Help please - 2 questions

Shattered_Dreams

Hi All

Not been on for a while, but I have 2 questions I realy need an answer to. The HMRC have now informed us that they are pursuing bankruptcy proceedings and I've been advised by the Business Debtline to let them do it rather than us go for it voluntarily.
We are now making token payments to our credit cards, loans etc (much to their fury!)and attempting to send the HMRC some funds too as a gesture of good faith.

With things the way they are, we now have accepted that we will lose our house (zero equity and stupidly high interest only mortgage). The mortgage company have offered us an assisted sale scheme, but property in this area just isn't moving - I know of houses of similar value that have had one viewing in 12 months!

My first question is this OH is suggesting that we do not make any more mortgage payments as we are going to lose the house anyway and the mortgage will be included in the BR. We also just don't have the money to cover the mortgage and have been paying half the amount over the last couple of months. We also need to find somehwere to rent and find the deposit, plus the rent if we're successful.
In my mind, not paying anything is wrong, but what does everyone else think?

Secondly, I'm desperately trying to produce a joint SOA, but OH is self employed and his income varies wildly month to month. Do I make an assumption on an average taken over say the last few months?

Your comments will be most appreciated

peachyprice

Hi Shattered Dreams,
It's OK to stop paying the mortgage and save the money for your rental deposit and rent, many people who are about to go BR do that.

When you do your SoA you can use an average, over the last 3 months or so.

HTH

Shattered_Dreams

Thanks for the quick reply! My main concern is that we have no idea how long this is going to take, no dates have been given and the debtline say it could be months!
I was just concerned that it would look bad on us if we stopped paying altogether.
Want it all to be over now quite frankly!

GettingHopeful

Best to stop paying everything, start looking for a new home, get yourself and family sorted, there isn't anyway to stop it looking bad, so best to do the best for your nearest and dearest.

Have you got advise from one of the debt charities?

And all thebest, it does get better once the BR has been gone through. The worst will be over then. xxx

Shattered_Dreams

Thanks GettingHopeful.
I have been getting advice from the Business Debtline, but getting hold of them at the moment is pretty difficult, they're so busy!
It's only recently they advised me to stop paying the loans & minimum payments on the credit cards and offer token payments instead, but concentrate on giving most of the disposable income to the HMRC so we don't get accused of preferential payments etc.

What's worrying me is something I read in another thread, where it was stated that if the HMRC are involved, they have the right to appoint thier own IP and are aggressive at going after your assets! I'm scared they'll only leave us with the bare basics!

I do have one other question (and forgive me for being ignorant on this one) - At what point do we need to consider appointing an IP (if we're given that option). Is it before the BR or after? Or is it the case that, as we are being made BR as opposed to doing it voluntarily, it's out of our hands?

GettingHopeful

Hmm I don't know too much about the HMRC other than that I included them on my statement to the Insolvency P and it was included as just another debt. I did a voluntary br.

I do know that you have to be left with enough to live on and you can argue what you need, and if you can prove the figures all the better. I have been left adequate, and I am fine, actually better off than when I was trying to pay everything. The allowances for living expenses are fine, I have been allowed to keep my car and my personal possessions. Nothing worth a lot anyway. If you have expensive tvs, jewellery and cars you might lose them or have to get cheaper ones.

My understanding is that the court appoints at time of br, but am sure someone will come along with greater familiarity with your particular circumstances.

All the very best

notfes53

Hi SD,

Agree completely with peachyprice and mostly with GettingHopefull!

1. Priority number 1 - new housing/rental: If you have a poor credit history you may need to pay a lump sum of up to 6 months rent up-front, and so I'd put everything into researching rentals, and saving every spare penny. ORs have no interest in seeing you homeless. Apparently some private LLs don't do credit checks, but most agencies do, and will charge you. Read advice on this forum and any others. I moved us to rented when we sold our last house in July, hoping to manage my debts. I had to admit defeat in December, but I had paid 6 months rent up front from the sale proceeds. Even if I'd had some credit reference issues, cash talks directly to LLs! Try - if possible - to find a new place and get moved into it before HMRC petitions for your BR. This is the only reason I can see to keep paying anything to them in preference to other creditors - this is not formal advice, just my opinion, but a few months delay would help you to keep a roof over your heads and maintain some control and dignity.
2. My wife did not (need to) go BR with me. On the SOA I put down all household expenditure/bills, and just left off my wife's debts and personal expenses (her car costs, hair, debts), the balance of her income was then used by the OR as other income for the purposes of my IPA calculation. Bottom line - an SOA is simply a tool, and every one you do can be for a slightly different purpose. as follows:
3. Real Life SOA - all in one pot to assess the overall household positon; what most of us simply call the household budget - this may contain stuff like Sky and Entertainment, Life Cover, Pets - as this is real life.
4. Debtor's Petition SOA - ORs are not in favour of you having Sky TV or life cover and other discretionary spending (they expect these to be funded from your residue after IPA). So this SOA has to be written along the lines of what ORs will accept - but it must also be YOUR personal SOA (but see below).
5. Partner's SOA - in my case we prepared a separate SOA for my non-bankrupt wife so that I could see if there was anything that she had available to contribute to the household expenses after paying her car costs, and a token amount for hair, and all of her own debts (including a joint debt that became her sole responsibility when I went BR) This was uncomfortable for my wife as we realised that she had NOTHING left over to contribute to the household at all. Her income is variable so we looked at he previous six months, and did a six month forecast (as there is seasonality in her income variations) and then took a monthly average
6. The OR Interview: In the interview my OR used my Debtor's Petition SOA as a basis for the discussion, but actually constructed a "household SOA" on the phone, and simply took my word for what my wife' average earnings were, putting these down as other income but then taking off all of her personal costs too. Just remember to take account of OH's tax, NI and employer's pension - don't give OH's gross earnings!!!

It is confusing knowing what type of SOA to construct. Don't get too het-up about this as I know that the OR nearly always gets it right to within 5% in the end. Just remember that the OR may look through all your recent bank statements to get a fuller pictute of how your household operates, so your SOA will need to reflect this reality too.

Cheers, notfes

p.s. PM me if you want more detailed feedback!

p.p.s I told my LL as soon as I was declared BR, and he was fine. He'd immediately told me that he'd been BR himself....! Honesty is the BEST policy.

notfes53

afterthought:


SD,
If you can get yourself moved quickly in to a rental home, AND also have the funds (£495) to petition for your own BR, then that is an option that allows you to have some control over the time scale and avoid your immediate destiny being "controlled" by HMRC.

notfes