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Clearing Large Debts

BethB_2
Posts: 10 Forumite
Over the last 4 years, we have built up debts with 17 creditors in excess of £30K. This has been, in the main, due to me having some major health problems that have limited my working capacity. We are self employed and currently making a loss and surviving on tax credits, child benefit and housing benefit. The CAB have been dealing with things for about 9 months now and they simply write to all creditors telling them we are not in a position to make any payments at the moment. So far, we've not had any major hassles from creditors and when we have had a problem, I've made complaints in writing and things have been mostly resolved. We've kept all creditors informed. However, I realise the only way out of this mess is going to be by hard work and determination to clear the debt.
We were advised by Business Debtline about 8 months ago that we should strongly consider bankruptcy, but I see this as an easy way out and would prefer to pay back what we owe than go down that route.
So, that means the only way forward is to minimise our outgoings and increase our earnings - so get the business profit making. My husband gets quite a bit of work in without any real effort but doesn't actively look for more work. I guess really he's not that cut out for self-employment but because of my health my ability to help him has been minimal. I now feel it's time for me to step in, start getting the business organised and start marketing and managing it properly. A major hurdle is going to be my health (which tends to deteriorate when I'm stressed or under pressure), the fact we have young children that I care for full time and also getting my husband onside to tackle this. He knows he has a problem with spending and although this has vastly improved I still have to try and keep tabs on what he's doing with money or it will be frittered away. My husband had debt problems when we first got together and I sorted out an IVA that was almost paid up when I was taken ill. That IVA is on hold and the £35 debt is in addition to the IVA.
So our situation is pretty dire, but I really want to set about sorting it out and paying stuff back. The point in posting is to get some honest feedback and tips on the best way to tackle this situation. Currently, with the business making a loss, our I&E statement that the CAB drew up shows us having less coming in than we need to cover basic living expenses. Obviously if I can get the business making a profit, our benefits will decrease to reflect this. Initially I think I need to sit down and work out some figures of what we need to be turning over in order to come off benefits and have some surplus income.
So, am I mad? Should I take the BDL's advice and look seriously at bankruptcy or is it possible to recover from such a bleak financial position?
We were advised by Business Debtline about 8 months ago that we should strongly consider bankruptcy, but I see this as an easy way out and would prefer to pay back what we owe than go down that route.
So, that means the only way forward is to minimise our outgoings and increase our earnings - so get the business profit making. My husband gets quite a bit of work in without any real effort but doesn't actively look for more work. I guess really he's not that cut out for self-employment but because of my health my ability to help him has been minimal. I now feel it's time for me to step in, start getting the business organised and start marketing and managing it properly. A major hurdle is going to be my health (which tends to deteriorate when I'm stressed or under pressure), the fact we have young children that I care for full time and also getting my husband onside to tackle this. He knows he has a problem with spending and although this has vastly improved I still have to try and keep tabs on what he's doing with money or it will be frittered away. My husband had debt problems when we first got together and I sorted out an IVA that was almost paid up when I was taken ill. That IVA is on hold and the £35 debt is in addition to the IVA.
So our situation is pretty dire, but I really want to set about sorting it out and paying stuff back. The point in posting is to get some honest feedback and tips on the best way to tackle this situation. Currently, with the business making a loss, our I&E statement that the CAB drew up shows us having less coming in than we need to cover basic living expenses. Obviously if I can get the business making a profit, our benefits will decrease to reflect this. Initially I think I need to sit down and work out some figures of what we need to be turning over in order to come off benefits and have some surplus income.
So, am I mad? Should I take the BDL's advice and look seriously at bankruptcy or is it possible to recover from such a bleak financial position?
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Comments
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Can you type out your I&E statement for us to see here? It'll help to give advice specific to your situation.0
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BethB wrote:Over the last 4 years, we have built up debts with 17 creditors in excess of £30K. This has been, in the main, due to me having some major health problems that have limited my working capacity. We are self employed and currently making a loss and surviving on tax credits, child benefit and housing benefit. The CAB have been dealing with things for about 9 months now and they simply write to all creditors telling them we are not in a position to make any payments at the moment. So far, we've not had any major hassles from creditors and when we have had a problem, I've made complaints in writing and things have been mostly resolved. We've kept all creditors informed. However, I realise the only way out of this mess is going to be by hard work and determination to clear the debt.
We were advised by Business Debtline about 8 months ago that we should strongly consider bankruptcy, but I see this as an easy way out and would prefer to pay back what we owe than go down that route.
So, that means the only way forward is to minimise our outgoings and increase our earnings - so get the business profit making. My husband gets quite a bit of work in without any real effort but doesn't actively look for more work. I guess really he's not that cut out for self-employment but because of my health my ability to help him has been minimal. I now feel it's time for me to step in, start getting the business organised and start marketing and managing it properly. A major hurdle is going to be my health (which tends to deteriorate when I'm stressed or under pressure), the fact we have young children that I care for full time and also getting my husband onside to tackle this. He knows he has a problem with spending and although this has vastly improved I still have to try and keep tabs on what he's doing with money or it will be frittered away. My husband had debt problems when we first got together and I sorted out an IVA that was almost paid up when I was taken ill. That IVA is on hold and the £35 debt is in addition to the IVA.
So our situation is pretty dire, but I really want to set about sorting it out and paying stuff back. The point in posting is to get some honest feedback and tips on the best way to tackle this situation. Currently, with the business making a loss, our I&E statement that the CAB drew up shows us having less coming in than we need to cover basic living expenses. Obviously if I can get the business making a profit, our benefits will decrease to reflect this. Initially I think I need to sit down and work out some figures of what we need to be turning over in order to come off benefits and have some surplus income.
So, am I mad? Should I take the BDL's advice and look seriously at bankruptcy or is it possible to recover from such a bleak financial position?
Your position is bleak but I admire your reluctance to consider bankruptcy, how much can you make out of the business and how much can you pay off by paying as much as you can and reducing interest by shuffling loans/cards? It may be feasible to avoid bankruptcy but because I don't know your line of work and how much more you can do it is hard to say. Good luck in avoiding bankruptcy, I too would do anything and everything to avoid it, if heaven forbid the situation arose for me.If you don't like what I say slap me around with a large trout and PM me to tell me why.
If you do like it please hit the thanks button.0 -
OK, this is the I&E that the CAB did with us. We have 5 children, btw.
Income & Expenditure
Weekly
Income from Benefits 299.38
Weekly Expenditure
Contents Insurance 2.18
Water & Sewerage 7.5
Gas 17.5
Electric 25
Housekeeping 170
TV License 2.54
Travel/Car Expenses 18.15
Children's Clothing/Shoes 25.8
Telephone 9.75
Children (school trips, etc) 5
Total Basic Expenditure 283.42
Priority Debts Weekly Debt
Rent Arrears 5 1739.2
Council Tax 5 320.89
Total Priority Debts 10 2060.09
Surplus/Shortfall 5.96 per week
This was drawn up in June and I know our tax credits reduce next month as we will no longer have a child under one. Our rent is paid by housing benefit direct to the landlord so not included in the above. It is £725 per month.
I've just checked our figures and our total non-priority debts (in addition to the priority ones above) is £42916.
The business could make a good profit. We had to change direction when I was taken ill and it meant the work we did then we could no longer do without me working full time. Since this happened nearly two years ago, my husband has built up a loyal client base and gets regular work and recommendations. His downfall is not actively marketing the business, not managing his expenditure (so buying stuff that's not needed) and buying things in order to provide additional services but then not marketing those services! I think, with some regular marketing and close management of costs it could make a profit and a good one. I do have many years of buisines management, marketing and accounting experience, so it is within my capabilities to turn it around. I guess my struggle is with getting my husband motivated and thinking about making a profit not just spending! If he is researching a new purchase he'll put loads of effort in. He seems to get a buzz from making purchases. I just wish he would put the same effort into making money!
I know this is going to be a hard slog but I would really like to achieve it. I think I may look at changing to BDL rather than the CAB, as the CAB is not really geared up for dealing with self-employed and business debts. The BDL cannot write to creditors on your behalf though and I needed this when I was very ill, hence why we were working with the CAB.0 -
Hi there... Thanks for posting with us
Can I ask why Bankruptcy is such a bad thing if the experts have recommednded it ?
It is not a stigma as it used to be and you will at least get a grip of your life again?
If I can answer any Q's please ask....
Mike x0 -
Sorry edited as Ive just re-read this
do you have any other debts in addition to the iva
when does it expire?:beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
Theres no dollar sign on piece of mind
This Ive come to know...
So if you agree have a drink with me, raise your glasses for a toast :beer:0 -
also will those rent arrears be picked up by housding benefit, ie was that as they were too slow paying up ifyou see what i mean:beer: Well aint funny how its the little things in life that mean the most? Not where you live, the car you drive or the price tag on your clothes.
Theres no dollar sign on piece of mind
This Ive come to know...
So if you agree have a drink with me, raise your glasses for a toast :beer:0 -
if the businesss doesnot make money would it not be best if your OH got an permanent job? Basically if he not suited to self employment then recognise now rather than struggle on and be forced to address this later.
similarly if the stress of the business make your illness worse then again wouldn't be better if you got a job that didn't stress you out but brought in some income.0 -
Mike_St_Helens wrote:Can I ask why Bankruptcy is such a bad thing if the experts have recommednded it ?
It is not a stigma as it used to be and you will at least get a grip of your life again?
I guess it's not about the stigma - I'm not really a person that's worried what others think. However, it feels wrong to just write it all off and not attempt to pay it. I really feel that we owe it so we should pay it and my consciense wouldn't been comfortable going for the 'easy option'.if the businesss doesnot make money would it not be best if your OH got an permanent job? Basically if he not suited to self employment then recognise now rather than struggle on and be forced to address this later.
similarly if the stress of the business make your illness worse then again wouldn't be better if you got a job that didn't stress you out but brought in some income.
This is a difficult one. Because of my illness, the flexibility of self employment is better for us. If I'm ill and need help with the kids, he can do that and work once the kids are in bed. The flexibility has really help with my recovery. Also, our potential earning capacity through employment is much less than if we were to put more effort into the business. The year before my illness, our combined income through my self-employment and his employment was around £70K. I am less likely to be able to hold down a full time job - again the flexibility of self employment is better for me and an employer is unlikely to tollerate my periods of ill health. Childcare would also be an issue - when I was working three years ago, our childcare costs were over £1K per month. With self employment I can work when the children are in bed or take turns to work (one works, one looks after children). I'm sure if we can get our acts together, self employment has the higher earning capacity and is better for us to be able to balance family commitments and work around any periods of ill health.also will those rent arrears be picked up by housding benefit, ie was that as they were too slow paying up ifyou see what i mean
Unfortunately not.do you have any other debts in addition to the iva
when does it expire?
The IVA was due to finish Dec 05 but there is still about a year that we haven't paid for. It has been frozen for now but we were paying £250 per month into it and cannot do that at the moment. In addition to the IVA, there is a further £43K debt in my name (the IVA was in my husband's name).0 -
5 children! :eek: What are you rabbits?
Nah seriosuly welcome to MSE and the DFW board. :beer:
And well done for facing up to your problems. Bankrutpcy is an option and it isn't neccesarily 'the easy way out'. There is alot of emotional stress attached to it. It isn't also a forgone conclusion that you will be accepted for bankruptcy but with my limited knowledge I imagine in your case that you could be.
The fact your IVA is on hold concerns me though. Are there any serious implications through not paying it, ie losing your house?
If you wanted to help your OH with his business perhaps you could find a free course in bookkeeping/accounts unless you know what you are doing already, maybe learn how to design a simple website. Something that you can enjoy and at the same time benefit the business? Just a couple of ideas off the top of my head but I haven't got a clue what I'm talking about! :rotfl:0 -
Our house is rented so shouldn't be at risk. The IVA could be failed, but that then means we just owe the creditors again - a bit of a bummer when we've paid over £9K in but apparently that would then only cover the IVA fees (I did question this with them, but not in detail). They haven't failed it thus far because I think they realise it won't get them anywhere. We have no assets.
I could help my husband without the need for courses. I have extensive experience in business management, accounting, design and marketing.
I've spoken to my husband this evening about my plans and he's agreed to have set times when I'll work and he'll look after the children. I think it's at least worth a shot.0
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