Huge Debts, Mental Health...where to turn?

css86

Hey, first time post that I have been avoiding for seemingly years.  Apologies for the monologue length!

I am in severe, seemingly insurmountable debt that already defaulted several years ago (so credit score is long in the bin), and it feels like the noose is tightening to the point that I see no way out...and I'm terrified.  I'd estimate my unsecured debt (I also have a mortgage of around 160k with no chance to remortgage given my credit score) to be in the region of 30-40k, but that's not all - my solo LTD company is out of money and is now missing payments on a large bounce back loan (thanks Covid) and is years behind on both business and personal tax returns and payments.  I have simply lived off whatever money coming in, "robbing Peter to pay Paul", and no doubt I will have HMRC hunting me down for huge sums also.

My mental health is at an all time low - for years I haven't even been able to open my mail (my partner has to), I avoid looking at my bank accounts, I panic and ignore calls from any unrecognised numbers, and I'm receiving emails/texts from most of the debt collection agencies out there and some solicitors.  I'm suffocating.  After my last episode of stopping paying everything a few years back, I have at least kept up to date with my mortgage, council tax and energy bills.

A few years back I called Stepchange...they referred me to Business Debtline as I'm self-employed. As I come across as quite competent and well-spoken, they simply palmed me off telling me the best solution would be for me to contact these companies to try to work something out - but as someone mentally unable to look at my mail or face his bank accounts, and currently earning zero due to my mental health, having to go complete budgets and face the questions left me panicked and things have only got worse I imagine.

Are there any companies out there that will really take me by the hand, take ownership of this, and help me find a way out?  Help from those that have come through these challenges would be so hugely appreciated, thank you in advance.

[Deleted User]

I have no knowledge to share with you but there are many on here who can. However I can say that, if you operate as a Ltd Company, you are NOT self-employed! That is important as the company is an entirely separate entity to you and any business debts owed by it belong to the company - NOT you. Your belief is very common but entirely incorrect. 

The word ‘limited’ in a limited company is defined:

1. a private company whose owners are legally responsible for its debts only to the extent of the amount of capital they invested.

Read the last eleven words carefully.

Stepchange probably acted upon your misinformation. 

Hopefully this is helpful.

css86

[Deleted User] said:

I have no knowledge to share with you but there are many on here who can. However I can say that, if you operate as a Ltd Company, you are NOT self-employed! That is important as the company is an entirely separate entity to you and any business debts owed by it belong to the company - NOT you. Your belief is very common but entirely incorrect. 

The word ‘limited’ in a limited company is defined:

1. a private company whose owners are legally responsible for its debts only to the extent of the amount of capital they invested.

Read the last eleven words carefully.

Stepchange probably acted upon your misinformation. 

Hopefully this is helpful.

Thanks for the reply.  I am indeed aware of the LTD company liability side, and have even ensured that I never sign any director's guarantees.  Because I am the sole shareholder, many operations - including Stepchange, even my mortgage - often treat that as self-employed for their purposes.

My concern is more that having not submitted tax returns or made payments for some time, yet spending all that money instead, it could be viewed as even fraudulent...and given it's HMRC, I don't want to assume that they won't come after me quite aggressively (and there will be of course be the personal tax side as well).  Essentially, my financial situation is a giant can of worms that I have been avoiding opening for many years!

sourcrates

Good news and not so good news, I appreciate you are having mental health problems, and I hope you are getting help with that, but as regards your debts, you don`t need a company to take charge of anything, you need advice, yes, but you also need to start looking at your post, and checking your bank accounts, and your debts, and basically find out what situation you are currently in, hard for you maybe, but 100% entirely necessary.

The 40k of personal debt can be dealt with quite easily, either by an IVA (as you are a homeowner) or a possible debt management plan, it depends on your available disposable income, and what you spend etc etc.

The solutions are there, you just have to access them.

The problem, hence the not so good news, and I really don`t want to scare you but this is a fact, is that you have business debts, and owe a considerable amount of tax, so HMRC may just decide to take matters out of your hands entirely and bankrupt you, they can, and will do it, unless you start talking to them.

Business debts and personal debts have to be dealt with separately, business debt line would be the place to go for advice on that, and possibly National Debtline or stepchange for the personal debts.

The tax is a priority, you must talk to HMRC and see if something can be worked out, because unless you do that, the rest of your debt suddenly becomes irrelevant as they may just issue a statutory demand and then bankrupt you.

Time to loosen that noose and do something about it.

annetheman

In addition to the very useful clarification above on the fact that the debts owed by your limited company are the company's and not your own (hence limited liability), StepChange can support you very well with the 30-40K you owe as an individual.

That is not an uncommon amount of debt in these parts, if you read the Debt Free Diaries, countless forumites have started at the same place and worked through it over time - it is very doable.

If you tell Stepchange the details of your individual debt situation, they will be able to help you in the way you have described.

[Deleted User]

sourcrates said:

Good news and not so good news, I appreciate you are having mental health problems, and I hope you are getting help with that, but as regards your debts, you don`t need a company to take charge of anything, you need advice, yes, but you also need to start looking at your post, and checking your bank accounts, and your debts, and basically find out what situation you are currently in, hard for you maybe, but 100% entirely necessary.

The 40k of personal debt can be dealt with quite easily, either by an IVA (as you are a homeowner) or a possible debt management plan, it depends on your available disposable income, and what you spend etc etc.

The solutions are there, you just have to access them.

The problem, hence the not so good news, and I really don`t want to scare you but this is a fact, is that you have business debts, and owe a considerable amount of tax, so HMRC may just decide to take matters out of your hands entirely and bankrupt you, they can, and will do it, unless you start talking to them.

Business debts and personal debts have to be dealt with separately, business debt line would be the place to go for advice on that, and possibly National Debtline or stepchange for the personal debts.

The tax is a priority, you must talk to HMRC and see if something can be worked out, because unless you do that, the rest of your debt suddenly becomes irrelevant as they may just issue a statutory demand and then bankrupt you.

Time to loosen that noose and do something about it.

You know infinitely more about the subject of personal debt than I ever will but, if the business debts belong to the company, it is the company that HMRC will chase to the point that it may be struck off. This includes PAYE, corporation tax etc. There would be implications for the op as to his suitability for directorships but the op will only be liable to the extent that was originally invested. 

Fines for non-submission of returns and outstanding personal tax is a different matter though. 

css86

Thank you all for your answers so far.  I have looked at IVAs but it talks of a need to remortgage if LTV allows it (I'm probably around 65-70%)...and I imagine to remortgage would only work with subprime lenders, and the rate would be significantly higher than my current rate (around 3.2%) which would likely leave me in an even worse situation.  It's certainly a minefield, and whilst there are a lot of advice companies it's hard to work out where best to go - it seems a bit of a murky market with a lot of companies promising to write off debts, etc in quite a 'salesy' manner.

Importantly though, it's finding the support that intersects between both the debts and the mental health situation.  Whilst I entirely get the advice that I I should open my letters and essentially face all of this head on....but equally, I know I should just cheer up and calm down in life - depression unfortunately tends not to play nicely with logic and rationale.  It's utterly illogical, and when paired with anxiety can easily lead to feeling utterly paralysed as I'm sure many with debts have experienced.

fatbelly

So are you getting help with your mental health?

My own story is that I had to try all the talking therapies before my GP (or maybe it was me) suggested medication and I found that a low-dose med completely transformed the situation and I could function again. The whole process took maybe 12 months.

As for the debts, most can stay on the back burner. Keeping up to date with your mortgage, council tax and energy bills is the right thing to do.

HMRC could be a pain though.

It's worth seeing if your local Citizens Advice have a specialist who could support you, or maybe there is a local CMA centre or even CAP. I wouldn't rush into an IVA.

It is going to be particularly important to let your creditors know about your health issues. The new FCA Consumer Duty coming in at the end of July says 'The outcome of the Duty on ‘Consumer Support reinforces the importance of identifying vulnerability in potential customers and treating them appropriately. The Duty’s cross cutting rules also require you to act in good faith, avoid causing foreseeable harm, and enable and support the customer to pursue their financial objectives. '

css86

fatbelly said:

So are you getting help with your mental health?

My own story is that I had to try all the talking therapies before my GP (or maybe it was me) suggested medication and I found that a low-dose med completely transformed the situation and I could function again. The whole process took maybe 12 months.

As for the debts, most can stay on the back burner. Keeping up to date with your mortgage, council tax and energy bills is the right thing to do.

HMRC could be a pain though.

It's worth seeing if your local Citizens Advice have a specialist who could support you, or maybe there is a local CMA centre or even CAP. I wouldn't rush into an IVA.

It is going to be particularly important to let your creditors know about your health issues. The new FCA Consumer Duty coming in at the end of July says 'The outcome of the Duty on ‘Consumer Support reinforces the importance of identifying vulnerability in potential customers and treating them appropriately. The Duty’s cross cutting rules also require you to act in good faith, avoid causing foreseeable harm, and enable and support the customer to pursue their financial objectives. '

Thanks for the reply.  I was diagnosed around a decade ago...they simply have just medicated me this entire time, with the very rare review where they ask if I'm thinking of killing myself before agreeing the repeat prescription.  It can take weeks (or months) to even get a GP appointment.  Many, many years back they made a referral for therapy but was told to wait for contact for an appointment....I did eventually receive a letter some months later but I'd been given an appointment at an impossible time and it was seemingly impossible to re-arrange.  I have engaged in private talking therapy in the past and found it helpful and would certainly do again if I had the money spare.

The complexity of the situation certainly seems to heighten with my being self employed (or Ltd company) - my earnings are irregular, for example I have earned zero for several months now due to the mental health issues.  I do have the propensity to earn large sums when I am well, which weirdly adds to the pressure and feeling of futility I'm trying to battle through.  I have considered somehow getting myself to a point where I can switch back to permanent employment, but the thought of what will happen when I appear on HMRC's radar again leaves me rather worried!

[Deleted User]

css86 said:

fatbelly said:

So are you getting help with your mental health?

My own story is that I had to try all the talking therapies before my GP (or maybe it was me) suggested medication and I found that a low-dose med completely transformed the situation and I could function again. The whole process took maybe 12 months.

As for the debts, most can stay on the back burner. Keeping up to date with your mortgage, council tax and energy bills is the right thing to do.

HMRC could be a pain though.

It's worth seeing if your local Citizens Advice have a specialist who could support you, or maybe there is a local CMA centre or even CAP. I wouldn't rush into an IVA.

It is going to be particularly important to let your creditors know about your health issues. The new FCA Consumer Duty coming in at the end of July says 'The outcome of the Duty on ‘Consumer Support reinforces the importance of identifying vulnerability in potential customers and treating them appropriately. The Duty’s cross cutting rules also require you to act in good faith, avoid causing foreseeable harm, and enable and support the customer to pursue their financial objectives. '

Thanks for the reply.  I was diagnosed around a decade ago...they simply have just medicated me this entire time, with the very rare review where they ask if I'm thinking of killing myself before agreeing the repeat prescription.  It can take weeks (or months) to even get a GP appointment.  Many, many years back they made a referral for therapy but was told to wait for contact for an appointment....I did eventually receive a letter some months later but I'd been given an appointment at an impossible time and it was seemingly impossible to re-arrange.  I have engaged in private talking therapy in the past and found it helpful and would certainly do again if I had the money spare.

The complexity of the situation certainly seems to heighten with my being self employed (or Ltd company) - my earnings are irregular, for example I have earned zero for several months now due to the mental health issues.  I do have the propensity to earn large sums when I am well, which weirdly adds to the pressure and feeling of futility I'm trying to battle through.  I have considered somehow getting myself to a point where I can switch back to permanent employment, but the thought of what will happen when I appear on HMRC's radar again leaves me rather worried!

I honestly think that you should forget about HMRC. There genuinely is nothing to fear on that score, particularly as the most they can do is force the winding up of the company. Even if you went PERSONALLY bankrupt, you will start afresh as an employee as if all your previous records never existed - literally!

I am a former HMRC employee and worked in taxation for over forty years. My advice is not what you really need - focus on the other issues such as your mental health and personal situation. The business side of things will look after itself, especially because, as a Ltd company, it is entirely a separate entity.