Dilemma for business start up

blackdoor

To be very brief I am £21K in debt from an unsecured loan, £8K in debt to Student Loans Company.

The debt was incurred from a previous relationship which ended in January 2005> Unfortunatley I had slipped up and had the loan made in my name. Originally it did start in joint names though.

I then got made redundant from a well paid position in March 2006, my new partner was also made redundant the following month in April 2006. We rent a house from a private landlord.

My reduced repayments on the loan (£200/month) have now ceased as my redundancy money is running out.

I am claiming JSA, so is my partner and have been waiting 16 weeks for the council to process my claim for Housing Benefit. Keeping up the rent payments has eaten into my redundancy money. My JSA payment just about buys food for a week.

I have chosen and determinded to go back to work as self employed and have approached Princes Trust for a start up loan. I really do not know what I will do if I am turned down for start up funding. (meeting next week) The loan situation was not entirely my doing.

The National Debtline have been very helpful and told me to continue making £1/month token payments, however the debt collection company wrote to me recently to threaten court action.

If I sought the bankrucy route, the insolvency fees this would eat further into the £2K I have left in my savings and damage my credit status, banking facilty and so on. I know its the easy way out now but dont want to do.

I dont know what to do. Have I any choice to bankrupcy?? - can anyone please advise?

Dr.Shoe_2

The glib answer is to use up the £2000 before you go bankrupt...

Personally I wouldn't even consider self-employment as an option as you have difficulty getting an employed position. How will you find contracts?

What I would do (and this isn't a definitive answer) would be to find an employed job, pay off my debts, build up some savings then go SE.

regularsaver1

The students loan company is different to any other loan - they only take a percentage out of salary straight away

i have a student loan - wouldn't count it with my normal loan

student loans only take money when you earn £15k plus a year

Conor_3

If you're in debt, self employment is the very last thing you want to be doing as you'll just end up in an even worse mess and starting a company by borrowing isn't the best way.

For a start, the companies I deal with pay on 60 day terms as do most. That means that if you invoice monthly, it can be up to 90 days from the first day you do any work before you see any money so you need to budget for at least 3-4 months living expenses.

As for the rent, have you applied for Housing Benefit to help pay it?

If you declare bankrupt you can kiss goodbye to the £2000 savings.

regularsaver1

Conor - the OP stated they they are waiting the council to process their claim for housing benefit

BestFootForward_2

You're about to borrow more money but are considering bankruptcy? I understand the debt is from a previous relationship, but you have a responsibility to the lenders.

I also whole heartedly agree with Conor.