Ask a CCCS counsellor a bankruptcy question

Spleen_2

Hi.. this is my first post ever on the board, so please be gentle with me!

I've done so much research over the last few months and have decided that BR is my best option. I'm a homeowner with a £97000 mortgage on a property worth about £88000. I've been told that as long as I can afford the mortgage (it's up to date, though it's a struggle), then the OR won't be interested in the property because it's in negative equity. I've also been told that they may decide to seize the property anyway if they feel I can't make the payments. I guess both of these could be right - is that the situation?

Secondly, I am in arrears with HMRC. I have been employed and self employed over the past 3 years, and am 2 years in arrears with my self assessment payments. I've not earned a huge amount of money over and above my PAYE, but what is the situation with HMRC with BR? Do I need to get up to date with my returns (even though I have very little paperwork available), and then wait for my tax bill and put it in the BR? Or will HMRC, simply clear the account without waiting for the ins and outs of (around) a £2000 debt? I suspect it's the first, but just needed to check before I spend weeks trying to get hold of missing paperwork from past employers etc.

Finally (though I'm sure I'll think of something the minute I press the "post" button"), when I calculate my I&E, I have to use an average of the past 3 months income - as my income changes every month. I then have to estimate my monthly tax bill in order to come up with a monthly net income. Is this the best plan? Plus, some months I have a deficit of about £100 (not including payments to creditors) and some months I don't. I'm literally on the edge of affording my house and it's associated bills. Is it likely the OR will take the house anyway and absolve me of all debt, or are they more likely to leave me in it?

Eek. I've just read all that. It looks so long. I hope I'm not boring everybody.

Thank you so much.

Spleen

homestead42

firstly we have to say hello to everyone, new on here but have looked at the site several times.

We are in crisis and urgently need some advice/ reassurances.
Our level of debt may well shock many- £70k unsecured plus £120k mortgage (approx £30/40k equity), but understand that we never missed a single payment. However my husband suddenly lost his job 3 years ago (malicious accusation resulting in crown court trial where he was acquited), the media interest and effects on health have meant finding alternative employment impossible.
We entered into a 16 year agreement with CCCS 2.5 years ago and they have been great (we pay £400pcm). Our dilema is now
a) Our eldest son leaves full time education in May- income will reduce (reduced CSA, Reduced child tax credit, child benefit)
b) Might lose DLA for other son around same time
c) I will no longer qualify for working tax credits when changes come into effect in April (I work about 22hrs wk earning £850pcm
We won't be able to meet our commitment to CCCS.
Will we have to go bankrupt? Will we lose the house/ car? What do we do? If we go bankrupt am I right in thinking we are making ourselves intentionally homeless and therefore not entitled to social housing?
Please help- we're very worried

ajp1

Hi Everyone,

Im in trouble, and I need some help!


Long story short.......well shortish!


My wife and I have personal unsecured debts of £77,000.
I currently own my own ltd decorating company and am the sole director, I started the company 3 years ago as the credit crunch hit.

The reason I decided to go it alone, was to make more income to be able to service our personal debt, however.....although my income did increase a bit.....it's still not enough to keep up with all our debt. The company is still viable and is making a small profit and turnover has increased year on year for the 3 years its been going.


We have come to the stage where we know we cant pay all our personal debt.......its just to much!


I got in touch with payplan.....give them all the info that they wanted, they got back to us and said we have 2 options.
option 1: we do a DMP for six years at about £1,200 per month.
option 2: we go bankrupt.


Option 1 sounded doable......but thought it was still quite alot of money per month.......I actually thought they would come back to me with a IVA solution as I have heard this may be a better solution as we owe a large amount of money.


The bigest issue with the of whole situation is that half the personal debt we owe is with the same bank I have my business with......and the bank has not long set up credit invoice financing and overdrafts for my business. Without these credit facilities.....the business will fail. Catch 22.......


I asked payplan why they couldn't sort out an IVA solution, and they said that they didn't think my main creditor would go for it as they have the most owing to them......so that is why they come up with the options I stated above.


I feel a bit lost at the moment.......it seams what ever debt solution I try....wouldn't work anyway as the bank would probably kill off all my business credit facilities....which would then kill off my business and this would then affect my income.......welll I wouldnt have one probably! so therefore wouldn't even be able to do a IVA, DMP or anything!


I have another business bank account I could use with a different bank, but it is in overdraft........and I would need the credit facilities boosted up to run the business from there, and am not sure they would agree if they found out how much personal debt mess im in!


I just don't know what the hell to do! I don't want to go bankrupt and loose everything and my home........


Well so much for that being shortish!

Please any advise or help will be greatly appreciated!

StepChange_Pavan

Spleen wrote: »

Hi.. this is my first post ever on the board, so please be gentle with me!

I've done so much research over the last few months and have decided that BR is my best option. I'm a homeowner with a £97000 mortgage on a property worth about £88000. I've been told that as long as I can afford the mortgage (it's up to date, though it's a struggle), then the OR won't be interested in the property because it's in negative equity. I've also been told that they may decide to seize the property anyway if they feel I can't make the payments. I guess both of these could be right - is that the situation?

Secondly, I am in arrears with HMRC. I have been employed and self employed over the past 3 years, and am 2 years in arrears with my self assessment payments. I've not earned a huge amount of money over and above my PAYE, but what is the situation with HMRC with BR? Do I need to get up to date with my returns (even though I have very little paperwork available), and then wait for my tax bill and put it in the BR? Or will HMRC, simply clear the account without waiting for the ins and outs of (around) a £2000 debt? I suspect it's the first, but just needed to check before I spend weeks trying to get hold of missing paperwork from past employers etc.

Finally (though I'm sure I'll think of something the minute I press the "post" button"), when I calculate my I&E, I have to use an average of the past 3 months income - as my income changes every month. I then have to estimate my monthly tax bill in order to come up with a monthly net income. Is this the best plan? Plus, some months I have a deficit of about £100 (not including payments to creditors) and some months I don't. I'm literally on the edge of affording my house and it's associated bills. Is it likely the OR will take the house anyway and absolve me of all debt, or are they more likely to leave me in it?

Eek. I've just read all that. It looks so long. I hope I'm not boring everybody.

Thank you so much.

Spleen

Hi Spleen and thanks for your post.

You’re right that they won’t be interested in your property if it’s in negative equity, but they will want to make sure that the monthly repayments are affordable. If not, you will struggle further down the line to afford the mortgage and the OR will take this into consideration.

It’s important that you get your tax returns up to date. Only the tax that you owe up to the date that you go bankrupt will be included. If you intend to stay self employed any tax that is owed after that date will be repayable and needs to be worked out.

The only way of working out our income if it fluctuates is to work out an average. However it’s important that you budget carefully to make up the difference when you’re in a deficit.

We would need to look at your situation in a lot more detail to determine whether bankruptcy is your best solution and to be able to answer your questions thoroughly. We have a specialist bankruptcy team that can help and support you through the whole process.

You can use our online debt advice service Debt Remedy (http://www.cccs.co.uk/ref/drcu) or call our free helpline to speak with an advisor on 0800 138 1111.

I hope this helps.

Kind regards,
Pavan

StepChange_Pavan

homestead42 wrote: »

firstly we have to say hello to everyone, new on here but have looked at the site several times.

We are in crisis and urgently need some advice/ reassurances.
Our level of debt may well shock many- £70k unsecured plus £120k mortgage (approx £30/40k equity), but understand that we never missed a single payment. However my husband suddenly lost his job 3 years ago (malicious accusation resulting in crown court trial where he was acquited), the media interest and effects on health have meant finding alternative employment impossible.
We entered into a 16 year agreement with CCCS 2.5 years ago and they have been great (we pay £400pcm). Our dilema is now
a) Our eldest son leaves full time education in May- income will reduce (reduced CSA, Reduced child tax credit, child benefit)
b) Might lose DLA for other son around same time
c) I will no longer qualify for working tax credits when changes come into effect in April (I work about 22hrs wk earning £850pcm
We won't be able to meet our commitment to CCCS.
Will we have to go bankrupt? Will we lose the house/ car? What do we do? If we go bankrupt am I right in thinking we are making ourselves intentionally homeless and therefore not entitled to social housing?
Please help- we're very worried

Hi homestead42 and welcome to the forum


Firstly please don’t panic. The good thing is that you’re already a client with us so you don’t have to go through all your information from scratch.

It’s difficult for me to say what your options are without having access to more of your information, but if you give us a call we will be able to discuss all the solutions that are available to you.

There may be other options available to you that you haven’t considered or be aware of, so it’s best that we discuss your circumstances fully.

Kind regards,
Pavan

System

ajp1 wrote: »

Hi Everyone,

Im in trouble, and I need some help!


Long story short.......well shortish!


My wife and I have personal unsecured debts of £77,000.
I currently own my own ltd decorating company and am the sole director, I started the company 3 years ago as the credit crunch hit.

The reason I decided to go it alone, was to make more income to be able to service our personal debt, however.....although my income did increase a bit.....it's still not enough to keep up with all our debt. The company is still viable and is making a small profit and turnover has increased year on year for the 3 years its been going.


We have come to the stage where we know we cant pay all our personal debt.......its just to much!


I got in touch with payplan.....give them all the info that they wanted, they got back to us and said we have 2 options.
option 1: we do a DMP for six years at about £1,200 per month.
option 2: we go bankrupt.


Option 1 sounded doable......but thought it was still quite alot of money per month.......I actually thought they would come back to me with a IVA solution as I have heard this may be a better solution as we owe a large amount of money.


The bigest issue with the of whole situation is that half the personal debt we owe is with the same bank I have my business with......and the bank has not long set up credit invoice financing and overdrafts for my business. Without these credit facilities.....the business will fail. Catch 22.......


I asked payplan why they couldn't sort out an IVA solution, and they said that they didn't think my main creditor would go for it as they have the most owing to them......so that is why they come up with the options I stated above.


I feel a bit lost at the moment.......it seams what ever debt solution I try....wouldn't work anyway as the bank would probably kill off all my business credit facilities....which would then kill off my business and this would then affect my income.......welll I wouldnt have one probably! so therefore wouldn't even be able to do a IVA, DMP or anything!


I have another business bank account I could use with a different bank, but it is in overdraft........and I would need the credit facilities boosted up to run the business from there, and am not sure they would agree if they found out how much personal debt mess im in!


I just don't know what the hell to do! I don't want to go bankrupt and loose everything and my home........


Well so much for that being shortish!

Please any advise or help will be greatly appreciated!

Hi and thanks for your message.

It sounds like you would benefit from some free and impartial advice.

If one creditor holds the majority of your debt they basically hold sway as to whether your IVA is accepted or rejected. An IVA usually lasts five to six years and would see creditors writing off a percentage of the debt. However, in a debt management plan you have already stated you would be able to clear all the debt within six years.

It is sometimes the case that creditors will not accept an IVA when they can see full return on their money in a reasonable period of time (usually under seven years). I think this is the reason why Payplan haven’t recommended an IVA.

As your situation is complicated I’d recommend that you call our free helpline on 0800 138 1111 to see what options we suggest. It’s always worth taking a second opinion. We also have a specialist self employed team that should be able offer more advice.

I hope this helps.

Kind regards,

Mat

katkins7

Hi, Can you help??
I have been in a DMP with CCCS for 2 years, i was made redundant last year and luckily found another job within a month but the salary is less and am travelling further. I now pay £116 per month off my debts of over £26,000.
On a recent call with CCCS i was advised that as my debts will take 20 years to clear, which is too long to be in a DMP, i should consider taking a IVA as it is more suitable.
My questions are - is there a time limit to your DMP? I wasnt aware of this.
- Is an IVA better for me? I am in a shared ownership property and only have 30% share (about £40,000 of £159,00 property - no equity). I have a charge again the house of £5000 from one creditor.
I have already been made redunant once, it is not unbeleiveable that it could happen again.
What are my best options??
Thank you

MalB_2

I have a plan with the CCCS. I had another debt come in (from years ago) through a recovery agency. My father-in-law was staying with us at the time and offered to pay the £10 a month we agreed with the agency.
I have never missed a payment but tonight they have called and said I have three options; 1. Pay the debt in full today 2. They will give me a settlement figure to raise the money. 3. They will give me a 6 month plan to clear the debt? Can they just change it like this?

System

katkins7 wrote: »

Hi, Can you help??
I have been in a DMP with CCCS for 2 years, i was made redundant last year and luckily found another job within a month but the salary is less and am travelling further. I now pay £116 per month off my debts of over £26,000.
On a recent call with CCCS i was advised that as my debts will take 20 years to clear, which is too long to be in a DMP, i should consider taking a IVA as it is more suitable.
My questions are - is there a time limit to your DMP? I wasnt aware of this.
- Is an IVA better for me? I am in a shared ownership property and only have 30% share (about £40,000 of £159,00 property - no equity). I have a charge again the house of £5000 from one creditor.
I have already been made redunant once, it is not unbeleiveable that it could happen again.
What are my best options??
Thank you

Hi and thanks for your message.

There are no time limits on debt management plans as such but typically with an IVA you would be debt free in five to six years depending on your circumstances.

IVAs are a good solution for some people depending on their circumstances. In regards redundancy most modern IVAs have clauses in regards redundancy that help keep the IVA a viable solution should this happen.

As we have access to all your details I’d advise you call us back for some more advice.

I hope this helps.

Kind regards,

Mat

System

MalB wrote: »

I have a plan with the CCCS. I had another debt come in (from years ago) through a recovery agency. My father-in-law was staying with us at the time and offered to pay the £10 a month we agreed with the agency.
I have never missed a payment but tonight they have called and said I have three options; 1. Pay the debt in full today 2. They will give me a settlement figure to raise the money. 3. They will give me a 6 month plan to clear the debt? Can they just change it like this?

Hi and welcome to the forum.

As you are already a client I would recommend that you call us so that we can see if we can add this debt to your plan.

The Debt Collection Agency is just trying to get the debt collected as quickly as possible. It would be best to include this debt with your other creditors and make a fair and reasonable offer to all of them together.

I hope this helps.

Kind regards,

Mat