a friend in need (substantial debt)

Merry_Gentry

julzdyer wrote: »

thanks all

he currently lives with parents, that is the rent charge, so should i put amount in for bills as i would imagine he doesnt contribute any more
So does that mean he doesn't pay anything towards the bills? I wouldn't recommend putting down something that he doesn't pay.

i will take your comments on board regarding SOA and prepare another copy
I know you're trying to help, but I really feel he should be more involved in this process - after all, he's going to have to live with the consequences.

i will double check his car insurance, it does seem high

As the job is only short term, it's difficult to say whether it's worth getting into a DMP or not but bankruptcy has such long-reaching effects, I think he needs to consider ALL other routes first...

leveller2911

Be interested to know how/why he owes £5k in VAT????.

Was he VAT registered out of choice or due to turnover???.

GotToChange

Sorry to tell you that should he go bankrupt, he will not receive his tax refund. HMRC and the OR are hand in glove and it will go straight towards payment of his debts or to cover the OR's fees.

julzdyer

leveller2911 wrote: »

Be interested to know how/why he owes £5k in VAT????.

Was he VAT registered out of choice or due to turnover???.

yes he was vat registered due to turnover expectations, but he is late with the last 2 returns as he hasnt the funds to pay HMRC

julzdyer

GotToChange wrote: »

Sorry to tell you that should he go bankrupt, he will not receive his tax refund. HMRC and the OR are hand in glove and it will go straight towards payment of his debts or to cover the OR's fees.

but the tax refund is imminent and BR may not been for a few weeks left yet. i have advised him to bank the cheque and declare to CCCS/OR

is this ok? or can he 'spend' it to live on?

julzdyer

Merry_Gentry wrote: »

As the job is only short term, it's difficult to say whether it's worth getting into a DMP or not but bankruptcy has such long-reaching effects, I think he needs to consider ALL other routes first...

hi merry

he has taken sone responsibility as he contacted CCCS off his own back, i am just trying to assist using the extensive knowledge of this site

a DMP could take forever, is this so beneficial at such a young age?

what are the exact long-reaching effects? surely he will be dishcarged after 12 months, and then it will be on his credit file for 6 years, whereas a DMP will be on there until it is satisfied?is that correct?

JCS1

julzdyer wrote: »

but the tax refund is imminent and BR may not been for a few weeks left yet. i have advised him to bank the cheque and declare to CCCS/OR

is this ok? or can he 'spend' it to live on?

He will need to account to the OR if he spends any of the tax refund - otherwise the OR may see it as disposal of an asset.

if there is any money left when he goes BR, the OR will highly likely claim it.

JCS1

julzdyer wrote: »

hi all

have been looking at the threads the last few days on behalf of my friends son and i need to ask for some help for him as follows :

he is only 24 years old and has accumulated the following debts

VAT £5000
PAYE £2000
BANK £10000
CREDIT CARDS £12000

he has £3500 saved and a tax refund due of £3000

he has no assets, nothing whatsover and currently has an employed job but he sees no way in clearing these debts at all in the near future

a client of mine has seriously advised him to consider bankruptcy and i am after some advice if this is the best route and what his next movements are if this is the case.

thanks all

julzdyer

The items I have highlighted are assets, and the OR will take both of these into the BR estate.

Merry_Gentry

julzdyer wrote: »

but the tax refund is imminent and BR may not been for a few weeks left yet. i have advised him to bank the cheque and declare to CCCS/OR

is this ok? or can he 'spend' it to live on?

The OR can go back several years, and will look into decisions from when the person became insolvent, not when they went bankrupt which can be very very different.

Basically he needs to be prepared to lose the rebate, his savings, and pay into a substantial IPA for three years if he decides to go bankrupt. And above all he needs to be honest - it doesn't seem that he needs to spend the rebate to live on when he has £3,500 in savings and any OR would see through something that transparent straight away.

nervousmother

Just to put in my pennys worth...
He is young and has a large surplus as hardly any outgoings. Use £500 of this months pay, put towards those savings and tax rebate and pay the PAYE and VAT bill. go on a DMP with payplan or some none profit organisation to clear off the other 22k worth of debt. With the amount of money he has left over he could afford to pay it and if i was in his position i would try to. Payplan can get the interest froze on the cards and loan.
Although the BR would be off his credit files by the time he is 30, if he is ever asked if he has was ever BR he would have to say yes, this can have effect on future employment and getting a mortgage