to help get it started.
Income:
This is where things get complicated. Initially at the start of the year I took three months off to try to ‘deal’ with everything else going in my life. I did not anticipate any issues with getting back to work with a good salary. Since then with the current climate high level positions akin to my previous role (circa 75k+ pa) are not being filled in my sphere – incidentally I have interviewed for several (lower paid, but very well paid!) roles earning circa £50k PA to be told I am over qualified and thus I am not being considered for the role as I am likely to leave etc.
This has led to me recently starting my own single person ltd company to allow me to act as a consultant. This (in the last month or so) now seems to be working with two clients offering me work and indicating a desire to keep using my services on a project by project basis, however it is next to impossible to predict any regular level of income – I have just been offered 10 days of work at £500pd this month – but may have the same, or nothing for the next 8 weeks. It is of course hoped that either this will increase overtime, or lead to a permanent role within one of the organisations, however it really is too early to make any concrete predictions, other that over time this should become self sustaining if allowed to continue!
However it I seem to be unable to reach any agreements with creditors I cannot provide a regular monthly sum, as there is nothing regular about my income, indeed I am not in a position to pay myself the maximum amount possible from the company as I need to keep it fluid. As an example I will probably be paying myself circa 2k from the company in January from Decembers invoices (i.e. current work being undertaken now), and this will be the highest yet achieved.
Current situation:
As of now I have contacted the CCCS for advice (as until recently I had been working on the basis that I would find a new role in time to manage issues myself), and have a case number.
The mortgage company has now applied for a court date to start proceedings on the property, and one of the credit card companies has registered a default and passed the debt onto Moorcroft. Any of these companies registering a CCJ against me (as opposed to a default) could cripple my ability to gain work next year (which I am already in negotiation with people for).
I have just lost a second appeal with the tax office, over the amount owed and they are now looking for an offer of £300 pcm (minimum) or they will start distraint proceedings.
Job Hunting:
I am of course actively job hunting, and people are talking to me about new director roles next year (largely after April 1st), however some of the work I am looking at is FSA governed. At present I have defaults, but no CCJ’s. It is my understanding that a CCJ would make me ineligible for some of opportunities I may be looking at (I would have access to, and control of, trading systems that can transfer money electronically). Should I be able to obtain full time work next year I can anticipate a salary of circa £75k including car etc.
Points to note:
I am currently not living in my house (and have no desire to) too many painful memories attached! As a result however this has stood empty for nearly a year, and has dropped in value from around £240k to £190k. Sadly the mortgage owing is still around £223 (Settlement) with around £7k of this being early settlement fees. Rental rates do not support the mortgage, and I would need to spend circa £3.5k on the property to make it suitable for rental, and can only expect a return of £750pcm. The local council have offered to place a tenant at £648pcm and to do the work if I offer them a 12 month guaranteed tenancy, however northern rock will not accept this, and will not grant me leave to rent the property.
I have currently moved back in my parents to try to make ends meet during the period in which I have had zero income – however this is not sustainable and really needs to end now for the sake of everyone’s sanity, not only my current (lack of) self respect!
I also have use of a car atm (previous car was company car), If I continue with the limited company I am going to need to obtain a new car for work purposes – needs to be capable of 30k miles per year and be deemed appropriate when meeting and travelling with clients (which include board directors of multinational companies).
In terms of my personal assets there is next to nothing, anything I had pretty much went in the divorce /shrug – as such it is merely a house in negative equity and little else I have to my name.
Questions:
I believe that an DMP or an IVA require a steady and sustainable monthly income, as such and especially in light of the tax offices threat of distraint, and the negative equity in the property (they have now given me until January to come up with this offer) I am not sure that either are suitable given the unpredictable nature of my income.
It seems to me that a personal bankruptcy may be the best (albeit painful) solution. The major concern is that I am forced to resign from my company, especially as recently (as in last 4/ 6 weeks) it now seems to be starting to stand on its own two feet. If I do declare myself (or get declared) bankrupt then I am committed to making the company work for both work and income in the future due to the FSA elements of my field of expertise (I should add I am an IT security/process expert with a financial/trading/directorship background – not a financial expert!) – I understand that the courts can grant leave to continue to run a company (the limited company has no liabilities, has never had etc) at the OR’s discretion, but can find no guidelines for this. If I do proceed down this line and cannot maintain the limited company then I really am left with no options, or viable income stream.
As such what are the criteria for the OR allowing the company to stand? Can this be ascertained 100% beforehand given that I apply for bankruptcy?
Northern Rocks response to the CCCS number was to state that they would accelerate the process of applying for a CCJ to attach the unsecured loan element to the property. They have led me to believe that once they make the request (as in apply for, not obtain the charge) it is enforceable even after a bankruptcy. As such I am concerned that if I am going to go through this process I should start proceedings immediately to ensure that this element is included in the elements that are written off – is this the case or not ? I should add that northern rock have always indicated that they would use a tomlin order to deal with the CCJ issue, however they now inform me that they will not be doing so as there is no payment arrangement in place – and of course they will not accept one unless it is backed by a regular monthly income.
I have the paperwork to do a voluntary surrender of the property. Should I return this to minimise costs incurred during the process ?
I would dearly like to wait until after a conversation with the CCCS to make some of these decisions, however (through no fault of their own) I am currently looking at dates in mid December for the initial interview (the dates they have currently offered clash with work for clients – that I am unable to change)
I guess my main aim is to try and position things so that my stress levels are such that I can cope with searching for a new role, alongside running a new company, and not have circumstances prevent me from working in my field or running said company. To do that I need to try to maintain some quality of life to allow me to function properly – and I am nearly at the point where I am not.
All help and advice greatly appreciated!
Over the past 12 months I have attempted to deal with a combination of a divorce, the tax office deciding that I have been underpaying for 4 years, and in January of this year being made redundant.
As a result I have been balancing a number of demands and finally seem to have run out of options.
Current Debts:
Current debts total circa £44k – not including any potential negative equity in the property.
This is broadly made up from:
£12k – Joint loan currently around £1400 in arrears.
£1400 – Overdraft (£750 limit)
£6000 – Mortgage arrears (6 months, £750 unsecured – mortgage product included an unsecured loan element)
£14k – Income Tax Liability caused by incorrect tax code
£10k –Two Credit Cards – one transferred to debt collection, other in process.
£600 – Arrears on Council Tax
Although the divorce is still underway, the house has been transferred into my name (as we mutually agreed). Initially this was in counterpoint to me agreeing to keep paying the Joint loan and using other cash at the time to pay various bills. It was anticipated however at the time that the house would have positive value on sale.
Outgoings:
£250 –Board and lodging (Temporary, will need to fund own living costs and rental in the very near future. Includes all bills etc.)
£350 – Credit Cards
£247 – Joint Loan
£1240 – Mortgage
£147 – Council Tax
£300 – Income tax deficit – this has not yet been agreed to, but I see no alternative!
Total: £2534
No allowance has been made for any form of social life, spending money etc at this point!
A number of other expenses that are essential to the ltd company are registered to it, such as internet access and mobile phone. As the company is relatively new it has only paid me a minimum wage (and on some months nothing) and I transferred my IT assets into it on formation to help get it started.
Income:
This is where things get complicated. Initially at the start of the year I took three months off to try to ‘deal’ with everything else going in my life. I did not anticipate any issues with getting back to work with a good salary. Since then with the current climate high level positions akin to my previous role (circa 75k+ pa) are not being filled in my sphere – incidentally I have interviewed for several (lower paid, but very well paid!) roles earning circa £50k PA to be told I am over qualified and thus I am not being considered for the role as I am likely to leave etc.
This has led to me recently starting my own single person ltd company to allow me to act as a consultant. This (in the last month or so) now seems to be working with two clients offering me work and indicating a desire to keep using my services on a project by project basis, however it is next to impossible to predict any regular level of income – I have just been offered 10 days of work at £500pd this month – but may have the same, or nothing for the next 8 weeks. It is of course hoped that either this will increase overtime, or lead to a permanent role within one of the organisations, however it really is too early to make any concrete predictions, other that over time this should become self sustaining if allowed to continue!
However it I seem to be unable to reach any agreements with creditors I cannot provide a regular monthly sum, as there is nothing regular about my income, indeed I am not in a position to pay myself the maximum amount possible from the company as I need to keep it fluid. As an example I will probably be paying myself circa 2k from the company in January from Decembers invoices (i.e. current work being undertaken now), and this will be the highest yet achieved.
Current situation:
As of now I have contacted the CCCS for advice (as until recently I had been working on the basis that I would find a new role in time to manage issues myself), and have a case number.
The mortgage company has now applied for a court date to start proceedings on the property, and one of the credit card companies has registered a default and passed the debt onto Moorcroft. Any of these companies registering a CCJ against me (as opposed to a default) could cripple my ability to gain work next year (which I am already in negotiation with people for).
I have just lost a second appeal with the tax office, over the amount owed and they are now looking for an offer of £300 pcm (minimum) or they will start distraint proceedings.
Job Hunting:
I am of course actively job hunting, and people are talking to me about new director roles next year (largely after April 1st), however some of the work I am looking at is FSA governed. At present I have defaults, but no CCJ’s. It is my understanding that a CCJ would make me ineligible for some of opportunities I may be looking at (I would have access to, and control of, trading systems that can transfer money electronically). Should I be able to obtain full time work next year I can anticipate a salary of circa £75k including car etc.
Points to note:
I am currently not living in my house (and have no desire to) too many painful memories attached! As a result however this has stood empty for nearly a year, and has dropped in value from around £240k to £190k. Sadly the mortgage owing is still around £223 (Settlement) with around £7k of this being early settlement fees. Rental rates do not support the mortgage, and I would need to spend circa £3.5k on the property to make it suitable for rental, and can only expect a return of £750pcm. The local council have offered to place a tenant at £648pcm and to do the work if I offer them a 12 month guaranteed tenancy, however northern rock will not accept this, and will not grant me leave to rent the property.
I have currently moved back in my parents to try to make ends meet during the period in which I have had zero income – however this is not sustainable and really needs to end now for the sake of everyone’s sanity, not only my current (lack of) self respect!
I also have use of a car atm (previous car was company car), If I continue with the limited company I am going to need to obtain a new car for work purposes – needs to be capable of 30k miles per year and be deemed appropriate when meeting and travelling with clients (which include board directors of multinational companies).
In terms of my personal assets there is next to nothing, anything I had pretty much went in the divorce /shrug – as such it is merely a house in negative equity and little else I have to my name.
Questions:
I believe that an DMP or an IVA require a steady and sustainable monthly income, as such and especially in light of the tax offices threat of distraint, and the negative equity in the property (they have now given me until January to come up with this offer) I am not sure that either are suitable given the unpredictable nature of my income.
It seems to me that a personal bankruptcy may be the best (albeit painful) solution. The major concern is that I am forced to resign from my company, especially as recently (as in last 4/ 6 weeks) it now seems to be starting to stand on its own two feet. If I do declare myself (or get declared) bankrupt then I am committed to making the company work for both work and income in the future due to the FSA elements of my field of expertise (I should add I am an IT security/process expert with a financial/trading/directorship background – not a financial expert!) – I understand that the courts can grant leave to continue to run a company (the limited company has no liabilities, has never had etc) at the OR’s discretion, but can find no guidelines for this. If I do proceed down this line and cannot maintain the limited company then I really am left with no options, or viable income stream.
As such what are the criteria for the OR allowing the company to stand? Can this be ascertained 100% beforehand given that I apply for bankruptcy?
Northern Rocks response to the CCCS number was to state that they would accelerate the process of applying for a CCJ to attach the unsecured loan element to the property. They have led me to believe that once they make the request (as in apply for, not obtain the charge) it is enforceable even after a bankruptcy. As such I am concerned that if I am going to go through this process I should start proceedings immediately to ensure that this element is included in the elements that are written off – is this the case or not ? I should add that northern rock have always indicated that they would use a tomlin order to deal with the CCJ issue, however they now inform me that they will not be doing so as there is no payment arrangement in place – and of course they will not accept one unless it is backed by a regular monthly income.
I have the paperwork to do a voluntary surrender of the property. Should I return this to minimise costs incurred during the process ?
I would dearly like to wait until after a conversation with the CCCS to make some of these decisions, however (through no fault of their own) I am currently looking at dates in mid December for the initial interview (the dates they have currently offered clash with work for clients – that I am unable to change)
I guess my main aim is to try and position things so that my stress levels are such that I can cope with searching for a new role, alongside running a new company, and not have circumstances prevent me from working in my field or running said company. To do that I need to try to maintain some quality of life to allow me to function properly – and I am nearly at the point where I am not.
All help and advice greatly appreciated!
0
Comments
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I am assuming you are still working in the Financial arena as a consultant? Do the companies you work for not expect you to be solvent (i.e. not Bankrupt). Presumably the risks are similar.
I can see you are in quite a pickle, what does your ex say about the joint debts, have you talked about reconsidering the agreement you came to about the house considering the lack of equity. Is he paying toward the mortgage of the house? Would he not be able to take it on instead? Is the mortgage still in joint names?
Sorry for all the questions.0 -
Sorry, I have no idea why, but I read all that assuming you were female!0
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Bugga!!!
That's all i can say to that. I'm afraid i have no idea as to the impact a CCJ will have on your situation. I'm sure you've already had a look, but justincase this site may have some answers.
http://www.insolvency.gov.uk
As you say, because of the unknown income status, it is very difficult for you to come to any kind of arrangement with your creditors. I wish you luck with this, but would also suggest posting this on the consumeractiongroup forum. Not sure if they will be able to help with this but there's no harm in asking - that site is usually fairly well clued up with the legalities of debt issues so you may have some luck.
http://www.consumeractiongroup.co.uk/forum/formal-solutions-bankruptcy-administration/
Couldn't just read and run, but i really hope they allow you some breathing space to get this sorted. Good luck.After falling off the gambling wagon (twice): £33,600 (24,000+ 9,600) - Original CC Debt: £7,885.91
Dad Gift 6k ¦ Savings & Inv Tst: £2,500
Loan 10k: £0 ¦ Dad 5.5k: £2,270 ¦ LTSB: £0 ¦ RBS: £0 ¦ Virgin £0 ¦ Egg £0
Total Owed: £2,270 (+6k) 11/08/20110 -
Hi Tuscan99
Well done Hun on getting that all down on the screen....bet it was heartwrenching just spilling it all onto the page....sounds like you have had a tough time over the last year or so.
Anyway you`re here now & I would suggest you post over on the BR board....your situation is complicated but there is plenty of property knowledge over there to help you....in fact I am in a similar situation however I have taken DMP as still earning (for now but illness is causing that to drop!!!)
From what you say I gather you are ready to let the property go anyway....so would be worth revisiting your SOA afer that happens & see where that leaves you.
Take care & big Hugs,
Angexx0 -
Right, firstly thanks people for the responces, I am still up working on a document for a client and just thought I would check back and was suprised to see replies so soon!
@vikki400 I ahave been called many things before, female not usuall one of them however although you have indeed made me smile so thankyou!
Regarding the Ltd company they are emloying the company, and the company is solvent and stable (unless I am forced to resign by the OR if I go bankrupt!) however, being employed in a permanent capacity without the limited company woudl indeed be an issue - and I am currently negotiating roles for next year. Regarding the ex, she has her own issues as I was always the breadwinner - I have to say that despite our differences all of our agreements were made in good faith, and I had agreed to take on the joint loan, and she agreed to transfer the joint property (with expected equity) into my name. As such I really should be doing all I can to make sure that she does not get persued for the loan. The property is now 100% in my name, its always been me that has paid for it, and initially I planned on continuing to live there - however I quickly discovered that that was niether possible or desirable.
Oh and for the record I enable some of the transactions that trading floors perform electronically as well as all of the security (techy geek am afraid!) and design business process around this functionality.
@George - yup bugga works for me too! (as well as several other things I probably shouldnt repeat here) Thanks for the tip on the other forum.
@Angel aye, and thanks for taking the time to read it! Unfortunately the negative equity means a volenteryy surrender on the property is a really bad option (50k?) - will also take a look at the BR board. A DMP may be applicable if I get another role in time, but I am having to accept that I wont get another perm role prior to a CCJ (2 weeks?) and one will preclide the other. Hence it looks like going bankrupt and maintaining the ability to run the company is apsolutely critical.
Thanks to anyone else who has taken the time to read 0 -
Well good luck! I was in a position to be looking for contract work at roughly the same pay level as you mentioned and there seemed to be quite a lot about.0
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