Help and advice for the seriously confused

threegreedydogs

Hello. New here - help and advice greatly appreciated.

My wife and I are contemplating BR (both of us). Leaving aside a mortgage the size of a 3rd world debt - and without going through all of the whys and wherefores - we are trying to deal with the following:

Bank overdrafts
1. approx £49,000
2. approx £12,000
3. approx £14,000

Credit cards
6 totalling approx £31,000

Inland Revenue
Combined tax demands for both of us of £32,000

At the moment we are making all payments, just, although the payment to the revenue is currently only a token £50 per month each.

In addition we are paying (again, just) a mortgage which costs £3,100 per month and there are no arrears.

Pretty much all of the debts are in joint names. I'm self-employed (my wife is a partner in the business) and we each earn around £40,000 per annum from it.

Our total income falls around £1,200 (each) per month short of our total outgoings, if an allowance is made for tax. Because we've been keeping up payments in every direction we haven't been able to make that tax deduction, hence we have the IR debt.

Frankly the stress of sustaining this is killing me (have been keeping all the balls in the air for about 6 years now) so we are looking at BR as an escape route.

The house is on the market and if sold would provide maybe £40,000 over and above the mortgage. It's the mortgage cost that is the real killer - although the rest are onerous, i could just about manage them and save for the tax bill if we weren't paying the mortgage.

We are very happy to move to rented and have enquiries in-hand. It's essential to protect my ability to earn, but as most of my income is from fees and/or commission, I hope that ought to be possible with some careful management.

We have no saleable assets, savings or investments (beyond small pension pots).

So, is BR the best route to take? Is it possible to do a deal with the mortgage lender to buy some time and relieve the pressure? Anybody have any suggestions?

poledancer49

I unfortunately do not know the answer but there will be lots of posts soon and they will be full of advice. Wishing you the best of luck in your journey.

threegreedydogs

Come on folks, I'm staring down the barrel of big gun and am desperate for some advice from people with personal experience of debt problems - especially if anyone has faced problems of this magnitude.

We've got well over £100,000 of unsecured debt, a large portion to the IR, and no idea if there's a way back from the brink.

All advice gratefully received.

mattannar

So who was looking after your business accounts?

You could sell the house, use the £40k to pay the ILR. Rant a flat for £400 a month , that would free up £2.7k a month less the shortfall of £1200 = £1.5k and use this to help settle the rest of your debts.

If you were to go br, with the equity you have in the property you would more than likely lose the property anyway.

poledancer49

:(Hope you get some advice soon.

threegreedydogs

mattannar wrote: »

So who was looking after your business accounts?

You could sell the house, use the £40k to pay the ILR. Rant a flat for £400 a month , that would free up £2.7k a month less the shortfall of £1200 = £1.5k and use this to help settle the rest of your debts.

If you were to go br, with the equity you have in the property you would more than likely lose the property anyway.

Around here rent for a family house would be around £1500 per month. The house has been on the market for nearly a year, during which time we've dropped the price significantly and there's still no prospect of a sale, so getting out any equity to use to settle debts is a very moot point.

In the meantime, the cost of interest (mortgage, credit card, overdrafts) stands at £4,300 per month and is killing me, it's very doubtful that I can continue to pay all that is due for very much longer, and a sale, if one os possible, may take another year to achieve - by which time we will unquestionably be in substantial arrears with most debts.

Yes, with BR we'd lose the house but as it's on the market anyway we're resigned to that. BR would wipe away the rest of the debt and give me a relatively clean start. What I don't know - and where I'm really looking for information based on experience - is how easy/difficult it would be to maintain a self-emplyed business given problems with bank accounts, the need to mobile phone and broadband contracts etc.

PippaGirl_2

Hi threegreedydogs, I take it you have 3 of those lol?

No one here is really able to advise you as to whether BR is the best option for you, really you need to speak to CAB or stepchange and get individual advice about that. But your debt seems high and if your house has been on the market that length of time and not sold then it would seem to be overpriced anyway so any equity would be minimal and would not cover your debts. Or really, barely touch them. Your income is high, both of you so it would be likely that you would both be asked for an IPA taking excess income from you for 36 months starting sometime after going BR.
Step change would be able to give you a good idea of how much your IPA's might be, and that might be useful information now to help you decide whether BR is the right option for you.

Before going BR, open a Co-operative Cashminder account, plus another for your business account. This account has internet access. I've managed to switch from skybroadband to Virgin while BR with no problems. I was declined a sim deal for mymobile phone so my dd took one out for me, and the £10.50 gets knocked off her rent money each month.

HTH

threegreedydogs

PippaGirl wrote: »

Hi threegreedydogs, I take it you have 3 of those lol? Indeed we do.

No one here is really able to advise you as to whether BR is the best option for you, really you need to speak to CAB or stepchange and get individual advice about that. But your debt seems high and if your house has been on the market that length of time and not sold then it would seem to be overpriced anyway so any equity would be minimal and would not cover your debts. Or really, barely touch them. Your income is high, both of you so it would be likely that you would both be asked for an IPA taking excess income from you for 36 months starting sometime after going BR.
Step change would be able to give you a good idea of how much your IPA's might be, and that might be useful information now to help you decide whether BR is the right option for you. Very helpful info about IPA's. I have no knowledge of them at all, but have already had contact with Step Change so will seek advice about them as I'm frankly terrified by the prospect of BR and it's consequences.

Before going BR, open a Co-operative Cashminder account, plus another for your business account. This account has internet access. I've managed to switch from skybroadband to Virgin while BR with no problems. I was declined a sim deal for mymobile phone so my dd took one out for me, and the £10.50 gets knocked off her rent money each month. Again, very interesting - thanks.

HTH

Much appreciated.

ensenar

Bankruptcy is always a personal choice, and the cold hard money facts need to be looked at carefully. It's the best thing we did with our large debts, although it is hard work. Money is tight, as you are essentally reset to Zero, and have to work back from there.
We've changed our lifestyles, drive old cars, and dream of a new sofa, but to be debt free is wonderful.
There's no gain without pain, and we work hard to manage our finances carefully now, don't have access to any credit, and it can be hard to rent as most landlords require 6 months rent or a guarantor.
We took on a rented house just before B/R and have built up a good rental history and references from the letting agency.
I definitrely recommend the Co-op Cashminder a/c before BR
Hope that helps and good luck!

Mouse1812

Saving the business is going to be difficult. I was able to transfer mine well in advance, but with both of you going bankrupt your options are limited.

How will your customers react to your bankruptcy? How many customers do you have?

I sounded a few out in advance and they were very supportive. A few found out afterwards and fell into two camps, the goodbyes and the why the hell didn’t you tell me? Thankfully most stayed. Some still do not know.

On the date of your bankruptcy the business technically ceases, the OR will close it down including any website. Any customers who owe you money will then have to pay the OR who will write to them asking for payment. Perhaps there is a planning point there.

You can start the business up again the next day but any damage caused by the above and practical difficulties obtaining a (business) bank account will make life difficult.

capeverde

From what I read into it he is self employed in a partnership with his wife. The company isn't limited so why would it have to be closed down. Reading between the lines he's a consultant and there would be no reason for any of his clients to know about his bankruptcy. The debts are on them, not the business if Ive understood it correctly.

Look the nuts and bolts are this, if you go bankrupt you will get a whopper of an IPA if the same income levels are maintained and you lose nearly all control. You are left with the absolute bare minimum for 3 years. You also face 6 years which can be trying, with the most basic things you took for granted out of your reach. Having said that, I personally didnt have any problems with bank accounts and have regular facilities both personal and business. For every one like me though, there are many more who can only access basic accounts at best. I dont know how this works and am yet to find anyone who can provide a satisfactory explanation.

On the other hand, the debts are manageable if you can sell your property for the amount you mentioned and managed to then cut your cloth accordingly. Obviously a big if here and as you mentioned every month you are sinking, so something has to be done. However, you do maintain control if this can be worked through.

Personally I don't see the point in making token payments as youre credit history will be screwed anyway, which to be fair is the main thing to try and protect. Also, your creditors wont negotiate until you get right down to the wire, at which point the above again applies. When I was faced with bankruptcy, I gave my only creditor, a bank, 3 choices; 1. give me a 60 day payment holiday and then restructure the debt. 2. accept 38p in the £ as full and final settlement and ark my accounts as settled in full 3. I would go bankrupt. They turned down the first two.! They wouldn't even put me through to their debt management department because Id never missed a payment or been late.