Business debts on personal credit cards

Downpaymentblues

Hi, this is something I have been trying to pluck up the courage to do for some time. I run my own one man business and have done for almost 20 years. Thankfully I have always been busy and to all outsiders I have a successful business. The truth of the matter is that although i have always been an honest hard-working guy who is good at his job....I have probably been a fairly useless businessman . Over the years cashflow issues have caused me on occasions to pay suppliers, hmrc, utilities using personal credit cards....always with the intention that i would pay off that amount 'next month' Anyway I now have approx £30000k on credit cards which currently means payments of around £ 900 in total ....£ 600 of which is interest. Virtually 100% of these debts are directly business related. I have been meeting the minimum payments for some time now by dd but have rarely been able to pay anything extra off. I would love to 'work my way' out of this and the advice i have seen on here will be a great help to me, along with the fact that I am not alone in this problem....altough I realise this will take years, Another option I have been thinking of is remortgaging. Our mortgage is actually less than the credit card debt and our house is worth about £ 120k. My money problems are not at the desperate stage (maybe I'm kidding myself) but they are having a significant impact on my home life, general health and my ability to provide for my family. Thanks in advance for any advice received.

BJV

Ok you need to speak to an accountant. I own a business and did pretty much the same but set up costs, 1st year the debt was over £100K. It has gone now thank god but getting the money back out of the business to pay it has cost a small fortune. Give yourself a pay rise and the government gets PAYE and you get a higher tax code. Take a divided and you get a massive tax bill.


Speak to someone asap. I waited nearly six months before I got the courage to ask for help. The longer you leave it the harder it will get and paying just interest will cost you a fortune in the end.


There will be a way. Perhaps a loan from the business to you? Clear the debt then a nominal pay rise to cover the loan repayment? It will be a lot cheaper.


Personally I would never re-mortgage to pay a loan but I think that is because I am a bit stuck in my ways and always think of the house as the very last thing I would ever let go.


I am sure that there will be a financial wiz along shortly to sort it out.

Downpaymentblues

Thank you BJV .Yep using my house is not something I would do lightly, but given that our current mortgage payments are so low i thought it merited consideration. I am a sole trader so guess I am pretty much in the same boat as any other individual .

andyfromotley

Turning unsecured debt into secured debt should usually be treated as a last resort for obvious reasons. Perhaps give step change or christians against poverty a call to explore your options.

Its difficult to give advice without knowing your full financial picture.If you want to give them then post an SOA using this link.

http://www.stoozing.com/calculator/soa.php

Obviously you need to get beyond paying just the minimum as this will cost you an enormous amount in interest and take decades to complete. Try having a look on the CC eligibility tool to see if you can move at least some of this to 0% CC's where if you could maintain your current payments would shift all of this debt in just under 3.5 years.

There is hope, don't despair.

Downpaymentblues

Thanks, i hear what you about the mimimum payments, i am guilty of just letting the direct debit take care of the payments and forgetting about it for another month.....as much as anything I need to buck up my ideas and stop feeling sorry for myself !.....maybe work smarter rather than harder !

dancingfairy

Whilst you are a sole trader and would be liable for the debts anyway, I think it is helpful to try and seperate any company debts from your debts. You need to try and run the business on a busines footing, rather than doing what you do in your line of work and letting the business side take care of itself (or not).
Hopefully you can get a bit more a grip on where the business is and cash flow etc and then start to think about paying you (the individual back).
Maybe have a chat with Business debtline? I'm not sure if it's them or National Debtline you'd be best to speak to but I'd start with Business debtline.
Another option is to explore any help from the chamber of commerce, in terms of courses or training or help on cash flow management/book keeping/planning or maybe finding a business mentor.
Good Luck
df

Downpaymentblues

To be honest we do all we can to improve cashflow.....most of our money comes in reasonably quickly......and it goes straight back out even quicker some of the time. Have to say I find the banking system very frustrating....many of my customers still pay by cheque which takes the best part of a week to clear into my account where as most of my payments to cards, utilities or suppliers are by direct debit of bank transfer. Anyway that side of things is my responsibility and I am not trying to point blame at anyone other than myself. I have looked on the National Debtline website previously......its just a big step for me to hold my hands up say 'this is a problem'. Now that i have taken the step of putting it out on here it has encouraged me to seek advice though. At the end of the day I am lucky that i have the means and skills to work towards sorting this out. Just to add this example of my cashflow, delivered a job last Wednesday got paid on delivery,cheque paid in that morning, cheque clears into my account tonight just in time to be sent way for my July tax payment....at least its coming out of my bank account rather than being put on a card this year. Thanks for the advice folks :-)

National_Debtline

Hi

As dancingfairy suggests, I think a call to my colleagues at Business Debtline would be a good idea. Even if it’s just to have someone objectively take a look at your business and see whether they have any suggestions and advice for you.

I appreciate it might be a bit daunting at first but as you say, you’ve taken the first step by posting here, and the Business Debtline advisers will be very understanding and non-judgemental.

www.businessdebtline.org


James
@natdebtline

Downpaymentblues

Thanks James, yes I will make that call. i am currently trying to asses exactly what my financial position is and get it all down in writing.