Dont know where to turn

clairev

We have a small family business that we have built up over the last five years and we were finally seeing a reward for all our hard work with a good reputation and repeat business coming in when orders took a nosedive from May of last year. We can only put this down to the credit crunch (plus I spent the month of June out of the office and in hospital at my daugher's bedside) We have even had some of our customers ring up to see if we want to buy their units back as they have gone bankrupt!

We are now in the situation where we realise that we cannot carry on as we are getting no income and having calculated how much we owe we are insolvent:-

Assets:-

House - £110k (£70k mortgage/secured loan)
Truck - £8k
Stock - £5k (would get a lot less for this if we had to sell off as is)
Total - £123k

Debts:-

Suppliers - £30k
Business overdraft - £18k
Tax/PAYE due in next month - £14k
Credit cards and equipment finance - £15k
Total unsecured - £77k
Mortgage - £62k
Secured loan - £8k
Total secured - £70k
Total debts - £147k


Spent all day yesterday trying to get through to the business debtline but no luck so far. (I rang the CCCS and they put me onto the them)

We are not in arrears with the mortgage or the other secured loan as yet but next month we will have no money to pay anything.

My husband is out today still trying to save the business but I can't go on like this and have finally admitted defeat. My main priority is to stay in the house as long as possible as our 23 year old daughter was diagnosed with an aggressive brain tumour last May. She has right sided weakness due to the debulking ops and underwent six weeks of radio/chemotherapy and is now into six month course of double dose chemo. The prognosis is poor with average life expectancy of 2 years from diagnosis. She shares a flat with her friend but has spent a lot of time at home so I can look after her (and try and run the business from office in bedroom!) They are in the process of moving to a new rented property in our village which will make it much easier for all of us as she will be able to keep more of her independence but with support just around the corner.

I will try again today to get through to the business debt line but wondered if anyone here could help me with some of my questions.

As we have no income from the business would we be entitled to any benefits? I applied for £50 a week carers allowance when my daughter first came out of hospital and was told because I was partner in business I was not entitled to it but pretty sure I would get it now. Do we have to get into arrears with our mortgage before applying for housing benefit?

We have made a sale this week - as we know we are in difficulty should we leave this money in our business account towards the overdraft or can we use it to keep one of the suppliers off our backs. I have learnt from this board that if we did go B/R then the OR would look into our conduct and how we prioritise our debts.

We have our truck up for sale and plan to use this money to pay towards our tax bill and PAYE at end of month - will that be acceptable to the OR?

Also if/when we do go B/R what can I do in preparation. I have applied for a co-op account. Worried about all the practicalities and things we haven't thought about that would help for us to sort out now while we can.

Many thanks in advance for anyone who can offer advice

creditpunch

clairev I can't provide any help but I'm sure a bevy of posters are tapping away as you read. Just to say sorry to hear of your circumstance and I wish you and your family all the very best. Love and care is what is important and I think you have your priorities right. All the very best. Get as much info as possible so that you have clear options and keep on with the Debtline.

CP

clairev

thank you creditpunch - I feel better already x

k2nga

Yeah Business debtline is your best bet so do keep on trying. I really feel for you. we lost our business last year so i know how you feel but you are doing the best thing and facing it head on and trying to deal with it.

Good luck and let us know how you get on when you get through.

skylight

Claire, selling anything to pay something back is kind of pointless at the end of the day. If you need to go BR, then paying something is not going to help. Plus, paying one creditor over another (regardless of the creditor) is prioritising that the OR doesn't like.

Keep on the phone today. Just settle yourself in with coffee and chocolate and keep hitting re-dial. Sadly they are very very busy at the moment so you just have to keep on and on.

As to your home, how did you get to a £110k value?? Is this a guestimate. With property prices dropping at the moment, I would suggest researching this a bit better to find as low a possible price as possible. With that much equity in it at present, and if you and OH are going BR, then it is possible you could lose the home. If you can get the value down to a realistic level and you can afford the mortgage and the secured loan repayments, then you could perhaps keep the property. Property is a minefield in BR and nothing is ever definite. But ORs do not want to make you homeless unless its necessary.

Housing benefit is not paid to mortgages. Its only paid to rentals if you qualify. There is a different scheme where mortgage interest can be paid after a period of time, but you need to be claiming benefits for that to happen. And it wont cover the secured loan payments or mortgage capital.

Calling it a day and meaning it is a big decision. Best of luck.

startagain_2

clairev,

I am so sorry that you and your family are in this situation. It is quite specialised and complicated as there are a number of factors involved.
The last thing I am going to do is read and run, I know how I felt when I first posted and just words of support made me feel a bit better.
So that is what I am offering - I do hope you get through to the helpline today ..... do keep trying and don't do anything drastic, like selling stuff, until you have spoken to them.
Thinking of you

SA

clairev

Thanks skylight. We paid £135k for the house five years ago and I have gone on the price of similar property - it has been on market for a year at £125k. I suppose if we wanted to sell it tomorrow it would have to be more like £90k. I realise that they will take the house but rather than trying to sell it now in order to settle as many debts as possible in the hope that business will pick up (which is what my husband wants to do) I just havent got the energy to struggle on on any longer. My priority is my daughter and I thought that if we go B/R now then we may get a few extra months in the house before we lose it. I have read somewhere on here that often this house is not sold until the end of the year of B/R and I was pinning my hopes on that as at least we will have some breathing space.

With the help of relatives we probably could just manage the mortgage and loan repayments but these would add up to £850 per month and renting an equivalent property would cost around £580 per month. Another problem with renting is that we have two dogs - one is my daughters who she has had since she was four:(

I agree that there is no point in carrying on as whatever we can manage to bring in will be a drop in the ocean but my husband hates letting anyone down and we have up to now had really good relationship with our suppliers so his solution is to get out there and try and sell but it is proving to be impossible in this climate.

So_Sad_Angel

Hi Claire

Welcome Hun....& sending lots of <<<hugs>>> to you ...sounds like you need them right now.

I know you say you feel `defeated` but try to look at it positively. If the business has no chance of `paying its way` then it is time to move on towards sorting out the financial position & if BR is necessary then so be it. There is no price on getting your life back.

You do not say if the business is Ltd...if it is then the liability may be reduced...however as you have an overdraft there may be personal guarantee anyway which will still fall to you. Have you got an accountant that you can chat through the position with??

In terms of benefits...try calling/pop into CAB or Benefits Helpline (sorry don`t know number)...or see if your local council has a Welfare Rights Officer who can help.

The property valuation needs to be realistic & quite honestly the lower the better so that you get more chance to stay in the family home provided you can still afford the mtge & SL pmts.

Keep onto bus debtline...don`t be tempted by the helplines that charge a fee !! There are some vultures out there!!

Hope that helps & sorry if Ive crossed over with other posts.

Angiexx

So_Sad_Angel

clairev wrote: »

Another problem with renting is that we have two dogs - one is my daughters who she has had since she was four:(

.

Don`t worry on this count Claire....there are many rental properties that allow dogs. I recently moved rented & just had to pay a little extra bond for pets.

LilyBart

Hi Claire,
Nothing much to add to what's already been said, but I'm very sorry to read your story. The only thing that occured to me - aside from emphasizing that you must speak to Business Debtline, not a fee-charging organisation - is whether you've investigated whether there are any charities or lobby groups attached to the kind of cancer your daughter has? I know from dealing with stuff for my late brother - different illness - that some charities can assist with finding housing or with emergency funds. It's a shot in the dark, but it seems you'd benefit from getting as much support as you can, from whatever source.
best wishes
Lily

clairev

Thank you everyone. Have just got off phone from business debtline and they have advised that we are without doubt insolvent and to take action sooner rather than later. Once we have ceased trading we can register at the Job Centre and either get a job or be entitled to benefits.

Going to now sort out basic bank account, ring court to find out when we can go B/R and get the forms and write to all our creditors to tell them we are ceasing trading and ask for 28 day hold action period as advised by NDL - oh and persuade my husband we've got to stop! Is there anything else I should be doing???