Looking at Bankruptcy

swillybales

Hi,

I'm new on here and I hope someone can give me a few answers.

I am looking through the rest of the site. That could take ages so does anyone have a similar situation and can let me know any likely pitfalls please?

I have debts of around £55k. £45k of which is hmrc for unpaid tax and penalties for late returns for 5 yrs of returns. Basically i buried my head in the sand hoping it would go away(I know.. Stupid).
All these returns were sent in early feb.

I haven't received a demand as yet, but obviously it will come.

Now.
I have spoken to stepchange and they said I should offer HMRC £260/mth which would obviously take forever to repay, if they were to accept it. (Highly unlikely from what ive read).
So Bankruptcy seems to me to be the only way to sort this in the not too distant future. I'm 52 and don't want to be paying it off almost till the day i die.
I understand the side effects of bankruptcy and I can cope with that. But I think a short sharp remedy is better in the long run.

Questions

Can a bankruptcy be refused by hmrc?

I understand that bankruptcy usually lasts for 1 yr. Is it likely to be longer because of the majority being to hmrc?

are the living costs allowed ridiculously small?

I Have a car worth £500. are they likely to take this or is it likely to be too small in value? Are you allowed running costs?

I will now carry on reading through faqs etc but any words of wisdom are very much appreciated.


Thanks

National_Debtline

Hi, just a few basic replies in bold below.

swillybales wrote: »

Questions

Can a bankruptcy be refused by hmrc?


They cannot stop you from going BR, no. If anything, HMRC often act to bankrupt debtors themselves - sometimes to recover assets, but on other occasions purely as a punitive measure.

The court could refuse your petition, but only on certain grounds - e.g. if they did not believe you were genuinely insolvent, or if you had not sought independent advice on bankruptcy before your hearing.

I understand that bankruptcy usually lasts for 1 yr. Is it likely to be longer because of the majority being to hmrc?


The identity of your main creditor is unlikely to influence this. What is more relevant to the Official Receiver (OR) is your conduct prior to the bankruptcy, and whether this warrants any "restrictions". For example, continuing to trade when knowing one couldn't pay one's suppliers, or accumulating debts through gambling.

are the living costs allowed ridiculously small?


The OR's team will determine what are seen as reasonable and necessary living costs in each case, but they are likely to be on the basic side.

I Have a car worth £500. are they likely to take this or is it likely to be too small in value? Are you allowed running costs?


A car worth £500 is unlikely to be sold off for its value alone. The cost of running it can be allowed by the OR if it is not disproportionate and is generally essential for work and/or family purposes.

You are welcome to read our guide to bankruptcy which may answer some more of your questions:


https://www.nationaldebtline.org/EW/factsheets/Pages/01%20EW%20Bankruptcy/Default.aspx


Dennis
@natdebtline

DorisTrousers

If you can afford £260, and that is without the other creditors of course, then you would like as not have to pay an IPA for 3 years as part of the BR. The alternative, if you do not wish to countenance BR, or you have other assets to protect, such as property, is to consider an IVA. HMRC are generally supportive of them, as long as your returns are indeed up to date. Up to you of course, so good luck with whatever you choose.