huge debts and self employment

mgr1970

Does anyone have any advice i have around £60000 in debts some of which i dont even know who they belong to now , none of the 4 larger firms will make me bankrupt and only 1 firm has accepted my payment offer.
I have an income of £87 tax credits as i have just started self employment 10 weeks ago, since then i cannot get a bank account for my business and now my creditors know i am self employed they have all come out the woodwork and i dont know what to do.

I have been advised to go bankrupt but then i am stook with my self employment, i have 7 court orders now and the baliff knocks on the door and laughs and just says goodbye we are best friends now....

Can anyone give any advice at all..

Thanks

Toto

First of all are you a sole trader or a limited company? If you are a sole trader you can open a basic bank account to have all of your company income paid into. I own a limited company which does make options for debt management slightly harder.

As far as options for your debt, It really depends how profitable you think your business will be in the next year. If you are not likely to make any money quickly then to be honest I would probably put plans for self employment to one side until you are in a position to support yourself in the start up months. It is bloody hard getting off the ground, if your business is anything like mine the start up costs are massive and that sucks all profit for the first 500 years! The only way my partner and I can make a living at the moment is by us working on some freelance jobs on top of working for our company. It sucks doing this but we can't live on fresh air.

Another possible option if you want to go for bankruptcy is to get your partner or parents to take over your directorship and you sub-contract for them until you are free to take the reigns again.

I do understand everything you say though, I am going through similar myself, although at the moment I only have 1 ccj which I managed to pay off in full recently. The others are still threatening court action, which at the moment I would rather they did take me to court because I will probably have better luck getting the judge to sort out payment amounts. I am in the process of selling my house to clear this debt once and for all. But even this is an uphill struggle and daily I wish I could just hand all of my assets over and say deal with the lot, take what you want and leave me alone. I can't pay till the house is sold and I can't magic a buyer out of thin air... I am trying.

My creditors would have trouble making me bankrupt because I have too many assets, my equity etc is more than my debt. This is a good thing in a way because I do want to maintain my business because it turns a good gross proffit... of course this has to be reinvested. But, getting back to your business... take an objective look at it and ask, does the growth potential in the early years really outweigh the benefits of clearing your debt by bankruptcy? Will the business earn you enough to cover your debts and give you an income quickly? If not, then this may not be the ideal time for you to become self employed. There is always next year.

rog2

Hi mgr and welcome to DFW,

I am in a similar position, owned my own business as a sole trader, and am currently being petitioned for bankruptcy by HMRC for an alleged debt of £70k.
It is, in fact, quite uncommon for a creditor to petition for your bankruptcy, as this will involve them with up-front charges, in excess of those charged to you, if you declare your own bankruptcy. Whilst the creditor will attempt to reclaim these charges, he will not get preferential treatment, for his debt, over your other creditors. HMRC are, unfortunately, the exception to this - they will go all the way, even in the knowledge that they are unlikely to gain financially.
One word of encouragement - Filing for bankruptcy need not affect your ability to continue working in 'self-employment' with certain exceptions, although you must state, if asked, that you are an 'undischarged bankrupt'.
It will, however, affect your ability to obtain credit and your assets (if you have any) may be siezed - even here the OR is unlikely to sieze assets, such as tools, computer etc., that you need in order to carry out your work.
It is relatively simple and inexpensive to file for bankruptcy - have a look at https://www.insolvencyhelpline.co.uk
Obviously, if you do decide to file for bankruptcy, you need to consider all the implications on both you and your business - as mentioned by Toto - as Bankruptcy is a very serious situation and certainly not to be seen as a 'Quick-Fix'.
But, reading your thread, I would personally agree that bankruptcy appears to be the most sensible option in your case, and there is life both during and after bankruptcy.
I wish you the best of luck and if I can offer any further advice, please feel free to PM me.

davethecue

Hi Welcome and good luck
Cant add anything to what Rog2 and Toto said. Just wanted to let you know that there are lots of similar situations to yours on here and there definately is light at the end of the tunnel

mgr1970

Hi All,

Thanks for all your help and support after reading your replies i have called the National Debt Line and the CCCS they all agree that i would be best going bankrupt since that way my debts will be frozen and stopped been passed from one company to another. They also said the OR will not take my laptop and car as they are the 2 main items used for my business plus they also said what someone remarked to before i am stuffed for more than 6 years at the moment so it might as well be 6 years off controlled choas and not a uncontrolled nightmare.

So in the morning i am going to call the OR linked to my court and then i will make myself bankrupt that way i can start to get some order in my life.

I will keep you all upto date during the coming weeks so anyone who is thinking of doing what i am will have a step by step guide to what goes on and how the system works by someone going through it in the hope it helps someone out there.

Once again thanks everyone and its not something i look forward to saying but keep speak to you all over the next days on the trip into bankruptcy.

sandralovescats

Provided you don't owe any money to the State, ie to the Inland Revenue and Customs for tax or VAT, the OR will allow you to remain self-employed and to continue to work

phoneprize

make sure you keep us up to date!