IVA or Bankruptcy help

adviceplease2

Hi, so I’m in quite a pickle with debt. 

Currently I’ve been able to pay everything but I’ve hit a brick wall. 

My business seems to have dried up, and I’ve stupidly not saved for my tax. I know there’s no excuses but had a generally bad few years like everyone, wife had two miscarriages and finally our baby came along, within that time she was not working so I’ve been paying all fhe bills and debts. Been paying last years tax bill on a monthly basis to clear that, and had nothing left over to pay for the next one. 

Fast forward to now, I have hardly any bookings for work so not much coming in to even cover the essentials. 

Owing £15,000 to HMRC for tax and NI sole trader.
 Household bills rent food etc comes around the £2300 mark per month (rented accommodation, nothing cheaper around here) 
PCP car has approx £14,000 left owing and the final balloon payment of around £3000 to keep the car.
Bank loan £10,000
Credit cards/purchases estimated around £3000

I’m bringing in currently £800 per week before tax and NI, but as of the last two months that has been a struggle due to cost of living and my business no one has money for the service I offer. 

I don’t own assets, no houses or anything  (apart from the PCP car but in the grand scheme of things I’ve not paid that much) no expensive items, no jewellery etc. I have £0 savings. 

My wife was on an IVA for Debts not linked to me, that’s failed so she will be doing a DRO once the paper work is completed from payplan - she doesn’t work, and due to no childcare or affordable childcare she won’t be for the next year or so. 

If you’ve read this far, then thank you 🙏 

•would bankruptcy be best because I don’t have assets? 

And how would this effect me in general, I’d loose the car wouldn’t I? I need a car for work so how would I be able to work around that or with I them to find a solution? 

Would I lose my rented property? 

Any help or advice is massively appreciated, at wits end and feeling so down about it all. 

sourcrates

You are allowed a cheap car in bankruptcy, around the 2k mark usually, is your rent up to date?

Because if your landlord is also a creditor in bankruptcy, then you will have issues, if they are not, then there shouldn't be any problems.

On the face of it, it looks like it might be the right choice for you, however as with everything in life pre-preparation is the key.

You need to find 2k for a cheap car, a new, clean bank account with no affiliation to any of your creditors, and £680 for the bankruptcy fees, how you do that is your next mission, and all needs to be in place before you press the "send" button.

DrEskimo

Is it worth checking the value of the car relative to the settlement figure?

it’s possible it’s worth the same or even more than you owe, so imagine it would be better to sell the car and potentially pocket the difference before hand.

adviceplease2

Thank you @DrEskimo & @sourcrates for the replies. 

So I’ve checked the current value of the car and it’s only at around £9500 because of the mileage, so settlement wouldn’t be an option unfortunately.

Do you know if PCP is cars are an allowable expense for a DRO? 

As that’s what’s taking me over the 30k limit for a DRO and why I’m needing to go for the bankruptcy or IVA. 

After all my household, taxes and essentials I’ve at max got £15-20 left over (not including the debts)  

I need it for both work and home, and it’s cheaper than public transport just about. I’ve been reading through the forums and seems a grey area regarding that? 

I know I’ll need to check my agreement to see if there’s an insolvency clause, but no point if it’s not an option  

I’ll be going to CAB at the first opportunity but as they are closed wanting to make sense of everything in the meantime.

RAS

@fatbelly might be able to advise?

Meantime sort out a new basic bank account, maybe check whether you can claim any benefits?

And start looking at paid jobs if there's no demand for your service work?

But not a lot can happen over the weekend, so be gentle with yoourself?

fatbelly

It would not be an allowable expense for a DRO.

There are circumstances where HP payments would be allowable but the value of the car would have to be less than £2000.

I think you should look into a voluntary termination to limit your liability, and follow sourcrates' advice in his final paragraph