Going bankrupt... again.

smalldarkroom

Hi all,

I went bankrupt in 2008 due to my business failing and had taken out unsecured credit to support the family. £74k was the total. Credit cards, car & business loans.... the list went on.

I am, and have always been the sole breadwinner of our family. We have 3 kids now (a surprise last year) and I still am the only one earning. Despite being well paid, I have struggled to set aside money for HMRC.

They are chasing now, and despite asking for "more time to pay" they have issued a Warning of Notice of Distraint" against me. I have been communicative with them, polite, and even offered to sell my own "assets" (Camera, Computer etc)... I don't have much. My car is an old one, worth about £500.

We live in rented accomodation, never have missed a month and the HMRC is my only debt. Last year I wrote to them, as I hadn't heard from them, and gave them my I&E which clearly shows that we are running at a loss. A year on, my work is the same, the outgoings have gone up and I'm stuck. With fines and interest I owe in the region of £22k and it's going up daily despite my offers of monthly payments.

I am self employed, so my question is this... If a BRO is put in place against me, with a re-payment plan (IPA?) how can I estimate how much surplus I have due to the fact that my income fluctuates month by month? Some months it's regular, others I have no bookings and therefore have to live off the previous month.

May I add that I'm expecting a BRO - because it's my second time - 5 years ago. It's been stressful, and painful - and something I never thought I'd have to go through again. My wife even suggested that we split up, as she blames herself for the costs associated with my predicament. I will not let that happen. I would see that as being selfish. The family is the only reason, but I'm proud of them.

That's the heart of the problem, I cannot predict cash flow, and that is why I've had no option in the past to borrow from my tax account to make ends meet.

Having done this before, I know the process, and know the system is there to help. My only worry is that an IPA will be applied that will mean that I will be unable to meet the financial requirements of my family. Rent, Heating, Water, Council Tax, Transport.

I realise that this 2nd bankruptcy is rare, and means that I have to find a different way to conduct my finances. The first bankruptcy recovery plan was just to live a normal life with no business overheads and costs. I have kept it simple, we have not been extravagant - but the financial climate has meant that I'm once again looking over the edge and wondering what to do now.

Any advice would be great. Many thanks.

arcon5

Get an accountant on board... as soon as possible. Once you have signed their letter of engagement and other stuff giving them permission to act on your behalf they may be in a far better position than you to negotiate with the HMRC. A good accountant may also be able to negotiate down charges.

Going forward... why not look in to trading as a Limited Company? And if you can negotiate a payment plan with HMRC also liaise with the accountant the transformation from sole trader to Ltd. This way if things do turn bad your whole life doesn't have to be completely turned upside down.

smalldarkroom

Thanks for your reply.

I have booked an appointment with a new accountant in a week. Earliest slot I could get due to it's the busiest time of year. Also, I'm working away from home and cannot afford to take time off to sort this out.

The notice of distraint suggests to me that they are close to getting very nasty. I saw bankruptcy as my only option, but perhaps not? The HMRC has not shown any give with me, perhaps an accountant will have better luck.

Best,
SDR

antonic

Please see my replies in RED

smalldarkroom wrote: »

Hi all,

I went bankrupt in 2008 due to my business failing and had taken out unsecured credit to support the family. £74k was the total. Credit cards, car & business loans.... the list went on.

I am, and have always been the sole breadwinner of our family. We have 3 kids now (a surprise last year) and I still am the only one earning. Despite being well paid, I have struggled to set aside money for HMRC. How much do you owe ? - How much will decide which type of enforcement action they may take, also which Head of Duty is the debt for ? (Self Assessment, VAT, PAYE, CIS ?)

They are chasing now, and despite asking for "more time to pay" they have issued a Warning of Notice of Distraint" against me. I have been communicative with them, polite, and even offered to sell my own "assets" (Camera, Computer etc)... I don't have much. My car is an old one, worth about £500. Enforcement Options available to HMRC are : Distraint/County Court Proceedings/Bankruptcy

We live in rented accomodation, never have missed a month and the HMRC is my only debt. Last year I wrote to them, as I hadn't heard from them, and gave them my I&E which clearly shows that we are running at a loss. A year on, my work is the same, the outgoings have gone up and I'm stuck. With fines and interest I owe in the region of £22k and it's going up daily despite my offers of monthly payments. Have you filed all your returns ? - because if you havent HMRC will not consider a repayment arrangement.

I am self employed, so my question is this... If a BRO is put in place against me, with a re-payment plan (IPA?) how can I estimate how much surplus I have due to the fact that my income fluctuates month by month? Some months it's regular, others I have no bookings and therefore have to live off the previous month.

May I add that I'm expecting a BRO - because it's my second time - 5 years ago. It's been stressful, and painful - and something I never thought I'd have to go through again. My wife even suggested that we split up, as she blames herself for the costs associated with my predicament. I will not let that happen. I would see that as being selfish. The family is the only reason, but I'm proud of them.

That's the heart of the problem, I cannot predict cash flow, and that is why I've had no option in the past to borrow from my tax account to make ends meet.

Having done this before, I know the process, and know the system is there to help. My only worry is that an IPA will be applied that will mean that I will be unable to meet the financial requirements of my family. Rent, Heating, Water, Council Tax, Transport.

I realise that this 2nd bankruptcy is rare, and means that I have to find a different way to conduct my finances. The first bankruptcy recovery plan was just to live a normal life with no business overheads and costs. I have kept it simple, we have not been extravagant - but the financial climate has meant that I'm once again looking over the edge and wondering what to do now.

Any advice would be great. Many thanks.

Please post again if you need more help.

arcon5

Do you have a lump sum you can pay? Perhaps £5k or a good chunk? A decent accountant would be able to use this as leverage in negotiating a payment plan.

jobdone1

did not want to read an run i really pray you will sort this problem out and have time to enjoy your family remember its only money looking out for your in my view is important good luck