I need desperate help!

Inapickle40

Hi All,

I’m new here and after help from those that have been in the same situation and can help me find a way out! 🙏

I started my business before COVID which was a well-being company for corporates. I did most of the services myself, and it went really well. No debt other than to franchise it, which was put on hold due to COVID. 

During covid we couldn’t operate for almost 2 years, and I got a bounce back loan for £10,000 from the bank. 

My husband was also seriously ill during that time so I had to care for him and our two little children.

I then had a surprise baby so I had to sub contract all my work out once it returned: I wasn’t making much per job, and companies slow to pay, alongside my husband being ill again and having a baby, I got myself in a complete pickle.

Some months were great and had loads of clients and others not. I ended up getting a £42,000 loan for cash flow. That was fine until this year business has been 66% down!! 

So I’ve had to get another couple of loans. 

I’ve also got personal debt. 

So far I have:

£37,000 Funding circle loan with a PG which is £950 a month! 
£4800 bounce back loan £180 a month 

personal: 
£20,000 Zopa loan 
£9,000 Admiral loan 
£1900 Aa loan 

I kept this from my husband and everyone as I didn’t want to cause anymore upset. At the time I couldn’t get a job. 

Now things are better in terms of my husband and my toddler is at nursery 4 days a week. 

I have had to confess to my husband who has taken this VERY badly. I couldn’t feel any worse!!!

i have tons of business outgoings that I could cut back on, such as marketing.

im hoping my mum might help me a little bit (maybe £10,000) but she hasn’t offered and will be another difficult conversation. 

I spoke to an insolvency person who said that I can’t do an IVA as our mortgage is £105,000 and our equity is £300,000 (or there abouts). 

I can’t lose my house and cause my family anymore stress. 

Im currently on a Breathing Space with Step Change, they suggest doing a DMP. 

My idea is to get a job, leave the business running (got no option to close it as have a PG). 

I’ve sold a franchise which goes into the pot to pay business expenses/tax for the next month. I have a VA as I have ADHD (through access to work) so she can carry on the operations. 

What a muddle! So depressed and feel like a complete failure but want to sort this out in the best way possible. 

My husband has  a medical pension which just covers all of our bills, so I need extra to pay for food and shopping. 

Thank you if you’ve got this far, any help or suggestions would be gratefully appreciated! 

fatbelly

So that's 73k of debt.

You have fairly significant surplus income and a lot of equity in the house

I'd agree with stepchange to start a dmp, though I still think Breathing Space is a waste of time. Had you actually missed any payments before entering Breathing Space?

There's no rule about maximum equity in an IVA  but I suspect a dmp would get you debt free in a similar time so an IVA wouldn't have an advantage for you

Emmia

1.  If there are identifiable business expenses you can cut, then you should do that. Are there any areas of personal expenditure which could be treated similarly??
2. I think it is unfair to ask your mum to (partially) bail you out. You are an adult with children and a husband, so you should tackle this yourself with ideally support (emotional) from your husband.
3. I would find a job, and carry on with your business as a side gig.

You might want to post a statement of affairs (soa) to look at your income and outgoings, to see if there are savings that can be made.

https://www.lemonfool.co.uk/financecalculators/soa.php

Inapickle40

Thank you. Yes I don’t want my mum to bail me out but I might need some help to get my business back to a ‘level playing field’ as I have heard that Funding circle are quite aggressive and want to make sure everything is back to ‘breaking even’ so I can leave the business alone to build up again. I’ve tried desperately to sell franchises to do this, but it’s so hard! (With the weight of all of this on top of me).

I haven’t missed any payments apart from breathing space, or spoken to anyone apart from online with step change. 

Is it best to default on payments before phoning- I’ve read on here that people suggest to do that to avoid credit history being buggered for many more years.

insolvency lady said they might force bankruptcy if I go for an IVA as it’s more worth while as equity in the house? 

Thanks so much for your kindness! 

fatbelly

Inapickle40 said:

insolvency lady said they might force bankruptcy if I go for an IVA as it’s more worth while as equity in the house? 

Thanks so much for your kindness! 

That sounds odd. I wonder who you talked to.

But anyway it sounds like your debts can be paid in full, eventually

On the 'default first' thing, yes, we advise that. Stepchange probably don't.

Our rationale is that everyone knows the score. The terms and conditions are over, and the whole entry drops off the credit file in 6 years. With Arrangement to Pay markers, the whole thing is likely to drag on for double that.

Inapickle40

Ok thank you. I’ll see if anyone can advise RE IvA, but I think a dmp is less complicated.

do you know if breathing space puts you into default?

Also, should I put all debts on the DMP from a legal perspective as one goes through our joint account that my husband was aware of already? 

Thanks again and have a lovely evening. 

fatbelly

The guidance says that a firm should issue a default after 3-6 missed payments. The guidance is often ignored.

A dmp is an informal solution. There are no 'legal' requirements

Inapickle40

Thank you and one final thing. If I do a DMP for the personal debt, can they make me go bankrupt?! Or is that unheard of? 

fatbelly

Who is they?

Statutory demands are very rare. Who do you think might issue one and why?

sourcrates

Inapickle40 said:

Thank you and one final thing. If I do a DMP for the personal debt, can they make me go bankrupt?! Or is that unheard of? 

Your in the realms of fantasy with that one, technically a creditor that you owe £5000 or more to, could make you bankrupt, but the cost to them would likely far exceed what you owe them, and involve a lengthy court process.

They would also have to be certain you possessed enough assets to make this worthwhile.

Only HMRC usually take this approach, and only as a last resort in most cases, most defaulted debt in the UK is either assigned to a debt collector or sold to a debt purchasing company, now legal action to enforce the debt does happen, but I know of no cases where creditors have made a debtor bankrupt for consumer credit debt.

They buy bad debt for a tiny fraction of its face value and attempt to collect full face value from the debtor, worst case scenario, recovery action never goes beyond an initial CCJ and perhaps a charging order or restriction on your deeds, orders for sale are so few these days official figures are no longer kept, I would expect the figures for lenders making debtors bankrupt to be even fewer.

Grumpelstiltskin

OP Sit back and breathe, nothing terrible is going to happen.

You need to realize now you are in control not your creditors.

You need to be 200% sure anything you think of doing is the right way to go, 

Keep posting for advice.