Iva Or Bankruptcy.. What A Mess!

Birminghamlad

Hello all,

I've not posted here before so be gentle!

Basically I've got myself into a complete mess, and yes some of it is my stupid fault. I'm not proud of it, but i am where i am.
I've read similar posts but not quite as complicated as mine.. and havent found any answers either.

I'll try and explain without going into war and peace.. and I'd really appreciate some constructive advise from anyone who may have been in a similar situation or might be able to offer some advise.

So, 2 years ago I decided to leave England for a new life and new business in Spain.
At that point a had 2 x credit cards with approx 5000 each, which i couldnt afford to pay off in full, so decided to continue to carry on paying the minimum balance.
I also had a small house in the UK which I arranged to be rented out for 9 months as a safety net in case I decided to move back.
As time went by the business took slower to create an income than planned, and the credit cards became increasingly difficult to pay. I managed to reach an agreement with them for token payments for a 6 month period, but in that time i moved to another rented property and whilst I know this was silly, I didnt both getting back in touch with the credit card companies and as such this debt is outstanding. They havent chased me, as they dont know where i am, yes this was a stupid thing to do, but I cant change what I've already done. I wish i could.
To complicate matters further, after the tennant moved out of my UK property, i couldnt find another one and after a period of time couldnt keep up the payments on the UK mortgage, so decided to go down the voluntary surrender route with Northern Rock. This decision was based on the fact that I had no intentions to move back to the UK, and figured it was the lesser of two evils.
As with other threads I've read, due to the plummiting UK property market, the value of my house has 'dropped' by approx £80,000 now leaving me in negative equity of over £70,000. I happen to know that the property has just been sold and it is currently going through motions.
I have no assets to pay this off, nor do I have £70,000 (or even £1000) lying under the bed.

In the past 12 weeks, my father has been diagnosed as terminally ill, and as such I cannot justify being abroad and I have decided to return to the UK in 8 weeks for the foreseeable future and close the business there.
In parallel to this (and quite fortunately), I have been asked to go into a partnership as a Director for business in England, which is currently being registered in companies house.

So, whilst I have the credit card debts that may well have been written off by now, they will clearly show on my file and i assume will cause me serious problems in my personal life for some time - mobile phone, tenancy agreement, car lease or HP, and anything else that requires a credit search now and for quite a while.

In addition to this, with the sale of the house now being finalised, I'm assuming someone will want to have a chat to me about the £70,000 negative equity position with my old house.
I ahve spoken to NR about the way forward, but they state they cant talk two me properly until the sale is finalised so they have the exacy figures.

And finally, as a director of a new business in the UK, this presents me with some serious problems:

1) should the company need a loan or any sort of credit, i understand the directors all get credit searched? if so, then this will hinder the company getting any credit.
2) I assume I will immediately be 'on the radar' once I'm registered at company house, and could therefore cause visits to the business address either for the credit cards or more likely the house.

And one final complication.. I partly own two properties in Spain (well, there is around 100,000 equity between me and a friend).

So, I guess I have a few options:

a) declare bankruptcy and face the consequences for however long it takes. And I assume I would need to be removed from the company as a director and have my shares taken also) and not be able to obtain and credit / bank accounts etc for years and years to come. Also risk losing the property in Spain.
b) Or, sit tight and wait till somebody comes knocking - although as I will need to rent a property and have utilities bills, car insurance etc (as well as some sort of paper trail in companies house) it wont take long before someone comes banging the door at my new rented property (if I can even get one) or at the registered business address via the paper trail from companies house.
c) try and reach an IVA agreement (formal or informal), which all things considered seems like the most sensible option right now???

So, a complete mess.. and I just dont know what to do.
I have to go back to the UK and face the music, but I just dont know what this will mean to my life (both personal and business) for the foreseeable future.
Whilst i have no problems paying said debts off with whatever I can afford to be, I'm not sure whether this is even an option (particularly with the negative equity) as it will take me 30 years or so to pay.

if you've read this far, thanks for staying with me.. I just hope you can offer some advise or point me at someone that might be able to offer me some practical advise about how to tackle this and what to expect the impact to be to my day to day living.

Thanks for reading.

MIVAA

Hi Birminghamlad,

Firstly, sorry to hear about your father's illness. It's situations like this that help us to realise that money problems are really trivial compared to health problems.

With regard to your circumstances....

You are right to suppose that if you were to declare yourself bankrupt you would not be able to act as a company director I'm afraid.

Also, there is zero chance that the credit card debts will have been written off, so you should be aware that they will have to be a part of what ever solution you decide to take.

My advice would be to come back to the UK, and try to establish yourself here, get settled and then deal with the debts in a couple of months.

The chances are the creditors won't know you are back in the country for a while at least so use this time to establish the Ltd Co income and find a place to rent.

Once you are settled, you could do one of three options

1) You could propose an IVA to your creditors based on 5 years of affordable monthly contributions, along with the equity from the properties in Spain.

2) You could try to release the equity from your property in Spain, and use it to offer a Full and Final settlement IVA to your creditors. This option would really only be viable if you managed to find a buyer in Spain, and had little or no disposable income available to offer creditors a monthly contribution.

or 3) You could enter into an informal DMP and try to manage the repayments through either Payplan or CCCS, and repay the debt over a structured repayment period, which would take as long as necessary until the whole debt had been repaid.

Bankruptcy would still be an option, but as you said, you would forfeit the Ltd Co & the equity in Spain.

I hope this helps

MIVAA