Ask a StepChange debt advisor a bankruptcy question

StepChange_Aidan

phill16359 said:

I am a self employed decorator and seem to permanently be in my £3000 overdraft I have just been issued with a bill for £15000 from HMRC as well as other debts totalling towards 35000 I have no hope of paying these debts and seem to be spiralling into Bankruptcy and suggestions for help would be most appreciated

Hi,

Thanks for your post.

There will be alternatives to going bankrupt, but this will depend on your financial situation and where you live in the UK.

I’d suggest getting in touch with a debt advisor so you can discuss your situation and options in more detail. Unfortunately, StepChange are unable to give advice to self-employed people, instead I’d recommend contacting Business Debtline who will be able to help.

Regards,

Aidan

miasuqu

Hello 

I have been working with a company for over 2 months re an IVA and I´m not confident in their abilities or understanding of my case and want to understand what I could do.

My case they keep telling me is complicated but I´m quite shocked in the lack of understanding on basic financial things such as tax and RSUs 

I have roughly 35K in debt and have had to move countries due to a chronic health condition and this condition is really part of why I am in so much debt. I have gone through the budget and worked on and signed a proposal with them which has now been rejected by a main creditor which I believe is down to their lack of understanding as I have had to explain and re explain things multiple times over the 2 month period 

My meeting is supposed to be today but they are putting it on hold with the creditors due to the rejection 

The complication in my case is that my company no longer give us bonuses they now give us RSUs which are basically shares. The shares are not liquid assets and every quarter a portion vests (means I can sell them) This company seems to have any idea what this means and I don't believe they have communicated this correctly to the creditors - they told me they understood but the rejection (which is over 50%) is based on the RSUs

I provided a document from the investment company that shows when they vest and the scheduled date I can sell them - I have been very clear and transparent that I cannot sell them now only when they vest as per the schedule and I will pay them into the IVA. The document shows the amount before tax (30K in total) but I will get much less after taxes and I only get them based on the schedule I shared and if I leave the company I lose any shares that still need to vest. They are asking me for more documentation but I have nothing more I can share I get the feeling they just do not understand the document I sent even after explaining it multiple times  

They also seem to not understand annual tax returns and that the country I now live in requires everyone to submit a tax return and there was a small amount (1K) I was keeping aside from my last vested shares in November (before the iva was signed) incase I had a tax bill - if there was no bill I would pay it into the IVA 

So my questions are 
1- now that I am in a holding period (the meeting has been put on hold for 2 weeks) can I cancel this IVA proposal 
2- can I go to another provider and would this initial IVA proposal impact my success the second time 
3- how can I find a provider that understands these basic financial aspects 

Thanks 

StepChange_Aidan

Hi,

Thanks for your post.

You can withdraw from the IVA process before this meeting goes ahead. You could also apply again through another provider, but based on the details you’ve provided, an IVA isn’t a suitable debt solution for your situation.

As others in your main thread have advised, enforcing UK debts abroad is a complex process and your creditors may not chase you for the money owed.

If you wanted to look at other options, I’d suggest contacting an advice agency in Spain, as they will be able to give you information on debt solutions available where you live.

I hope this helps,

Aidan

MeliMoosh

Hi

I’m considering bankruptcy. I have no assets save for a car which I’ve valued on Parkers as £3,200. I own no property etc, and I rent privately with no tenancy agreement. I pay a sum each month to my landlady which is for rent, share of the bills and council tax. I can’t afford to rent privately under an AST, so where would I stand with having a bare licence to occupy? My friend is supportive and wants to help me out. 

MeliMoosh

To add, I need the car to get to work as I have to travel to meet clients at their offices (I work in the project side of construction) and there isn’t reliable public transport to remote sites. I’m also female and its not safe waiting round in industrial areas by myself at night.

StepChange_Aidan

Hi,

Thanks for posting.

MeliMoosh said:

Hi

I’m considering bankruptcy. I have no assets save for a car which I’ve valued on Parkers as £3,200. I own no property etc, and I rent privately with no tenancy agreement. I pay a sum each month to my landlady which is for rent, share of the bills and council tax. I can’t afford to rent privately under an AST, so where would I stand with having a bare licence to occupy? My friend is supportive and wants to help me out. 

If your rent payments are up to date, Bankruptcy might not affect your current living situation, as you have don’t have a formal contract with your landlady. However, it will show on your credit file for six years, which could make it harder to rent a new home in the future. I’d recommend getting in touch with Shelter, as they can give specialist housing advice.

MeliMoosh said:

To add, I need the car to get to work as I have to travel to meet clients at their offices (I work in the project side of construction) and there isn’t reliable public transport to remote sites. I’m also female and its not safe waiting round in industrial areas by myself at night.

The Official Receiver will usually allow you to keep your car if it’s essential for work and of low value. If your car is worth £3,200 you could be asked to sell it, buy a cheaper replacement and pay them the difference.

There’s some more information on how bankruptcy can affect your car here.

Have you checked to see if you qualify for a Debt Relief Order (DRO)? This is another type of insolvency to write off your debts, but you can own a vehicle worth up to £4,000.

I hope this helps,

Aidan

MeliMoosh

thanks Aidan, appreciated 

BlewIt

I am currently completing income/living costs for a potential sequestration  application (scotland).  the debt is solely mine however it is the household budget that gets taken into consideration.

My wife has a very expensive hobby and pets that cost over £1k per month - horses.  livery costs, feed, vets, insurance all adds up.

How will this be viewed by the AIB?  is there any risk she'd be asked to give them up?

By the time we work out the household budget, my share of the surplus income would still leave a contribution toward the debt - in the region of £300

StepChange_Aidan

Hi,

Thanks for your post.

When you apply for Sequestration (bankruptcy in Scotland), the Accountant in Bankruptcy (AIB) would review your budget.  Any spending that’s outside of the normal guidelines or not justified, could result in the application being rejected.

As it’s just you that’s applying, the AIB would be looking at your income and your share of the household costs. If your wife’s hobby is covered by her own income then it shouldn’t be an issue, but if you’re contributing towards the cost, it may not be viewed as an essential expense.

In any case, before the application goes the AIB, your budget should be reviewed by your case worker, and they would have a further discussion around costs to ensure that you’re eligible.

If you’re applying through StepChange you could contact our Scottish team to discuss your budget in more detail.

I hope this helps,

Aidan

BlewIt

Any thanks for taking the time to respond.

The horses would be covered entirely from her income, no need for me to contribute.

Many thanks.  appreciated.