Hefferlump's Holler for Helpful Hints

Hefferlump

My partner and I are both just turned 50 and, despite every effort that we have made to keep our heads above water, we don’t see any option other than bankruptcy for us unless, that is, any of the excellent posters on here can think of a different course to take.

First things first. I am self employed in a job that, if I were to be made bankrupt, it would be almost certainly impossible to carry on in. IVAs are frowned upon as well. My partner was in the same job but had to give it up earlier this year (more later). There is no set income in my job and it is fair to say that this year has not been great on that front. However, the seeds of this problem date back a fair old time so I had better set them out here.

My partner and I have always done the same type of work for almost 30 years. At one point my overdraft was well into five figures so, five years ago, I took out the maximum unsecured loan the bank would allow and reduced the overdraft to just over £10k. A couple of years ago the bank defaulted the loan (I had informed them of cashflow problems) but I was able to cash in a small life policy, get the loan back on track and reduce my overdraft further to £7000. Six months later the bank refused to renew my overdraft and I have been struggling to pay them almost £300 pcm off the overdraft (they were charging interest on top until recently, meaning it was only falling by c£50pcm) together with a further sum of c £300pcm towards the loan. At the present time I have missed the last 3 months payment on these two. The bank has sent the standard default letter for the loan, showing that, if it was to be paid up by a lump sum payment, it would cost £16k.

In an effort to support my business, when I was younger, I took out two loans against the money my job had generated but not received. They were secured by life policies. Because of the cashflow problems I had a couple of years ago those policies were “closed”, meaning that the policies are c£6k short and are over a year past their settlement date, although I do not know what the bank concerned are doing as they haven’t contacted me about them.

I owe tax and VAT to the tune of c£8k, c£7k of business bills and £3k on a credit card bill. My total debts, therefore, are c£45k.

Strangely enough my partner and I were managing to “box and cox” as far as our debts were concerned and, although we never took holidays or bought expensive items (car is worth £400, no flash clothes, jewellery or hi-fi) we were coming up for air regularly rather than sinking after the third gasp!! Unfortunately, just after the turn of the year things took a drastic turn.

We live in my partner’s flat that was re-mortgaged almost 3 years ago. The value of the flat, in its current state (it needs decorating, kitchen seriously out of date, etc) is probably £150k. The remortgage, taken out by my partner to do the decorating but there were bills to pay so it was never done, was for almost £120k so, in theory, there is over £30k of equity there. However, earlier this year my partner had to stop work as my partner was diagnosed with primary progressive multiple sclerosis, meaning that my partner could no longer cope with the large amount of travelling sometimes necessary for work. Virtually immediately, therefore, we had a drastic reduction in the household income. We were able to totter along with the small amount of savings we had but we are now 3 months behind with the mortgage (over £2k) and my partner’s other finances are also in lousy shape. £6k owed on credit cards and my partner had also taken out a ‘business loan’, like mine, but that was for £15k and the repayments are c£4k short. £3k is owed on tax and VAT.

My partner started looking for other work and, yesterday, had an interview arranged for a possible job, not bad for someone aged over 50 and with MS. Sadly, the disease has progressed so rapidly that my partner was unable to get to the interview because my partner was unable to cope with the travel by tube and bus. My partner just couldn’t walk any further, having got to within 5 minutes of the interview destination. It is likely that my partner will never be able to get to a workplace again. We are stuck with my insufficient income and therefore the solids are about to hit the fan.

Although becoming bankrupt no longer holds the stigma it once did, it will screw us. I will be unable to remain in work and, undoubtedly, we will be homeless with little hope of employment or a roof over our head. Unless someone on here has a flash of inspiration, can anyone fault my conclusion? My partner, for some reason, thinks getting married would help but I think all that happens is that it makes my partner’s situation even worse.

Thanks in advance for your replies, irrespective of what you say, and sorry about the length of the post.

Shineyhappy

Hiya and welcome to the boards! :j

If you are looking to avoid bankrupcy then the first thing you really need to do is to organise a statment of affairs (all your incomings vs your outgoings and a list off all your debts, their minimium payment and their apr), when people can see that, it is easier to give advice. There is a sticky thread by Southernscousser that gives more details on these.

Dont worry about the length of your posts, mentioning no names but plenty of us are prone to chatting away for no reason

Crown

Hi, and Welcome to DFW!

Reading your post I couldnt see you mention what your current joint income is and if you still have any savings or investments that could be released to pay towards your debt. Although Bankruptcy and IVAs are certainly an option they are not the only remedies. Have you thought about Debt Managenet Plan?

Also if you were to sell up could you use the equity in the property to pay some of the debt and rent somwhere? It sounds like you are getting to the stage where the preverbial is hovering near the fan and you certainly need to take action.

Have you looked at the first time posters thread located at http://forums.moneysavingexpert.com/showthread.html?t=107280

If you can post up your current Statement of Affairs in the format shownh there it makes it easier for us to give you advice. I would almost definitley recommend you call the CCCS who are free Debt advice charity who will gove you Free, Impartial advice on your situation.

For starters though from what you you have posted the most important aspect at the moment is the mortgage payments that have been missed.

It is Important that you try and get this back up straight as otherwise your home is at risk anyhow. the Bank are not going to starve so as long as the debts are unsecured just make a a token paynet of £1 to them why seek advice from the CCCS or another debt organisation.

You may already know the difference but there are priority and non priority debts

Your priority Debts are

Mortage/Rent
Secured Loans
Council Tax
Gas/Electric
Food/Clothing (Within reason!)
Water

Any other debts are not as important at present so use the payments you are making against your mortage. you will also need to set up a parachute bank account if you go down the DMP route.

I do not want to overwhelm you with details but I strongly suggest that you call the CCCS and arrange a appointment with one of there debt counsellers who will be able to give you a lot of advice on this matter.

I look forward to seeing further details and try not worry to much as you will get there one way or the other

Best regards

Hefferlump

Thanks for the advice so far. A brief response to your points at present as I have to go out.
1. As stated, my partner has no income at present and mine is variable, dependant on work done. I recieved no money in June and July then £3k in August. Nothing received this month so far. This makes a statement of affairs document, with income and expenditure, pretty difficult to draw up.
2. Parachute account. My bank, when they stopped my overdraft, only allowed me a basic Electron account. On top of that I have a basic building society account so I think I have that covered.
3. I will look at the first time posters thread
4. I will give the CCCS a call as well

I will check in later

Crown

Hi Heffer, thanks for the reply.

Even if you have a basic bank account you would be advised to open an account with a different lender who you hold no debts with. Also make sure the organistion is not financially linked to another.

The reason being that if you inform them that you are thinking of going down the BR, IVA or DMP route the bank has a legal right to claim any money they are owed from ANY account you hold. I found out this to my cost when the Halifax took money from an account I held where I had money from a rental property I owned. because of this it lead to major problems and resulted with a repossession of the property after many months.

The CCCS will give you advice on this when you speak to them im sure but it is a safe option to have an account without any creditor being able to claim anything from it without your knowledge or sayso

trying-very-trying

So sorry to hear about your partners MS. Your partner should be able to claim benefits. Probably incapacity and dla plus mobility allowance, I would think. These benefits can be a nightmare to try and claim, but it would definitely help if you can get the MS nurse or someone like that to help fill the forms in.

madmoney_2

hi there first of all i wanted to say how sorry i am about ur partner being diagnosed with ms, its a terrible thing to go thru so my thoughts are with u.
Secondly is your partner claiming what they are rightfully due? ie disability living allowance etc? they can also claim housing and council tax benefit, the housing benefit pays for the interest on the mortgage which should help out significantly. I 100% agree with the other posters in that u could try a dmp, and post ur soa so we could help more. Good luck whatever u decide to do, and for more info on benefits, check out https://www.entitledto.gov.uk
hope this helps

mm

madmoney_2

http://www.entitledto.co.uk/ sorry this link should work!!

lindens

Selling up may make sense as you say you have a flat, but with MS it may make sense moving to a bungalow (unless flat is GF obviously!)
Maybe now would be the time to make this move, release some equity and rent a bungalow, thus taking some pressure off your poor OH's health.
I think your OH should definately go down the benefits route, they mus be entitled to something?
Dont worry about your income, so do the SOA anyway, we will still understand it and be able to help.

Hefferlump

Thanks for the advice so far, guys. We have contacted CCCS and have our appointment with the counsellor next week.
One question, however, why do we need to contact any of our creditors before we speak with the counsellor? Surely that could cause any one of them to take action before CCCS are fully involved?

Hefferlump

<bump>
Busy doing our SOA today and tomorrow, but if anyone has the answer to post#10 we would be grateful