Considering bankruptcy

Jackfruit12345

After a long time of consideration I am very close to declaring myself bankrupt. I have around 55k in personal debt (25k BBL, 2 personal loans and a couple Credit cards). i'm not behind on any payments, but I did a debt management plan and it would see me paying around 500 a month over 10 years. After doing lots of research it seems bankruptcy is my best option and start afresh/reset.

My situation is a little complicated though, I am currently in a short term employed contract which i get paid around £2500 a month for, this will end in a couple months and around 6 months ago i started an online eccomerce business which is doing quite well, but doesn't pay me anything yet.

I'm aware i can not go bankrupt if i am a director, but i want the business to continue so i would put a family member who already helps with the operation in as director and then resign, does that sound ok to do?

Also - I have leant the business some money from some of my personal debt, would the bankruptcy OR look to get back some of that debt from the eccomerce company?

Separately, I have a property which has a mortgage of 120k, but the value of the property is almost nothing now due to cladding issues. Literally they don't sell. I am in a joint mortgage too and help to buy have 20%. Will me going bankrupt affect the  person who is in the joint mortgage with me? Would the OR take this an asset even though it's in negative equity?

Finally, if you have been bankrupt already do you have any regrets and is there anything you would have done differently before going bankrupt?

Any advice would be hugely appreciated

Thanks.

ManyWays

I think you should talk to Business Debtline about going bankrupt and your business because they are the experts.

Do you live in the property with cladding issues? 

MalMonroe

Hi, I agree with you wholeheartedly that your situation is complicated and I also agree with ManyWays, above, that Business Debtline should be able to give you some advice. If not, they will know where to direct you.

Link here - https://www.businessdebtline.org/

I can only advise about my own situation, which was personal debt and I had a Debt Relief Order (similar to bankruptcy but for those with debts less than £30k). It is something I have never regretted at all.

BUT you do need to seek help and advice first. I turned to StepChange for help because it was personal debt and they helped me enormously. 

Just speaking to someone lifted a big weight off my shoulders - so I do know how you feel. I would not rush into anything though. Please do speak to the experts. You will receive non-judgemental, confidential advice.

All my own opinion and experience of course but there are people out there who can and will help and advise. 

I wish you all the best. 

Jackfruit12345

ManyWays said:

I think you should talk to Business Debtline about going bankrupt and your business because they are the experts.

Do you live in the property with cladding issues? 

Ok and Yes I do.

Altior

Is 'BBL' bounce back loan? If so, do you have any more detail around the bounce back loan, ie why it's considered in your personal debt? Does this relate to another business? 

Jackfruit12345

Altior said:

Is 'BBL' bounce back loan? If so, do you have any more detail around the bounce back loan, ie why it's considered in your personal debt? Does this relate to another business? 

Yes it does. And it relates to a separate business I had during covid which I was running as a sole trader and was able to get the BBL. No longer operating. 

fatbelly

Have you obtained a valuation of your property?

Are you aware that the OR has three years to deal with property?

It's very rare to recommend bankruptcy for property owners because we do not have a crystal ball that will tell us how much a property will be worth in 3 years. It may be in negative equity now, but then....?

ManyWays

As you are still living in this property, if you think it will still be in negative equity after 3 years (see @fatbelly's point above) then you should seriously consider moving somewhere else and renting and handing back the keys. The mortgage and any shortfall would then fall into a bankruptcy (if that is what BDL recommend).

If you want to do this, it is better done before bankruptcy, so it is easier to find a private rental. 

And yes, your bankruptcy will affect the person you have the mortgage with as your credit records are linked.

So this is complicated. But that does not mean that it gets any better if you put off a decision...