Advice needed

Freefalling
Freefalling Posts: 14 Forumite
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in Bankruptcy & living with it
Don't even know where to start 😔 our debt problems started when we were young and naive, credit was given to us so easily and as a young married couple we happily kept accepting. Unfortunately we soon started to struggle to keep up and eventually resorted to using credit for day to day living. My husband then lost his job and instead of facing the music then, we tried to keep chipping away at the credit but in reality we were borrowing Peter to pay Paul. Then the dreaded HMRC dropped a debt on our doorstep and refused any payment options., all or nothing! They eventually paid us a home visit and saw we had no assets and no means to pay in full so they said they would start BR proceedings, by this stage we had already defaulted on all our credit and were on a debt management plan with the then CCCS. This was only ever meant to be a temporary measure to give us time to assess. When the next review came along they advised bankruptcy. HMRC have still only used BR as a threat but never follow it through. All this has spanned over 10 years approx, we haven't paid any of the debts for years now (much to my shame), it just felt like a pebble in the ocean. Our unsecured debts are prob around 40k and no equity in our house. Both my hubby and I recently secured new employment so our surplus income at the minute is about £600ish, time to face the music. Apologies for mega long post but if anyone is still reading how did you decide between an IVA or bankruptcy? Should only hubby do BR and then maybe debt management for the debts leftover in my name?? I don't know where to start and shame is stopping me seeking advice again, I break down when I try to discuss it.

Comments

  • fatbelly
    fatbelly Posts: 20,457 Forumite
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    Freefalling wrote: »
    ...by this stage we had already defaulted on all our credit and were on a debt management plan with the then CCCS. This was only ever meant to be a temporary measure to give us time to assess. When the next review came along they advised bankruptcy. ... we haven't paid any of the debts for years now

    How many years?

    CCCS became stepchange seven years ago.
  • Freefalling
    Freefalling Posts: 14 Forumite
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    I honestly don't know, the years roll by with great intentions but here we are no further on. I tried to find thw debts on all 3 credit reports but a lot of them aren't there, so I dont even know what debt collector even owns them. The letters and phonecalls have practically stopped, now and again an odd debt collector letter or phonecall once a month but even HMRC only raise their head once a year. Its the same merry-go-round, we offer them money, they say no, they say they arw starting proceedings definitely this time then we hear nothing until the next letter a year letter. It has been relatively easy for us to bury our heads in the sand and ignore the mistakes we have made, but I know its lurking in the background, it is a huge amount of money and I just want it sorted once and for all
  • fatbelly
    fatbelly Posts: 20,457 Forumite
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    Freefalling wrote: »
    I just want it sorted once and for all

    It sounds like it may be.

    If you have not acknowledged a debt (by payment or in writing) in a period of six years then it becomes statute barred. That is, they are out of time to take court action. The debt exists but cannot be enforced.

    This assumes you are in England/Wales - in Scotland the equivalent law is 5 years, and the debt is 'extinguished'

    As for your credit file things drop off 6 years after they are defaulted. If anyone gets a county court judgement against you that creates a fresh entry that stays for six years but it sounds from what you say that no-one has.

    HMRC are a little different in that they do not need a court order. Who owes HMRC and how much?
  • Freefalling
    Freefalling Posts: 14 Forumite
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    Husband, it was a disputed debt but due to a dodgy accountant we gave up fighting it, it's for 9k
  • fatbelly
    fatbelly Posts: 20,457 Forumite
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    Not worth going bankrupt for that

    Try Tax Aid

    https://taxaid.org.uk/
  • Freefalling
    Freefalling Posts: 14 Forumite
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    If it was only the HMRC debt I would agree, but there is about 40k of unsecured debt as well
  • fatbelly
    fatbelly Posts: 20,457 Forumite
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    Freefalling wrote: »
    If it was only the HMRC debt I would agree, but there is about 40k of unsecured debt as well

    ... which no-one is chasing you for and is at or near being statute barred.

    HMRC is a priority debt and you have £600 per month spare if you (with some professional help) can agree how much your husband owes them.

    Even if it is 9k you could pay 600 x 15, no marks on your credit file, no insolvency and no danger to your house.

    I suspect with help you'd be able to agree a lower figure though.
  • Freefalling
    Freefalling Posts: 14 Forumite
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    Problem is HMRC wont accept a payment offer, the lowest they would accept was £5000! Although the other creditors aren't hassling us anymore I know its still there 😔 I want a clean slate, a reset so to speak but just don't know if an IVA or BR is best, I have heard more horror stories about an IVA to be honest but BR is a scary prospect.
  • silvercar
    silvercar Posts: 46,945 Ambassador
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    Freefalling wrote: »
    Problem is HMRC wont accept a payment offer, the lowest they would accept was £5000! Although the other creditors aren't hassling us anymore I know its still there 😔 I want a clean slate, a reset so to speak but just don't know if an IVA or BR is best, I have heard more horror stories about an IVA to be honest but BR is a scary prospect.

    If you can save £600 a month then you would have the £5000 in 9 months time (less anything you have already saved).
    I'm a Forum Ambassador on The Coronavirus Boards as well as the housing, mortgages and student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.
  • fatbelly
    fatbelly Posts: 20,457 Forumite
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    Any form of insolvency can be 'a bit scary' and is best avoided if that is possible.

    In bankruptcy your house has to be dealt with within 3 years. Although there is no equity now, there may be in 3 years and potentially that would mean a forced sale to release equity for the creditors and the OR fees. I wouldn't recommend that for a homeowner.

    There are some risks with IVAs but the biggest one is the risk of a change in circumstances leading to the IVA failing and the debts returning.

    I don't think you need either. But do save your £600 per month because whatever happens that will build to a valuable resource.
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