Please help - crisis stage

Ade704

Hi all.

I've got myself into a real mess but more importantly, my parents have been dragged into it too. I set up a new company 5 years ago and I have gradually put everything into it. In addition, because I had a well-paid job before, I have been able to take out some large loans and I've also taken out various credit cards that are now all pretty much maxed. This was all on the basis that the company would take off, but our suppliers have hit delay after delay and it is getting the point where I can't wait much longer. My father works with me and has made similar sacrifices. He and my mother have racked up credit card debts and loans but he has also put his nest-egg piece of land on the table too - it secures the business overdraft with the bank. In other words, everything rides on the success of the company.
The problem is that our personal monthly outgoings are now more than the company can afford. I am not too bad - if everything goes pear-shaped, I am only 36 and I've just got married to a wonderfully supportive woman who has a well-paid job. I've been advised by a friend who went bankrupt a couple of years ago that I could basically wipe the slate clean without really affecting my wife (the house is in her name and all debts are in mine) and I am young enough to start again. But it is my parents that I am really worried about - they will lose everything. Their nest-egg will be swallowed by the bank, their house will go and they are both approaching 70. The knowledge that they could end up with nothing is killing me.
The really really frustrating thing is that if the credit card debts could be changed into loans, then we could probably squeeze through. We can't get any new cards to do the transfer 'shuffle' and their house is mortgaged up to the hilt. But if the credit card companies would agree to change the debts into loans, even if the rate was 10%, it would make a huge difference and we could probably survive.
The question is, will the credit card companies negotiate, if so, how do we go about it? I am wary of contacting them in case it sets any alarm bells off but I would have thought that from their point of view, if they knew we were going to go down as the situation stands, but that we could survive if the interest rates were cut, then in theory they should at least consider it. Any help or advice would be really appreciated. I am at my wits end!
Thanks a lot, Ade
p.s. sorry - I'm new to forums and appear to have posted twice by accident

taxi73

Do you have a business advisor at the bank?..if so go and see them..I'm not sure but I don't think that CCs will be able to be turned into loans with themselves.Can you change suppliers?..whatever you do you need to take urgent action..good luck

Ade704

taxi73 wrote: »

Do you have a business advisor at the bank?..if so go and see them..I'm not sure but I don't think that CCs will be able to be turned into loans with themselves.Can you change suppliers?..whatever you do you need to take urgent action..good luck

The bank is next to useless and I am wary about spooking them too much. The business overdraft is big - £100,000 - and they could cancel it at a moments notice if they wanted to. I am really trying to find a way of consolidating the personal stuff to bring the monthly outgoings down. If all the cards could be replaced by loans, then my problems would be greatly reduced. Can't change suppliers either - it is a brand new patented technology and there are only 2 manufacturers in the market. Both are now pretty much there but it has taken 5 years and the delays have done the damage. We are sooooo close but the high credit card interest is the problem.

COPPERHEADJACK_2

I was in your situation about 3 years ago we struggled to buy a loaf of bread.
try to make an arrangement with the credit card companies to pay off all the debts at the minimum amount. Bring all your personal outgoings down to a minimum ( get rid of mobiles and all luxuries cut the food costs down) and concentrate on paying the overdraft to keep the nest egg.
If you have to live on the value food for 6 months then thats what has to happen. I had to.
You could make yourself bankrupt but you would have to take your name off the business account.
The best thing to do is to try and get the credit cards sent to debt collectors and they usually stop any intrest going on.
you need to concentrate on the most important payments at the moment they will all get paid in the end.

Ade704

COPPERHEADJACK wrote: »

I was in your situation about 3 years ago we struggled to buy a loaf of bread.
try to make an arrangement with the credit card companies to pay off all the debts at the minimum amount. Bring all your personal outgoings down to a minimum ( get rid of mobiles and all luxuries cut the food costs down) and concentrate on paying the overdraft to keep the nest egg.
If you have to live on the value food for 6 months then thats what has to happen. I had to.
You could make yourself bankrupt but you would have to take your name off the business account.
The best thing to do is to try and get the credit cards sent to debt collectors and they usually stop any intrest going on.
you need to concentrate on the most important payments at the moment they will all get paid in the end.

Thanks a lot for the advice. I think I can survive ok - it is my parents' payments that are the problem. I take it the involvment of debt collectors would cripple their credit rating but at least it would take some of the pressure off. Thanks again - much appreciated.

COPPERHEADJACK_2

No more than if they start missing payment and the business goes belly up.
rather that than lose their house and nest egg a credit rating can always be repaired.
you only need acredit rating if you are going to get credit of some sort by the sounds they won't be getting credit for a long time

Ade704

COPPERHEADJACK wrote: »

No more than if they start missing payment and the business goes belly up.
rather that than lose their house and nest egg a credit rating can always be repaired.
you only need acredit rating if you are going to get credit of some sort by the sounds they won't be getting credit for a long time

Thanks again Jack

Rafter

If the business case is sound and you really have a case then a bank or outside investory should be possible. You would have to give up equity in the business but at least you would not end up losing the lot.

Do you not have any business contacts or even this supplier or potential customers who would be prepared to bail you out?

Otherwise you are going to have to start defaulting on cards to pay what you can afford and hope that the business recovers fast enough to get you back on track.

If you go the bankruptcy route your credit rating is going to be shot for 6 years anyway, so you seem to have little to lose by paying what you can afford personally for now in the hope that business sales will enable you to pay back in time.

Good luck.

R.

Backbiter

I don't think bankruptcy would solve anything. If, as you say, getting the credit card rates reduced to 10% would be sufficient to ease the situation then that has to be your first move, I would have thought.
Hope everything sorts itself and your business takes off!

Ade704

Thanks to you both for your input. I already have 2 outside investors who have put money into the company. The problem is that the money we have to draw out to pay the personal debts will very shortly be seen as unacceptable by them. We have an agreed amount we can both draw out and the minimum payments for my father far exceed his allowance. I think Rafter has the right idea. The only complicating factor is that my father was forced into bankruptcy about 15 years ago by a long-time friend and partner who did the dirty on him. We lost everything back then apart from the land which he was able to keep out of the BR. The thought of him having to go through it again is frightening as it was very hard on him at the time. I think we are going to have to try and talk to the card companies and negotiate.

Does anyone have any ideas about the best way to do this?
Thanks again everyone

MABLE

Ade704 wrote: »

Hi all.

I've got myself into a real mess but more importantly, my parents have been dragged into it too. I set up a new company 5 years ago and I have gradually put everything into it. In addition, because I had a well-paid job before, I have been able to take out some large loans and I've also taken out various credit cards that are now all pretty much maxed. This was all on the basis that the company would take off, but our suppliers have hit delay after delay and it is getting the point where I can't wait much longer. My father works with me and has made similar sacrifices. He and my mother have racked up credit card debts and loans but he has also put his nest-egg piece of land on the table too - it secures the business overdraft with the bank. In other words, everything rides on the success of the company.
The problem is that our personal monthly outgoings are now more than the company can afford. I am not too bad - if everything goes pear-shaped, I am only 36 and I've just got married to a wonderfully supportive woman who has a well-paid job. I've been advised by a friend who went bankrupt a couple of years ago that I could basically wipe the slate clean without really affecting my wife (the house is in her name and all debts are in mine) and I am young enough to start again. But it is my parents that I am really worried about - they will lose everything. Their nest-egg will be swallowed by the bank, their house will go and they are both approaching 70. The knowledge that they could end up with nothing is killing me.
The really really frustrating thing is that if the credit card debts could be changed into loans, then we could probably squeeze through. We can't get any new cards to do the transfer 'shuffle' and their house is mortgaged up to the hilt. But if the credit card companies would agree to change the debts into loans, even if the rate was 10%, it would make a huge difference and we could probably survive.
The question is, will the credit card companies negotiate, if so, how do we go about it? I am wary of contacting them in case it sets any alarm bells off but I would have thought that from their point of view, if they knew we were going to go down as the situation stands, but that we could survive if the interest rates were cut, then in theory they should at least consider it. Any help or advice would be really appreciated. I am at my wits end!
Thanks a lot, Ade
p.s. sorry - I'm new to forums and appear to have posted twice by accident

I feel sympathy for your situation and I hope you can come to some arrangement with your creditors. However why oh why did you have to involve your parents. As you say you are young enough to start again.
Knowing a new business is always a risky venture no way should you have involved your parents and especially at there time of life.

Sorry I just feel cross for them and so very angry with you.