HMRC Bankruptcy letter

BrassFarthing

Today I received the letter that I have been dreading - a letter from HMRC warning of bankruptcy action. I ran a self employed business until Jan 2013 when my major supplier withdrew my line of credit and I had to close the business owing them £15,000 - I now have a CCJ for this.
In April last year I entered into a DMP for £100 pm with Gregory Pennington to pay my other outstanding loan and credit card debits which go back quite a few years. Until my business failed I had been paying under individual arrangements with them. In January this year I was contacted by Freeman Jones who I think are associated with Gregory Pennington who suggested that I should take out and IVA with them in order to clear all my debts in 5 years instead of the 20 years or so that it would take under the DMP. Anyway, the creditors meeting was at the end of February and HMRC voted against it.
Now I have no choice but to file for bankruptcy or let HMRC bankrupt me. I am just sick with worry; my husband thinks that my debts were cleared when I closed the business and our marriage has been struggling for the last few years. On top of everything else I can see my marriage failing.
I am so sorry to go on but here are my biggest concerns. If anyone can help with advice I would be so grateful.

1. The house is in my husbands name and always has been. He pays the mortgage, all household bills, rates, phone etc. I just pay for the family food, some smaller household expenses and any garden costs and my own expenses.
I am scared that the OR will want to sell the house even though it does not belong to me. Is it possible that he may deal with my beneficial interest later? It may give me some time to try and raise some money from other family members

2. The car that I use was bought by my husband and is registered in his name. I can prove that he paid for it but I pay the insurance, tax, fuel etc. I am hoping that the car will them be safe.

3. Since April last year I am now employed but I am terrified that I will lose my job be a use my employer will realise from the NT tax code that I am bankrupt. I work for a charity and although there is nothing in my contract of employment about having to declare bankruptcy I am scared that they will find out.

4. I am sure that I read from a previous post that it would be better for me to declare myself bankrupt rather than wait for HMRC to serve the papers. Am I right that they always serve papers personally so my husband would know because they will call at the house?

5. I have looks through the forms that I have to submit and will have to declare that I was self employed. Does this mean that the OR will want to come to my house to inspect the books?

I am going to ring HMRC on Monday to say that I need to get independent advice . I have more questions about the SOA but hope that you can help with the above for now.

debtinfo

Hi Brass Farthing and welcome, i'll try and answer your question below but i first just wanted to start with this. You need to tell your husband about your situation as soon as possible, its very very unlikely that a bankruptcy can go ahead without your husband finding out and it is better coming from you than anyone else.with that said when you do tell him he is probably going to have questions so lets see what we can do to sort some answers out.

1)Before we get to how long you have to sort the BI (beneficial Interest) out the bigger question is do you have a BI and if so how much would it be worth. This is an extremely complicated area of law which does change from time to time on the result of court cases. so no one is really going to be able to answer the question exactly before you go bankrupt but hopefully we can give you an idea. At the moment the way it is worked out is that you start from how the Legal title is held (in your case 100% by your husband) and work from there but it is the OR's job to prove other than this starting position rather than the other was round. So a couple of questions to start with. 1) why is the property held solely in his name. 2) was the intention always that you would get nothing from the property if you separated. 3) how much is the total equity. ie the value of the property less the amount of any charges secured on it.

2) If you can prove that he solely bought it and in no way has gifted it to you since then that should be safe.Although that doesent guarantee that the OR will allow the running costs, (they might but that is a separate question to ownership).

3) They may find out, you need to find out what your position is regards this maybe an anonymous call to the HR department. The other way to look at it is this, say the worst happens and you do get let go, will your overall position as a person looking for a job with no debts be worse than an employed person with lots of debts.

4)There is not much difference between them applying and you doing it yourself. Yes they may serve the petition personally but if you have told your husband and you are expecting this then it matters not. If they make you bankrupt you will have a face to face interview rather than a telephone one but if you ran a business there is a good chance this will be the case anyway so as i say not much difference.

5) The OR will not come to your house except in exceptional circumstances.If you have business asset at your house such as stock the OR's agent may after arranging it with you collect that stuff from you but none of your ordinary personal belongings. You will send your accounts etc to the OR's Office.

Hope that helps

antonic

Please see my comments in RED

BrassFarthing wrote: »

Today I received the letter that I have been dreading - a letter from HMRC warning of bankruptcy action. I ran a self employed business until Jan 2013 when my major supplier withdrew my line of credit and I had to close the business owing them £15,000 - I now have a CCJ for this.
In April last year I entered into a DMP for £100 pm with Gregory Pennington to pay my other outstanding loan and credit card debits which go back quite a few years. Until my business failed I had been paying under individual arrangements with them. In January this year I was contacted by Freeman Jones who I think are associated with Gregory Pennington who suggested that I should take out and IVA with them in order to clear all my debts in 5 years instead of the 20 years or so that it would take under the DMP. Anyway, the creditors meeting was at the end of February and HMRC voted against it.
Now I have no choice but to file for bankruptcy or let HMRC bankrupt me. I am just sick with worry; my husband thinks that my debts were cleared when I closed the business and our marriage has been struggling for the last few years. On top of everything else I can see my marriage failing.
I am so sorry to go on but here are my biggest concerns. If anyone can help with advice I would be so grateful.

1. The house is in my husbands name and always has been. He pays the mortgage, all household bills, rates, phone etc. I just pay for the family food, some smaller household expenses and any garden costs and my own expenses.
I am scared that the OR will want to sell the house even though it does not belong to me. Is it possible that he may deal with my beneficial interest later? It may give me some time to try and raise some money from other family members

2. The car that I use was bought by my husband and is registered in his name. I can prove that he paid for it but I pay the insurance, tax, fuel etc. I am hoping that the car will them be safe.

3. Since April last year I am now employed but I am terrified that I will lose my job be a use my employer will realise from the NT tax code that I am bankrupt. I work for a charity and although there is nothing in my contract of employment about having to declare bankruptcy I am scared that they will find out. The NT tax code is what HMRC will instruct your employer to operate, your employer is NOT allowed to ask why they have to use it.

4. I am sure that I read from a previous post that it would be better for me to declare myself bankrupt rather than wait for HMRC to serve the papers. Am I right that they always serve papers personally so my husband would know because they will call at the house? To make you bankrupt HMRC can either serve the papers on you personally OR if they cant see you to serve them they can ask the Court for substituted service by post. If you dont want them served at your home address, you can ask for them to be served elsewhere BUT the Field Force Agent who serves them has to
1) Confirm your address and
2) You have to prove who you are before they are served.

If HMRC make you bankrupt you dont have to find the £700 bankruptcy fees.

In order to make you bankrupt HMRC first have to serve you with a Statutory Demand under S268(1) (I think !) of the Insolvency Act 1986 - have you had one of these yet ?

5. I have looks through the forms that I have to submit and will have to declare that I was self employed. Does this mean that the OR will want to come to my house to inspect the books?

I am going to ring HMRC on Monday to say that I need to get independent advice . I have more questions about the SOA but hope that you can help with the above for now.

longtermplanner

I echo Debtinfo's comment that your husband is VERY VERY likely to find out that you have gone bankrupt and that however difficult it will be to tell him, this will be better than him finding out after the event.

Your questions:

1. The house is in my husbands name and always has been. He pays the mortgage, all household bills, rates, phone etc. I just pay for the family food, some smaller household expenses and any garden costs and my own expenses. On that basis if the OR decides that you have a beneficial interest it is not likely to be very large so it may be possible for your husband to 'buy it back' from the OR and the house would not have to be sold. It is also quite possible that the OR will decide you have no beneficial interest.
I am scared that the OR will want to sell the house even though it does not belong to me. Is it possible that he may deal with my beneficial interest later? It may give me some time to try and raise some money from other family members

2. The car that I use was bought by my husband and is registered in his name. I can prove that he paid for it but I pay the insurance, tax, fuel etc. I am hoping that the car will them be safe. It is not your car, it is his car, it is safe.

3. Since April last year I am now employed but I am terrified that I will lose my job be a use my employer will realise from the NT tax code that I am bankrupt. I work for a charity and although there is nothing in my contract of employment about having to declare bankruptcy I am scared that they will find out. It is unlikely but if they do it is not the end of the world. You are not the first person to have had to go bankrupt because a business failed. Hold your head up high, bankruptcy is not a nasty disease.

4. I am sure that I read from a previous post that it would be better for me to declare myself bankrupt rather than wait for HMRC to serve the papers. Am I right that they always serve papers personally so my husband would know because they will call at the house? If you go bankrupt yourself you have to come up with c £700 for the bankruptcy fees. There is no reason to do this, just wait for HMRC to do it all.

5. I have looks through the forms that I have to submit and will have to declare that I was self employed. Does this mean that the OR will want to come to my house to inspect the books? No.

BrassFarthing

Thank you all for your advice I am feeling less panicked now. To answer your question debtinfo about the ownership of the house - my husband built the house 16 years ago. I was not working at the time as the children were very small so the mortgage was taken out in my husbands name. I didn't really think anything of it at the time. He has said to me previously that I would not get anything if we divorced (I have been told that legally this is not so because it is a marital home). There is a lot of equity in the house ( I don't know how much) because it was built 16 years ago the value has increased significantly). If I were to tell him about the bankruptcy it would not help me because he would do all he could to make sure that no money went to me.

If the OR is not happy about allowing running costs for the car surely he would have to allow what it would cost to travel to work by public transport? Also I need my car as my mother is 85 and I travel to her house once a week to help with chores and shopping would he be OK with this? She lives alone and would struggle without me.

Thank you antonic - I have not had a Statutory Demand yet just a letter stating that I have 7 days to pay or they will proceed to bankrupt me for the debt and telling me that I need to phone them now if I cannot pay and I need to get independent advice.

Thank you long term planner - do you know if someone else can buy my beneficial interest if the OR decides there is one or can only my husband do this?

I know that you all think that I should tell him about the bankruptcy but believe me it will only end badly and I would rather that were later rather than sooner. My younger child has high functioning autism and copes very badly with stress which is why I promised myself that I would not leave or divorce my husband whilst he is still at home.

If anyone has any idea about what the timescales are for HMRC taking action against me then please let me know.

Thank you all again for your help.

woodformoretrees

In my case it took them months and months from their first threat of bankruptcy. The stat demand papers were served, by hand, and they would only hand them over to me. From this point is took 2 (?) months? I then had to phone the court to see if the bankruptcy went through. The first hearing was postponed, then the next one was 1 month later.

I can't imagine telling your household of the situation now will cause more stress than your husband (who doesn't sound terribly supportive at the best of times) finding out from a third party that his wife was made bankrupt and she didn't think it a good idea to let him know

There must be an un-believable level of stress coming from yourself, even if you think that you're masking it well and your child will be picking that up. Once it's all taken out of your hands by HMRC making you bankrupt then the stress levels in your house will go down - unless your focus is still on trying to keep it all hidden.

longtermplanner

BrassFarthing wrote: »

Thank you long term planner - do you know if someone else can buy my beneficial interest if the OR decides there is one or can only my husband do this?

Anyone can do this.

tigerfeet2006

Also any letters for you will most likely be marked Insolvency Service.

Please give Business Debtline a ring a talk through your situation with them. They offer a free, professional service.

https://www.bdl.org.uk

alastairq

Regarding the issue of 'beneficial interest?'

The fact that you stayed at home to bring up your children, and have financially contributed to the household in other ways, is offset against your husband having paid the mortgage....in other words, without your support, financial or otherwise, the mortgage may not have been payable?

In the end, your husband will have little or no 'say' in what percentage of the property's equity lies with you [beneficial interest].

The Official Receiver will argue for your percentage.

[you admit to having contributed, even if 'after a fashion'.......something that could reasonably be expected of any spouse/partner, over such a long period of time?]

Whether the OR demands the sale to realise the interest will depend on how much equity there is..and what percentage of BI you are deemed to hold.

The old man really should offer you the maximum of support with what may lie ahead.

If that support is not forthcoming, then perhaps now is the time to realise this, and do something positive about it?

As for your young child? Believe me, they will cope much better than you realise.

The biggest factor will be establishing an acceptable level of stability for him?

I speak from experience.

Much better if both partners can recognise things may not be of a lasting nature...and can separate on an amicable basis.

Again, I speak as someone who still receives birthday and Xmas cards from my ex's....