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Long and complex - Bankruptcy vs ??? (cross post from parent forum)

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!

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Comments

  • Hi Tuscan,

    I did read this and hadn't commented as I am a newbie here and my advice really isn't worth a lot. There will be plenty of people that will be along that will be much better placed than me to make suggestions or point you in the right direction.

    In the meantime have you tried calling National Debtline/Business Debt LIne at all? If you haven't iyou really should call them.

    call National Debtline free on: 0808 808 4000
    • Monday – Friday 9am-9pm
    • Saturday 9.30am-1pm
    Business Debtline

    Freephone 0800 197 6026

    9.00am to 5.00pm Monday to Friday







    Just wanted to post to let you know that someone had read your post and keep you bumped up so those with more knowledge will see the post and offer more help than I can. I realise from what you say this is a tough call for you in terms of the work issue etc.

    Good luck with it all and await some more helpful post.
  • Thanks Strim, Appreciated :)
  • I second ringing BDL and NDL.

    Any joint loans you have will fall to your ex wife to pay unfortunatly.

    You will not be able to be a director of a company while you are bankrupt.

    Some jobs that are regulated by the FSA you will not be able to work in if you are bankrupt.

    Have a good read through the first post of the Bankruptcy Help sticky at the top of the board.
    Namaste DeeDee x
  • LilyBart
    LilyBart Posts: 1,171 Forumite
    Would it not be possible to continue consultancy work in your field as a sole-trader?
  • Just bumped you up ...no1 has posted may be beacuse they have missed it...or maybe because it a bit complex they really don't know what to say.

    Anyway bumped up......anyone got any ideas to help for this???
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