I now have my date - SOA added to original post....

Debtaddled

Hi,

I'm a new poster but have been reading the forum for a while now as I've been trying to decide what to do to sort out an increasingly difficult situation. I'm almost convinced that BR is the best route for me, and have prepared but not submitted the petition and SoA online (and opened a Co-op account), but have a few concerns (well loads actually but I'll stick to the main ones!).

I'll give you the background first, and I'll try to keep it as brief as poss. To anyone who takes the time to read this thank you in advance. Letting the questions keep on going round in my mind isn't doing me any favours so here goes.......

Rewind to 2007 and I was running a successful mortgage broking business, launching another spin off company, buying a new home and generally doing ok. Then the financial industry started to go off the rails and things began to go downhill for me. Firstly my wife was made redundant (from her job as a mortgage advisor for another firm) just after we moved and she was 4 months pregnant with our first child. With few jobs available, especially to an obviously pregnant woman, her income was reduced to the payout from a redundancy insurance.

By Jan 2008 the new business was in trouble and needed more money. To try and avoid our initial investment going to waste me and the other 4 directors stumped up more money. I funded my share from a credit card and was beginning to amass more debt covering things needed for the new house and preparing for the baby etc. I now wish I hadn't as we had to cease trading a few months later. On the advice of our accountant and an insolvency practitioner we didn't formally wind the company up. Instead we gave the necessary notice to the company's creditors and applied for it to be struck off.

By spring 2008 the mortgage broking business was in trouble with the problems getting worse faster than we could ever have imagined. Before we knew it we reached the point where we had to let our staff go (just as my daughter was born).

In the August I spent £2,500 to go on an intensive course to gain additional qualifications in order to be able to offer more services to our clients and hopefully save the business. At the same time my business partner decided to step away and get an employed job. With barely enough business for one person it made sense to not have to find money to pay both of us. She transfered her shares into my name (had to because of the new job) and I became sole shareholder, although her husband was named as a non shareholding director.

Sadly business didn't pick up and by February of this year and on the advice of my accountant I ceased trading. The business had a number of creditors (landlord, bank, lease firms) but again, I couldn't afford the expense of an insolvency firm to wind the business up so again followed the advice to give 3 months notice to all the creditors and then apply to strike the company off.

At this point my wife secured a new job (yes, it took a year!) which was some good news but I was then unemployed for 2 months before securing a new job myself. The new job I am in has prospects but the money in the first year is less than I was on when I left uni 10 years ago!! Added to that with full time employment for both of us came childcare costs.

Just as we thought we were turning a corner my wife's new employer hit the rocks, leaving her unable to earn any commission (something we desperately need) and is almost certainly going to go under in the next 3 months. Happily she has found a new job but the basic is lower and it will take time to earn commission so we really are on a shoestring budget.

I've spoken to the CCCS who went through our i&e and we have a definite shortfall (even after taking into account getting childcare vouchers etc) but they wouldn't give BR advice until we balance our i&e.

Current situation is that I owe:

£22k credit cards
£11k car finance
£2k overdraft
£3k loan
£500 personal tax bill
£800 personally guaranteed accountancy bill from the business

plus joint debts with my wife:

NR together mortgage £247k secured, £30k unsecured

and she owes on her own:

£5k loan
£2k overdraft

The house is worth £235k so definitely in negative equity
My car is worth less than the finance and my wife owns a car outright worth about £4k.

I was liable for a £14k personal guarantee on the banking facilities with my main business but my business partner's parents have come to a full and final settlement for that (she was still joint guarantor as the PG was set up while she was still with the business).

BR is not an option for my wife as she would lose her job, plus we've been advised that she should be able to buy the beneficial interest for £1 +costs as the house is in neg eq which saves the roof over our head. So I am probably going BR on my own.

Sorry, I really am rambling, here come the questions, just wanted to try and make sure they make sense by giving the background.

Firstly, will the OR need to tell the other directors of either business about my BR?

Secondly, if I go personally BR, what happens about the mortgage broking business? The application to strike off is in but technically it is still active although hasn't traded since 24/02/09. Will I be in trouble for not winding the company up formally? Will it have an impact for the other director (my ex business partner's husband)?

My wife and I are both in jobs that will hopefully pay commission but it will vary a lot. How will this impact on the OR's decision regarding IPA/IPO's? One month we may have a huge shortfall, the next a bit of a surplus. Will they monitor our pay every month and will this rule out ED?

I have 2 estate agents coming to give written valuations on the house, will this suffice or do I need to pay for a surveyor?

I actually only began missing payments on the cards, car and loan last month (when we realised that we couldn't go on borrowing to pay for our borrowings in the hope our situation would suddenly improve). The calls have started but I don't know what to tell them, should I say I'm considering going BR?

How soon after I go BR will my car go? I need a car for work so need to make other arrangements (not sure what!).

Again, I know this is a super long post but I guess it's difficult to answer the questions without the facts. Any answers are appreciated and any other pointers greatfully received as well.

Thanks a million to anyone who has taken the time to read on this far!!!!

fiveyearplan

Debtaddled wrote: »

Current situation is that I owe:

£22k credit cards
£11k car finance
£2k overdraft
£3k loan
£500 personal tax bill
£800 personally guaranteed accountancy bill from the business

plus joint debts with my wife:

NR together mortgage £247k secured, £30k unsecured

and she owes on her own:

£5k loan
£2k overdraft

The house is worth £235k so definitely in negative equity
My car is worth less than the finance and my wife owns a car outright worth about £4k.


BR is not an option for my wife as she would lose her job, plus we've been advised that she should be able to buy the beneficial interest for £1 +costs as the house is in neg eq which saves the roof over our head. So I am probably going BR on my own. I agree.

Sorry, I really am rambling, here come the questions, just wanted to try and make sure they make sense by giving the background.

Firstly, will the OR need to tell the other directors of either business about my BR? not sure

Secondly, if I go personally BR, what happens about the mortgage broking business? You wouldn''t be able to be a director and anything you signed as guarantor will fall into your personal bankruptcy. The application to strike off is in but technically it is still active although hasn't traded since 24/02/09. Will I be in trouble for not winding the company up formally? I wasn't and I didn't wind up my ltd co - I couldn't afford to and also couldn't afford the accountant so went BR with no accounts. Will it have an impact for the other director (my ex business partner's husband)? not sure

My wife and I are both in jobs that will hopefully pay commission but it will vary a lot. How will this impact on the OR's decision regarding IPA/IPO's? One month we may have a huge shortfall, the next a bit of a surplus. Will they monitor our pay every month and will this rule out ED? You would average out the last 3 months (or less if you haven't been employed that long. OR will then expect you to inform him of increase/decrease in income.

I have 2 estate agents coming to give written valuations on the house, will this suffice or do I need to pay for a surveyor? Don't pay for anything - save all your money for BR fees.

I actually only began missing payments on the cards, car and loan last month (when we realised that we couldn't go on borrowing to pay for our borrowings in the hope our situation would suddenly improve). The calls have started but I don't know what to tell them, should I say I'm considering going BR? Tell them you are waiting for an appointment with CCCS to discuss your debt repayments or don't answer the phone!

How soon after I go BR will my car go? I need a car for work so need to make other arrangements (not sure what!). If you car in on HP the OR will have no interest in in and if you cannot afford the repayments it is up to the HP company how long they take - don't sign any voluntary form - they may have to take you to court to repossess - thats what happened to me - I wouldn't sign although I didn't dispute the repossessions I didn't want to be liable for the shortfall

Again, I know this is a super long post but I guess it's difficult to answer the questions without the facts. Any answers are appreciated and any other pointers greatfully received as well.

Thanks a million to anyone who has taken the time to read on this far!!!!

Hi and welcome! I would advise phoning National Debtline and also Business Debtline. Why don't you pop up your SOA on here for guidance. http://www.makesenseofcards.com/soacalc.html

money_penny_26

hi debtaddled glad you found this forum,more knowledgable peeps will come along an help so keep posting.the one thing i can help with is your decision weather to answer the creditors phonecalls...i would say no dont answer,i at first did answer contrary to what i was advised on here.what happens is you tell the person on the other end your problems why you cant pay..they hum an arr an then say (so how much can you pay today?) i have just explained to you ive no money.(or words to that effect) then they either get nasty or lie to you about what this company can do to you. on putting the phone down you feel upset..so they ring again same company,just another agent..you tell them same story,untill you are sick of repeating it,an upsetting yourself in the process.so dont answer it put it on an answer machine.i know you said should you tell them you are in talks with cccs or similiar....this also does not work,they just ring more.i think thier is something in our brains that tells us phone ringing i must answer no.your journey throughout this will be daunting enough,so dont let these scoundrels make it any worse. good luck penny x

Debtaddled

Thank you so much for your replies and advice. Not only are your answers helpful in themselves but I really appreciate that you've taken the time to read my post. A problem shared and all that!

Tinytim

Hi Debtaddled,

As far as the limited companies are concerned, you will not get into any difficulties by not formally making them insolvent. The thing to remember is that it is a limited company, and as long as you have not done anything like trade whilst insolvent, your liability as a director is limited to the money you have invested and any personal guarantees you have given. As you have followed the advice of your accountant, you will have acted completely properly.

When you declare BR, if you haven't already resigned as a director, you will have to do so at that point. The impact on any remainig directors is reasonable simple - they will be responsible for the debts of the company to the extent of the money they have invested, and any personal guarantees they have given. Do remember though that most business debts are joint and several, so if you have a business overdraft of say £50,000, on which you have both/all given a PG, then the bank will be able to go to each individual guarantor for the full amount. Whether they bother to do this with the remaining directors, and to what extent will depend on their circumstances. Your PG's will e included in the BR unless they are secured.

As you will be aware, the unsecured part of your Together mortgage is joint and several, and although your liability for this will be included in your BR, the whole amount will still be payable by your OH is she isn't to go BR. Are you sure the amount outstanding is £30,000? This was the maximum you would have been able to apply for, and could only be taken on a repayment basis. So depending on how long you have had the mortgage, it may be slightly less than this.

One other thing which you have not raised, but which may be an issue is your FSA permissions. Were you an AR or were you DA? If AR, then there is probably no issue, but if you were DA, did you cancel your permissions before the deadline. If not, the FSA are currently refusing to cancel permissions voluntarily for those who have an outstanding amount, which creates a catch 22 situation for those who do not have the funds. If this applys, the process would be for them to continue sending invoices which would eventually lead to "enforcement action". This means that they would eventually remove permissions for non payment of fees and would publish this. This really wouldn't matter if you never wanted to work in an authorised capacity again, but would be recorded on the file and hamper any fit and proper checks in the future.

As far as creditors are concerned, everything which has been mentioned is corect. The thing to remember is that most of the collection call centre employees are incentivised on the amount they recover, and regretably, they have found through experiene that using scare tactics and trying to make the debtor feel worthless get the best results. In my case, it resulted in my wife being prescribed anti-depressants because of the stress and upset.

However, you have three choices in the way you deal with them. You can ignore them, and if you are going to declare BR soon, this may be the least stressfull way. You can let them win and be a victim, and allow them to get away with their threats and insults, or if you have the strength, you can play them at their own game. Get clued up on the recovery process, including what happens if they eventually decide on court action, and the threats become hollow. In the end I found it quite easy to respond to their threats in a ways which stumped them. Some of my favorites were;

Creditor - If you can't make a payment today we will have to send collection agents.
Me - That will be interesting, I have a part time job as a debt collector, we will be able to swap notes.

Creditor - Can't you take a further advance on your mortgage, or make a payment with another card?
Me - Hold on a moment, can you just confirm that for the tape. You are advising me to borrow from someone else to repay you?

Creditor - If we can't take a payment today, next week we will get a judge to give us permssion to sell your house?
Me - How much do you want to bet me you can't.

Lastly, don't tell them you are considering BR, at the very least the hassle will get much worse as they try and get as much as they can out of you beforehand.

LeeSouthEast

I didn't want to read your story and not comment. I have no advice to offer, other than to wish you the very best. The folks here are good people and will help you to the big day and then beyond as well.

Keep smiling. It is only money after all.

Debtaddled

This might be a stupid question but am I right in thinking that to go BR I will need to:
1) go to the court with the petition and soa, swear in the docs,
2) wait for another date to go back and actually be declared BR by the judge 3) wait for another date to have my OR interview?

And how long is each step likely to take? Got to figure out how much time I need off work as have had to book up holiday to look after my daughter so don't really have any days left!!

MicheH

That didn't happen to me like that. I called the County court to make an appointment (i've read on here that some county courts have a drop in) and submitted my forms online but took 3 copies with me. On that day in court (which is a very quick process for what it is) you are declared bankrupt. The OR interview will approx be 2 weeks later - some quicker, some slower depending on how busy they are and from then you're likely to know about your house or car or whether you'd have to have an IPA, this in reality doesn't always work out as mine came back to me a couple of days later with regard to the car.

tigerfeet2006

As Miche says ring your County Court to see what system they operate, appointment or drop in or one or two run a system where you go in and petition and go back later in the week to pick up your papers but these are rare, I think there has only been 2 or 3 people on here that have had to do that in the time I've been here.

Also check how many copies of the petition they require some want 1 and some want 3.

And check it is the right court for your postcode. My nearest court is 20 miles away in the same county but we have to go to the county court 30 miles away in the next county Go figure.

Debtaddled

Well today I called up and booked my date (2/11). I've been desperately trying to think of a way to avoid going BR because the whole thing scares the proverbial out of me. Between finding out that it will affect my whole family for the rest of the time we live together (insurance etc), worrying what will happen about my businesses, not knowing whether I'll end up with an IPA/IPO based on commission I might not earn from month to month and a million other worries I've been going slightly mad. But then I just go back to actually adding the figures up and can see there really is no choice. I'm deluding myself that we've been coping when all we've been doing is borrowing to delay the inevitable and it has to stop.

Anyway, before I ramble on again, here's my SOA, anyone's thoughts welcome. There's a couple of things I've done that I'm not sure are right:

1) I've based my income on my basic salary and a 'guarantee' that I have been given for the next few months. My role has changed slightly so my employer has agreed to pay me a guarantee for 3 months based on what I should be able to earn as a realistic commission amount. Great from a cashflow point of view but in a few months time I may earn no commission or I may earn more.

2) I've quoted the mortgage payment as just the secured borrowing, not the Together loan but my wife, who is joint on it and not going BR will have to still pay towards the together loan, and another loan she has. If she doesn't she'll lose her job. So, I've quoted her income after those payments have been deducted - will this get me in trouble? All other figures on here are total household costs for the 3 of us.


Monthly Income Details
Monthly income after tax....................................... 1137
Partners monthly income after tax............................ 978
Benefits...................................child benefit............ 80
Total monthly income............................................ 2195

Monthly Expense Details
Mortgage................................ .............................993
Management charge (leasehold property).. ..................22
Council tax............................. ..............................131
Electricity............................. .................................49
Gas..................................... ................................49
Oil..................................... ..................................0
Water rates............................. ............................51
Telephone (land line)................... ..........................20
Mobile phone............................ ............................60
TV Licence.............................. ............................12
Satellite/Cable TV...................... .............................0
Internet Services....................... ............................0
Groceries etc. ......................... ............................320
Clothing................................ ..............................20
Petrol/diesel........................... .............................200
Road tax................................ ..............................33
Car Insurance........................... ...........................70
Car maintenance (including MOT)......... ....................15
Car parking............................. .............................40
Other travel............................ .............................0
Childcare/nursery....................... ..........................190
Other child related expenses............ ........................0
Medical (prescriptions, dentist etc).... ......................10
Pet insurance/vet bills................. ...........................14
Buildings insurance..................... ...........................30
Contents insurance...................... ..........................0
Life assurance ......................... ............................42
Other insurance.................redundancy cover............49
Presents (birthday, christmas etc)...... ......................0
Haircuts............................................................... 0
Entertainment....................................................... 0
Holiday................................. ................................0
Emergency fund.......................... ...........................0
Total monthly expenses...................................... 2420


Monthly Budget Summary
Total monthly income.................... .......................2,195
Expenses (including HP & secured debts).................. 2,420
Available for debt repayments................................. -225
Amount short for making debt repayments................. -225

Thanks again for reading all this.

Tinytim

Debtaddled wrote: »

Well today I called up and booked my date (2/11). I've been desperately trying to think of a way to avoid going BR because the whole thing scares the proverbial out of me. Between finding out that it will affect my whole family for the rest of the time we live together (insurance etc), worrying what will happen about my businesses, not knowing whether I'll end up with an IPA/IPO based on commission I might not earn from month to month and a million other worries I've been going slightly mad. But then I just go back to actually adding the figures up and can see there really is no choice. I'm deluding myself that we've been coping when all we've been doing is borrowing to delay the inevitable and it has to stop.

Anyway, before I ramble on again, here's my SOA, anyone's thoughts welcome. There's a couple of things I've done that I'm not sure are right:

1) I've based my income on my basic salary and a 'guarantee' that I have been given for the next few months. My role has changed slightly so my employer has agreed to pay me a guarantee for 3 months based on what I should be able to earn as a realistic commission amount. Great from a cashflow point of view but in a few months time I may earn no commission or I may earn more. You can only complete your SOA as it actually is. If your income were to drop after the guarantee period ended, you would inform the OR at that time.

2) I've quoted the mortgage payment as just the secured borrowing, not the Together loan but my wife, who is joint on it and not going BR will have to still pay towards the together loan, and another loan she has. If she doesn't she'll lose her job. So, I've quoted her income after those payments have been deducted - will this get me in trouble? All other figures on here are total household costs for the 3 of us. You should list your wife's contribution as her income less the things she has to pay out, such as her loan, the together unsecured element and her own personal expenses such as travel, hairdresser, prescriptions etc. You then list all youe expenses, and the total amount of any joint expenses in your SOA.


Monthly Income Details
Monthly income after tax....................................... 1137
Partners monthly income after tax............................ 978
Benefits...................................child benefit............ 80
Total monthly income............................................ 2195

Monthly Expense Details
Mortgage................................ .............................993
Management charge (leasehold property).. ..................22
Council tax............................. ..............................131
Electricity............................. .................................49
Gas..................................... ................................49
Oil..................................... ..................................0
Water rates............................. ............................51
Telephone (land line)................... ..........................20
Mobile phone............................ ............................60
TV Licence.............................. ............................12
Satellite/Cable TV...................... .............................0
Internet Services....................... ............................0
Groceries etc. ......................... ............................320
Clothing................................ ..............................20
Petrol/diesel........................... .............................200
Road tax................................ ..............................33
Car Insurance........................... ...........................70
Car maintenance (including MOT)......... ....................15
Car parking............................. .............................40
Other travel............................ .............................0
Childcare/nursery....................... ..........................190
Other child related expenses............ ........................0
Medical (prescriptions, dentist etc).... ......................10
Pet insurance/vet bills................. ...........................14
Buildings insurance..................... ...........................30
Contents insurance...................... ..........................0
Life assurance ......................... ............................42
Other insurance.................redundancy cover............49
Presents (birthday, christmas etc)...... ......................0
Haircuts............................................................... 0
Entertainment....................................................... 0
Holiday................................. ................................0
Emergency fund.......................... ...........................0
Total monthly expenses...................................... 2420


Monthly Budget Summary
Total monthly income.................... .......................2,195
Expenses (including HP & secured debts).................. 2,420
Available for debt repayments................................. -225
Amount short for making debt repayments................. -225

Thanks again for reading all this.

I will leave it to others to comment on the amounts, as I am not sure what the generally accepted allowances are. The only thing which seems to be a little strange, is that your motoring expenses appear to come to significantly more than 25% of your net income even with the guarantee.