Secured and Unsecured Debt

thelibrarian11

I want to sense check and idea I've had, to see if it's a really bad one or not.

I worked freelance to service unsecured debts and didn't put money away for tax, I spent it all on those debts instead. Now I've got a big HMRC bill I can't pay. I've got a full set of defaults that I'm paying token payments to, and everything else to HMRC. This processes effectively moved an unsecured debt to a secured one, or at least to a really strict creditor.

I don't think I can keep HMRC happy and will get late fines before I clear it, I've just not got enough coming in to do more. I will clear it one day, just not fast enough for their liking.

I should have put money away for tax and put less on my unsecured debts.

What I'm wondering is - can I reverse this process? Get enough new unsecured debt to clear HMRC in time, then put that onto my self managed DMP? This is if any company will offer me anything. I'd be moving my debt back to being unsecured, and I can handle a DMP with FandF settlements then.

Is this a bad idea? 

itsthelittlethings

Can you set up a payment plan with HMRC?

Grumpelstiltskin

What do you mean by unsecured turned to secured debt?

No forget getting more debt to please HMRC.

fatbelly

You are using the wrong terms. You mean priority debt (HMRC) and nonpriority.

Secured debt means a mortgage that is secured on your house.

Yes in theory you can move priority debt to nonpriority. In practice with a load of defaults, you will not be able to borrow money and the way forward for you is a payment plan with HMRC and to stop paying the nonpriorities

thelibrarian11

itsthelittlethings said:

Can you set up a payment plan with HMRC?

Yes but what I can afford means they're going to put late payment charges on anyway.

thelibrarian11

fatbelly said:

You are using the wrong terms. You mean priority debt (HMRC) and nonpriority.

Secured debt means a mortgage that is secured on your house.

Yes in theory you can move priority debt to nonpriority. In practice with a load of defaults, you will not be able to borrow money and the way forward for you is a payment plan with HMRC and to stop paying the nonpriorities

Yes I do mean that, thanks! I probably won't be able to borrow that amount you're right.

itsthelittlethings

thelibrarian11 said:

itsthelittlethings said:

Can you set up a payment plan with HMRC?

Yes but what I can afford means they're going to put late payment charges on anyway.

I don’t understand? They will charge you extra for an affordable payment plan? I’m not sure you have any choice. Stop paying your non priority debt, pay priority debt. I assume HMRC is priority debt from the way people are talking?

fatbelly

It's regarded as priority because they can appoint field agents (effectively bailiffs) without a court order

thelibrarian11

See, I'm gonna get bailiffs because I can't pay enough. I'm thinking if I get lucky and somehow can get an unsecured loan I should just to avoid that? 

thelibrarian11

Business debtline says I should include this information when I speak to HMRC "Any form of unsecured finance that you can raise to clear the debt. You will usually need to provide evidence of a creditor agreeing to lend you the money. Before taking out further credit to deal with a debt to HMRC, check to make sure that you can afford the repayments and contact us for advice."

So I can't afford repayments so I shouldn't be doing it, but if I could I should.

Grumpelstiltskin

OK how much are you paying your other creditors each month?

When you stop paying them that will give you the starting amount you can pay HMRC.

Hopefully you can scrape up a bit more without even trying to borrow more .