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Please help my brother - £85 000 debt

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Hi,
I haven’t posted before just been a lurker, but am in need of some serious advice regarding my brother’s situation and hope that someone would be so kind as to point him in the right direction.
His situation is - About 2 years ago his business partner and he fell out and he bought his partner out. It was over a job that they had made a mistake while doing. (he works in construstion)The partner wanted to fold the company, he didn’t. So he struggled on, at one time this co. was quite successful, but with the expense of making the mistake correct, it ran into difficulties. He tried to pay the people he owed money to - suppliers - and the nightmare began. He managed to pay all but one supplier and the taxman. Finally the company went bust. But not before he put everything he had personally into - he also shored it up with a business credit card - not in the name of the ltd company but his own name to the tune of £85 000. He took advice from some debt insolvency place and was advised to go bankrupt.
But the insolvency comp, said it would cost between £8 -38000 to put company into liquidation. He didn’t have any money, so didn’t do it, then the taxman put it into recievership anyway.
Meanwhile the insolvency guy set up another company for him - It’s not in debt, just has no funds, assets or much work. My brother has been paying the c/c debt min payment for 2 years - £500 a month. Hoping I think that the new company would pick up or for some miracle so that he could pay it off. He never told anyone about the credit card debt. The strain and worry has been unimaginable - and to cut a long story short it has culminated in the breakdown of his marriage. His wife has put him out of their house. They are hoping to work things out but she will not take him back until he has sorted out his business and self.
Their house has no mortgage - ex council house that they bought years ago for a discount- when her father gave her money recently they paid rest of mortgage off. It is in joint names and worth about £130000, but if the house is used to pay the c/c debt - his wife will never let him back, will fight him for the house, and he has no means of paying or obtaining a mortgage. Plus she and their 4 kids need somewhere to live even if marriage is over. His wife’s father is wealthy and business astute, and will ensure that my brother is made to pay for debt, not his wife. He is homeless, has no money to even make min payment on c/c debt. Is he liable for the c/c debt and can they seize his house to pay for it? He is afraid to ask the bank for any kind of repayment plan- it is a bank of Scotland c/c - in case they demand his house. Would he qualify for trust deed? If he goes bankrupt - they will seize house won’t they? All he wants to do is try and save the house and his marriage - think when his wife finds out about the c/c he has had it. Can anyone suggest where he should start or where to go for advice?

I am so worried for him, he is literally reached the end - and to cap it all in the midst of all this financial terror our beloved father died, so he is grieving too. thanks in advance.

Comments

  • at times like these one needs much support and you are thankfully obvisly there to help him...
    however the fact that his wife is showing no support what so ever puzzles me..
    when you enter a marriage its for the good and the bad.. if she isnt willing to show help or support then maybe the marriage is over with or without the debt..
    i may be wrong over ms may have a different view but your brother needs all the support he can get right now and being made homeless has obv not helped

    i fell for your brother and congratulate you on the loyalty and support you are offering him...

    as for bankrurtcy to my knowledge it would force you to sell up...
    with the cc i dont see why they wouldnt give you a payment plan..
    give it a go before he defaults...

    good luck and welldone for being such a good brother...
    :beer: :j OFFICIAL DFW NERD NO 159 PROUD TO BE DEALING WITH OUR DEBTS:beer: :j

    If you do a job well, people won't be sure you've done anything at all :rolleyes:

    Must claim back bank charges!!!:rolleyes:
  • thanks for your reply - i just asked a neighbour who is quite financially astute - he mentioned apossible way out would be for my brother to sign over house to his wife - then file for bankruptcy - is this possible? Or even legal! That way tho my brother would be stuffed - at least his wife and family are not affected. Think that is why is not helping out any longer - she can't take the strain of shoring up the debts either - and she does not work. Does anyone have any idea what he should do?
  • You have to be very careful about transferring any assets. The Official Receiver has the right to overule any deals that prejudice the bankruptcy position. I can not remember the exact terminology, but it as the OR is concerned that no one has a priority position in the bankruptcy. There is a web site https://www.theba.org.uk which is run by the bankruptcy organisation, please take a look there.

    The legislation and rules surrounding bankruptcy are a nightmare, and not many solicitors or accountants understand them properly.

    Please make sure you get some good advice and be very careful about transferring assets.

    Hope this helps and keep us informed.
    Don't lie, thieve, cheat or steal. The Government do not like the competition.
    The Lord Giveth and the Government Taketh Away.
    I'm sorry, I don't apologise. That's just the way I am. Homer (Simpson)
  • unfortunately i can't offer any help on what to do but....

    rhonam wrote:
    His wife’s father is wealthy and business astute, and will ensure that my brother is made to pay for debt, not his wife. .

    If your brothers wife doesn't work it's your brother who has kept her and probably paid for her clothes, jewelery, food and everything else. While the company was successful she must have had the holidays, nice cars and benefitted from the success.
    Her asking her father to help keep her marriage together, his grandkids smiling, clothed, homed and fed can't be too much to ask can it?

    Also think there might be something he isn't telling you. £500 on 85k credit cards seems very low. I've got just under 2k on one of mine and my minimum payment for this month was £57, so £500 would be more towards 20k and £500 is more like a mortgage payment on 85k,
  • Apple_2
    Apple_2 Posts: 148 Forumite
    There's a lot in your post. business debt is treated differently to personal debt, but I think you said the credit card is the only debt and that is is personal not business so that's ok. Are you in Scotland ? because 'bankrupcy' is totally different there, think it's called a trust deed and follows different rules. Go to a CAB or equivilant if in Scotland for lowdown. If in England/Wales and he goes for bankrupcy then the house is in the equation. If his wife can prove ( probably can ) that mortgage monies came from her dad, that will help - but the house still increased in value since bought and the OR will assume some of the equity increase will belong to your brother - this can be 'bought' from the OR by an interested party ( wife, father-in-law ).
    Basically your brother NEEDS to go get advice now. Either CAB or scottish equivilant so find out his options, and make decisions from there.

    Edit - If your bro transfers the house it will probably be overturned by the OR anyway. Basically they know all bankrupts try to 'protect' loved ones/assets if possible. The OR is not there to do that, he stands in the shoes of the bankrupt and is legally obliged to distribute any monies/assets the bankrupt owns. They look back approx 5 years and examine all transactions. The transfer of a property for under market value would be nullified I'm afraid.
  • Conor_3
    Conor_3 Posts: 6,944 Forumite
    He is liable. The debt is in his name. The house is at risk and would be seized as it is in joint names and I expect that RBS would file for bankruptcy as they have no hope of seeing the money.

    Your brother is homeless solely due to trying to service a debt he can't afford. What was going through his mind when he thought paying £500 off a bit of plastic to a company making £billions instead of using the money to put a roof over his head and food in his mouth is beyond me. But as he's running around like a headless chicken because of everything, I suppose I shouldn't be surprised.

    His wife sounds like a right money grabbing cow and the father in law, equally as selfish and used to throwing his weight around and getting what he wants because he's got a few quid.

    His marriage is already over. She has well and truly indicated that fact already.

    Honestly, I'd go bankrupt. It'll take the weight of the world off his shoulders whilst also having the convenient side effect of sticking two fingers up to the wife and father in law. If the father in law is as wealthy as he claims to be and likes interfering with other peoples business, he can afford to help the wife find the £65000 to secure the house.

    Either way, I think your brother needs to forget the Self Employed idea for a while and get a job. A steady regular income is of paramount importance when trying to sort out your financial mess - the one thing you don't need is the instability of income that is self employment.

    I would expect that someone with the skills your brother has, should be able to find a job paying £500+ a week quite easily. It would have two benefits:

    Firstly, he'd have plenty to pay the £500 a month on the CC.
    Secondly, if he's adamant that he can save his marriage, he can prove to the wife that he is a breadwinner on a steady income with more than enough money to pay the bills and run the house.
  • scheming_gypsy
    scheming_gypsy Posts: 18,410 Forumite
    They've got a roof over their head though. The mortgage is paid off and by the sound of it the money wasn't given to them to get out of debt or because of the debt.
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