How do we get out of this mess

pinkkisses

hi, this is my first post.
Today I spent just over 2 hours on online chat with business debt line, I ended up more confused, more stressed and more upset by the end of it, I have never been in debt in my life until the last 2 or 3 years.
We are a self employed husband/wife partnership. Covid as dam near killed our business, we are limping on, barely enough for one never mind the 2 of us. We have already told our accountant that we are considering dissolving the partnership as husband is looking for full time employment and considering bankruptcy, he hasn't been much help.
We don't owe to any of our business suppliers, tax is up to date, only thing not paid is NI, we possibly have stock worth about £20,000. We do have ltd but it is dormant and never been used, accountant set it up to protect our business name.

We have been claiming UC since April last year and have claimed SESSI 4 times, each time we get SESSI we don't get any UC, we had a bounce back loan of 25k, deferred until January.

On the personal side of things I owe 18k spread over 4 credit cards, husband owes 30k over 6 credit cards, one of which we used to by business supplies and the joint current account is owed 2k
We have 2 cars one in each name, mine is worth peanuts, hasn't been used since the start of covid and only 2 seats so not suitable to be the daily car, the other is worth about 2-3k. We don't have a house but we do live on our building plot in a caravan worth 2k, the build as started to stalled, both our names are on the deeds of the land.
I wanted one of us to declare bankruptcy, wasn't sure which one of us would be best to do so.
But having had the online chat it looks like we don't have much option but to pay it all back even if it takes 20 years, I will be long gone by then, and will end up living in a caravan for the rest of our lives.
I have had a quick look at loans to consolidate the debt, but that looks out of our reach despite it meaning we would be paying out less per month than we are already.
Can anyone help, advise, point me in the right direction. I can't sleep for worrying and it had made us both ill.
thank you

fatbelly

There are some situations that bankruptcy works well in - wipe everything clean and start again.

The problem you have is that the building plot that you live on will be a significant asset and would be difficult to protect in bankruptcy.

In the first instance you need to develop a budget that allows you to live, even if it means the debts don't get paid. So dissolving the partnership and husband looking for full time employment sounds like the way forward. Whether the business can become profitable with just you running it and as we emerge from the pandemic will determine whether it survives or not.

I would say that you should consider your options for dealing with the debts once the new situation is resolved. Personal debt does not go bad quickly. Banks and credit card companies will issue a default after 3-6 months of missed payments, then look to sell the account to a debt buyer.

You will need to be using a current account that is not connected to your debts in any way.

I suspect the option you are trying to avoid is selling the plot and clearing everything. I'll mention two other options that may open up for you.

An IVA is bankruptcy for those protecting an asset, but you do have to make payments for 5 or 6 years.

Personal debts could be cleared by full & final settlement - obviously not likely to work for HMRC debts

pinkkisses

thank you for your reply.
Yes you are right I want to protect our land, as if we lose that we lose all our animals too, they are one our biggest expense with feed and insurance other than our own food.
What happens if you struggle to pay an IVA? would we lose everything?
It is just NI that hasn't been paid but will be paid at some point as we don't have a pension pot, the tax is up to date.
The business would pick up if we had the cash to replace sold out stock, it's catch 22, no money no stock, no stock no money.
I am looking to see what we can sell of our personal belongings to buy stock with, once sold the money would go back into clearing personal debt and the profit to buy stock.

fatbelly

Well an IVA is insolvency and when they fail, creditors or the Insolvency Practitioner themselves, can petition for your bankruptcy. But it is rare for that to happen.

When you talk about animals it sounds like these are more than pets. Another reason to avoid bankruptcy, but a properly drafted IVA could work for you if you needed one.

Remember personal debt of the sort you have is what we term 'non-priority'. The risk to the creditor is recognised in the interest they charge. If you are struggling you can get informal breathing space quite easily with most of them.

MalMonroe

pinkkisses said:

hi, this is my first post.
Today I spent just over 2 hours on online chat with business debt line, I ended up more confused, more stressed and more upset by the end of it, I have never been in debt in my life until the last 2 or 3 years.
We are a self employed husband/wife partnership. Covid as dam near killed our business, we are limping on, barely enough for one never mind the 2 of us. We have already told our accountant that we are considering dissolving the partnership as husband is looking for full time employment and considering bankruptcy, he hasn't been much help.
We don't owe to any of our business suppliers, tax is up to date, only thing not paid is NI, we possibly have stock worth about £20,000. We do have ltd but it is dormant and never been used, accountant set it up to protect our business name.

We have been claiming UC since April last year and have claimed SESSI 4 times, each time we get SESSI we don't get any UC, we had a bounce back loan of 25k, deferred until January.

On the personal side of things I owe 18k spread over 4 credit cards, husband owes 30k over 6 credit cards, one of which we used to by business supplies and the joint current account is owed 2k
We have 2 cars one in each name, mine is worth peanuts, hasn't been used since the start of covid and only 2 seats so not suitable to be the daily car, the other is worth about 2-3k. We don't have a house but we do live on our building plot in a caravan worth 2k, the build as started to stalled, both our names are on the deeds of the land.
I wanted one of us to declare bankruptcy, wasn't sure which one of us would be best to do so.
But having had the online chat it looks like we don't have much option but to pay it all back even if it takes 20 years, I will be long gone by then, and will end up living in a caravan for the rest of our lives.
I have had a quick look at loans to consolidate the debt, but that looks out of our reach despite it meaning we would be paying out less per month than we are already.
Can anyone help, advise, point me in the right direction. I can't sleep for worrying and it had made us both ill.
thank you

Hi, I'm so sorry to hear about this and I believe that many small businesses are in similar positions now, thanks to covid. That's not very reassuring for you and your husband though. 

I understand that you have been having an online chat with business debtline but is the following link of any help? https://www.stepchange.org/debt-info/self-employed-debt-advice.aspx

I did not have a business but a few years ago was struggling so much with financial worries that I didn't know where to turn and was at the end of my tether. I saw an advert on TV for CCCS, which is now stepchange and they helped me so much to turn my life around. They suggested a debt relief order for me, something I'd not heard of before but which I'm sure saved my life as I was truly at rock bottom.

I think the best way to contact any debt help agency is by phone so you can chat with someone who is non-judgemental, friendly, knowledgeable and helpful. They may suggest bankruptcy as something for the two of you to consider - but whatever solution you choose they will help you every step of the way.

You could at least just start off with a free phone call to them. Just make sure to have a Statement of Account with you when you phone. They will go through it with you and then make their suggestion.

Brie

pinkkisses said:

Yes you are right I want to protect our land, as if we lose that we lose all our animals too, they are one our biggest expense with feed and insurance other than our own food.

Sorry to hear you are struggling - it's difficult at the best of times to run a business and the last 18 months certainly can't be described as anything near the best!

I don't want to sound hard hearted but can you afford to keep the animals?  I would understand hanging on to chickens if you get a good supply of eggs or maybe a goat for milk.  I know that pets can be expensive but it sounds like you have more than just an old moggy.  It would break my heart if I had to get rid of my cat (and will break it when she dies) but I know that there are charities that will foster animals of all sorts or help find them new homes too.  

I hope you find a solution.

pinkkisses

Brie said:

pinkkisses said:

Yes you are right I want to protect our land, as if we lose that we lose all our animals too, they are one our biggest expense with feed and insurance other than our own food.

Sorry to hear you are struggling - it's difficult at the best of times to run a business and the last 18 months certainly can't be described as anything near the best!

I don't want to sound hard hearted but can you afford to keep the animals?  I would understand hanging on to chickens if you get a good supply of eggs or maybe a goat for milk.  I know that pets can be expensive but it sounds like you have more than just an old moggy.  It would break my heart if I had to get rid of my cat (and will break it when she dies) but I know that there are charities that will foster animals of all sorts or help find them new homes too.  

I hope you find a solution.

2 dogs, poultry and pigs, it's a small holding