Bankruptcy to clear VAT debt

Gwenig3

Hi my Dad is 76 and has been paying a large VAT debt for fifteen years.He pays £10 per month at the moment. HMRC have contacted him and said he has to pay £60 a month. He can't afford this as he only gets state pension. Both he and my mum are worried that they will send bailiffs if he dosnt agree to pay more. Everything in the house is in my mum's name, but would that matter.
They are considering him declaring bankruptcy to lose the debt, but not sure if this would work.
HMRC are no help and basically hound him for the cash.
Any help or advice would be much appreciated.

ermine

Gwenig3 wrote: »

Any help or advice would be much appreciated.

Head on over to the MSE Citizens Advice Board section on debt

That one sounds like it needs expert help as to where your parents stand, and the CAB is one place to get that

luvchocolate

Hi the C.A.B forum has been inactive for 2 years so stay on here..you will receive excellent advice from many posters here

Gwenig3

Thank you, they are getting worried now as keep getting letters from them. They where going to pay the £60 a month and I told them no get advice first.

Bantex_2

How much is the debt?

National_Debtline

Hi Gwenig

Yes, bankruptcy could be an option for your father but we'd really need to know a bit more about his circumstances, or at least the following:

- the size of the VAT debt;
- the extent of any other debts he might have besides this one; and
- whether he owns or has a stake in anything valuable e.g. property, vehicles etc.

He shouldn't simply try to up his payments on demand by HMRC if he can't afford such an increase. Bailiffs are unlikely to materialise overnight and there should be plenty of time for you to get appropriate advice on his behalf here and elsewhere.

It is worth you getting in touch directly with one of the free debt advice charities listed on this forum, as they will be able to advise you on your father's behalf in greater detail.

Dennis
@natdebtline

DorisTrousers

Different people have different definitions of large, but if the debt is under £15k then don't forget the option of looking into the possibility of a DRO, which has the same effect as BR, but is much, much cheaper.

Gwenig3

The debt is £7000 and I think he ows £600 on a cataloge, and that's is. He has no property or vehicles as everything is in my mums name. Can you explain what a DRO is please.

fermi

See: http://www.adviceguide.org.uk/wales/debt_w/debt_help_with_debt_e/debt_debt_relief_orders/debt_debt_relief_orders_explained/dros_-_what_you_need_to_know.htm

haras_nosirrah

sounds like they have realised it will currently take the 58 years to get the money back at the current £10 a month whereas £60 a month would see it clear in under 10 when there is still a chance of him being alive to repay it

alastairq

Sounds like a Debt Relief Order is the way forwards for the OP's parents.
[A DRO is essentially Bankruptcy Lite.....has the same effect as bankruptcy, but costs less, and has greater limitations to qualify...also, should some circumstances change during the 12 months the DRO runs, then it could be revoked.]

There is one issue I find of concern.

The OP mentions that the parents' home is ''all in wife's name'..?

If HMRC do continue, and do a creditor's petition for your Dad's Bankruptcy....even though the home is in the wife's name, the husband may well have accrued what is known as 'Beneficial Interest' in the property.

The longer they have lived together in that property, the greater the percentage of BI that can be accumulated.


In the absence of information, it is to be hoped they live in a rented property?

Then the above would not apply.

But, if not....and a Bankruptcy petition ensues, the Official Receiver may well look at your Dad's share of any equity in the property?