80k debt, shared ownership & self employed. IVA or something else?

JoeBloggz00

Hello, 

I've been running a company for the last 2 years and have ploughed all my savings in to it, as well as taking out a huge amount of loans and maxing my credit cards to keep the company afloat. I haven't been able to pay myself anything much for the last 6 months (£500 a month ish) and so get UC, but that will reduce by £600 a month soon due to receiving it for 12 months and the earnings floor being removed. My mortgage is also needing renewal, so will go up by £80 a month. 

I spoke to Stepchange yesterday and they referred me to the business debt helpline, who were amazing. We spoke for nearly 2 hours about all my options and it looks like my best option is an Iva due to being a company Director. The other thing we discussed was selling my house, releasing 45k equity, offering a full and final settlement and asking for breaking space for all of them, but would ultimately end up in rented accom at £1000 a month as have a child and, and rent is stupidly expensive here. I am a single parent and literally can't keep going like this, I'm having panic attacks and am on anti anxiety meds and need a way out. I'm working 60 hours a week to keep the company afloat but the government have crippled me and my industry and I can't see it improving any time soon. 

What would you do? Is an IVA the right thing for me? I worry about taking it on for 6 years as sometimes the company can't pay me, but it is looking like we will turn a decent profit this year and I will able to take more pay from it. The thing about the IVA that worries me, is that I've not had any spare money for a long time, and if I were to be able to pay myself more some months, how does that effect the IVA? I also find the idea of having someone watching my accounts for 6 years, so depressing. How much do they watch your bank? Will I be able to do anything like book a holiday while in it, or is it literally 6 years of living on the bare minimum? I know I owe it to people so why should I have a holiday etc, but if it really is that depressing for 6 years I think I would rather avoid and sell up. Even if I needed to ask to live with my parents for 6 months while I took breather and sold my house, would it be better for me? I assume I will still end up with late payment marks on my credit file etc, which at the moment is good, as I haven't ever missed a payment. I pay for everything on credit cards to keep things paid, hence the huge amount of debt I have wracked up. I am prettified of losing my house and making my Daughter and I homeless, and so do all I can to pay everything. But I am at breaking point. 

The debt helpline have said we can do the IVA as soon as I want to, but I am so so scared of it. I can't talk to my family as they are old school and very judgemental, and wouldn't understand how I got to this point. I also can't just close the company overnight and return to work as I have 12 months worth of advancer orders, and would have to find 12k to pay them all back before I could close. 

Currently 80k owed in loans and credit cards, costing me £1800 a month plus living costs of £1200 a month (rent, mortgage, phone etc). If I took an IVA I would have around £150 a month left over after the £1200 (including the IVA), instead of being -£1500 a month  

I would love to know your opinion, without judgement, as I am a bit fragile right now... thank you in advance  

fatbelly

I think you're saying that they've suggested an IVA of £150 per month over 6 years.

If so that's quite good. However I can't see why creditors would agree to you being allowed £150 'left over' so you're going to have to allocate that to something legitimate or face a £300 per month payment. And there is the possibility of higher payments if your business generates more profit

It's unlikely that you would be able to remortgage in the final year but that does require a bit of a crystal ball.

JoeBloggz00

They suggested an IVA of £80 a month, as we worked out my budget as below: 

Personal income £2164.47

Personal outgoings £2083.20

Savings £0.00

Money for creditors £81.26

Arrangements with Priority debts £0.00

Surplus/deficit £81.26

I can't remortgage to release equity from my Mortgage as if I could I would do that now, and I wouldn't be able to get a secured loan by then I imagine. 

But I assume you can't do anything like move house while in an IVA? My car PCP (also used for work but paid privately) is coming to an end in 1 year, so I would either need to do a balloon payment of 13k or hand it back/trade in. How does that work while in an IVA? 

JoeBloggz00

Would love some feedback on this  

kimwp

Hiya! Your situation involves business debt, which is a bit of an unknown to a lot of us on here, so you'll probably get fewer replies than other threads. Speed of replies will just depend on when people check the boards.

One point that wasn't clear is that your initial post suggested a "left over" amount of £150 but in your later post you said it was £80 ish going to the IVA. Obviously the reason why you're asking these questions is that the area is new to you, but it will help you get answers if you are really clear on how the figures are calculated.

TheAble

A few questions (and I'm afraid I know little about business debts either but to help my understanding):

1. Is the business viable in the medium to long term? You say on the one hand the government has crippled your industry but on the other hand you're set to make a good profit this year. So the future prospects are unclear.

2. If you closed the business tomorrow what's the worst that could happen?

3. Is your home currently at risk from any of these debts? I.e. any debts secured upon it, or even if not, could your home be somehow taken from you if you fail to pay?

JoeBloggz00

kimwp said:

Hiya! Your situation involves business debt, which is a bit of an unknown to a lot of us on here, so you'll probably get fewer replies than other threads. Speed of replies will just depend on when people check the boards.

One point that wasn't clear is that your initial post suggested a "left over" amount of £150 but in your later post you said it was £80 ish going to the IVA. Obviously the reason why you're asking these questions is that the area is new to you, but it will help you get answers if you are really clear on how the figures are calculated.

None of the debts are business, they are all personal, and have been taken out to bail the company. As the company accounts only went in recently, no one will lend to the business. 

I meant as in what isn’t paid out each month, due to some being paid annually etc, so that would be a surplus after everything has been paid. 

What I’m really asking is do you think an IVa is the right route to take. 

Of course the area is new to me, and I didn’t come here to ask for judgy comments about my figures, i‘m asking about the much bigger picture. But thanks for your input. 

JoeBloggz00

TheAble said:

A few questions (and I'm afraid I know little about business debts either but to help my understanding):

1. Is the business viable in the medium to long term? You say on the one hand the government has crippled your industry but on the other hand you're set to make a good profit this year. So the future prospects are unclear.

2. If you closed the business tomorrow what's the worst that could happen?

3. Is your home currently at risk from any of these debts? I.e. any debts secured upon it, or even if not, could your home be somehow taken from you if you fail to pay?

Hi, they’re not business debts, all are personal. 

It’s set to make a good profit, but who knows if it will. We’ve good good turnover but as costs keep increasing, the payout pot is lessening, and so I’m the one that suffers as I’m the last to take a drawing from the company. 

The worst that would happen is that I would need to find 12k to pay everyone back for placed orders, and let a lot of people down. It’s not an option at the mo as I’m very heavily invested and everyone knows the business is very much mine. 

My home isn’t at risk. I’m up to date on all payments. No secured debts at all. I’ve no idea if the home could be sold to pay debts, I guess it could if someone bankrupts me… 

MovingForwards

Can you post a statement of affairs so members are able to fully assess your situation and make appropriate suggestions.

JCS1

Are you a sole trader or limited company?

JoeBloggz00

JCS1 said:

Are you a sole trader or limited company?

Ltd Co