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going bust
Jul 15th, 2008, 7:42pm
Hello, I'm adacrash and I'm in real strife... I've been in trouble for a few years now and it has finally caught up with me.
My history: I'm a self-employed plumber and heating engineer, was employed and a home onwer with full custody of my then 1 and half year old boy, single parent and all, I was fine finacially for many years but then I decide to end it all by moving back to my Mother and having a fresh start. I paid off all my depts with the profit from my 1st house sale. Then I met my beautiful wife and her cute little girl and things just clicked I knew I loved her within ten minutes of her presence. We decided to move in together in a new home for our family of four. By this time I was self employed with a business partner and things were going well (like you hear on the news - rich plumber), but sadly my business partner and his wife ran the company finances and ended up with bad debts, a tax investigation and an unhappy VAT man (not good times). I then decided to go alone. The partnership broke down and all the merchant accounts and bank accounts where in my name=big debt.
For two years now I have tried to escape this nightmare. A friend of mine has done an IVA and this has worked well for him but he had no kids, sold his home and offered a one off final payment and they accepted. This is now not the easiest thing to do if you have no money to offer..
I think that I have made bad judgements on people and have no luck at all with vans, non-paying customers, tax, accountants and everything...
I have seriously thought of leaving the plumbing trade for a regular wage and pension holiday etc etc ....
I have paid for my Corgi training, and this will remain valid regardless of this bankruptcy.
These are my details below:
1. Do you own property ...........................yes 2. If so, is the mortgage in joint names ...............no 3. If so is there any equity in the property .................25,000 dropping daily 4. If so how much is your mortgage ......................115,000 owed 850 monthly payments
5. Do you live with others ..................wife, step daughter (age 15) son (age 11) 6. Provide details of the others wife works 24 hours part time for kent county council pay average 680 month kids both at school 7. Does your partner work and how many hours ......24 hours 8. Do you work and how many hours .............self employed, so varied - avg. 45hrs p/w
9. How much debt is there in total ......... 11,000 tax man, 600 accountant, 2,500 overdraft, 4,500 business credit card, 4,000 plumbers mechant, credit cards [about as finding it hard to add all of them up got 5] 16,000 to 20,000 - will come back to that a.s.a.p = total 38,350 10. Is this all in your name ...yes 11. If between you and partner, can you break this down for us
In order to assist further we may require you to give us details of your income and expenditure. The details needed are as follows:
INCOME Your wage .....................Up and down I don't think I have paid myself for 2 months as when I have money in, I owe it out...say on my books 16,000 Partners wage............. 680 month Tax Credits .......zero as being self-employed this is a mine field and have left it alone Child Benefit wife gets 18.10 weekly me 50.20 monthly Other benefits (please name) CSA from my ex for my child 122 monthly
EXPENDITURE Rent / mortgage payments ...........850 monthy Council Tax ......................... 110 monthy Gas .....................10 monthly Electric ...................100 (pond pump drains the electricity) Water ....................20 monthy Contents / building insurance .......40 monthy Life Insurance .........................11 monthy Food / Housekeeping 150 weekly TV Licence ........139.50 yearly Court Fines ..........unknown????? Car costs (separate petrol / insurance / tax / repairs / car finance) Petrol: car pleasure/work 30; Van work only 70 weekly Insurance: Car 48; Van 51 monthy Tax: Van 185, Car 185 Yearly repairs: Car 550, Van 850
Travel costs (if public transport is used)........not used Telephone (landline) ...........112 per quarter Telephone (mobile - PAYG or contract)............ Myself - 70 contract, Wife 36 contract monthly Health costs......... 21.30 monthly (prescription charges) Child minding ................... 10 monthly Clothing ........................me 40...........Wife 40, kids 40 monthly Sky / broadband ...................24.50 monthly Any other expenditure not already mentioned............ smoking 30 weekly, Work insurance 30 monthly tools ?
Hopefully this will be ok.....
Please state whether the figures are weekly / fortnightly / 4 weekly / monthly
If there is anything else - add it to the list...
I have a few questions:
Can I continue working as a self-employed plumber?
What happens to contracts that are partially completed, i.e. plumbing contracts that haven't been completely fulfilled. I ask because I've not completed a contract on a job, but the agent is happy for me to complete the work and pay me the same amount even if I have gone bankrupt - but am I allowed to do this?
Do I get to keep my van? - Value, 0. Needs work doing to it.
What will happen with my plumbing merchant accounts? e.g. if I need a boiler, but know I'm going bankrupt... can I still get it?
Are there any hints and tips of the best way to do the whole thing? Would it help if I got divorced? What will happen with the house? Can I live in it? - as I've heard you get a grace period in which you can live in it rent-free for a certain period of time.
Many thanks in advance for your help and feedback, and warmest warmest regards.
confused.com
Gold Member
Re: going bust
Reply #1 - Jul 15th, 2008, 8:47pm
Hi and welcome to the forums
How much do you want to keep the house?
With debts of 38.5K and equity of 25K you do have other options. Are you up to date with your mortgage repayments?
Hear from you soon
Mr C
adacrash
Topic Starter
Junior Member
Re: going bust
Reply #2 - Jul 15th, 2008, 10:20pm
id say 2 months behind....have money but thought it a waste to pay it at the mo.......and family have offered to help but dont want them to waste money aswell ... was thinking about a charge on my house by my mum as owe her at least 5000 over the last 5 years she has helped me out
confused.com
Gold Member
Re: going bust
Reply #3 - Jul 16th, 2008, 9:41am
Personally, I'd approach my mortgage provider first and see if they can help. I know you're 2 months behind but they might still want to help, especially as you have equity.
I'm not in favour of IVAs over a 5 year term as anything can happen during this period and you're tied to a very strict budget for the duration. However, if the figures you have provided are correct, through an ip (insolvency practitioner) you might be able to offer a full and final settlement on your debts by raising the money from the equity you have. This would be a one-off payment to wipe all your debts out completely (not the mortgage obviously).
This would mean you keep the house, ditch the debt and hopefully have one manageable monthly repayment to your mortgage provider.
However, you could also consider selling the house and moving into a smaller place or even rented accommodation. Then use the money you have made from the sale to make full and final offers to your creditors.
If you go bankrupt now, unless you have a rich relative who is willing to buy your bi (beneficial interest) - i.e. any equity less costs, you will very possibly lose the house. The OR will get monies left over to pay your creditors.
As you can see, there are lots of things to think about. Have you discussed your debt problems with any of the recognised debt people - i.e. CAB, CCCS, National Debtline or even this site (DHUK - telephone number above)?
Hope this helps a little, look forward to any comments you have.
All the best Mr C
Jayne
Senior Member
Re: going bust
Reply #4 - Jul 16th, 2008, 12:59pm
I will post more later. I have just been through your I & E figures, rearranged them and summary - see below
Your family need at least 2,500 a month to live on. Whereas, like me, you are self employed and the business figures are coming out of your business expenses so are not part of the 16-!7 k that you earn per year. Your wife contributes 680 pcm, so you need to bring home after tax (and business costs) 1,820 pcm.
That is just to get by. There is not much money in there for shoes and hair cuts! And no money for holiday.
If you went B even the OR quidelines allow funds for a family holiday as part of basic living expenses (although not sure about smoking) on the other hand, lots of people also have a budget for pets...
EXPENDITURE - domestic - monthly 1, 153 mortgage Council Tax Gas ElectricWater insurance TV Licence 645 Food / Housekeeping 130 pcm petrol car 110 pcm car ins + tax + repairs 75 Phones (wife & landline) Health costs......... 21.30 monthly (prescription charges) Child minding ................... 10 monthly Clothing ........................me 40...........Wife 40, kids 40 monthly Sky / broadband ...................24.50 monthly 130 pcm smoking
TOTAL domestic expenditure : 2,419
EXPENDITURE - business - monthly 300 fuel Van 140 pcm Van ins + tax + repairs 70 Phone 30+ Work insurance + monthly tools Total work expenses at least 540 p c m
plumduff
Administrator
Re: going bust
Reply #5 - Jul 16th, 2008, 3:08pm
Hi Ade.. I would seriously consider contacting Business debtline, especially if you want to continue with your business.. BDL can help with both business and personal debts and will go through everything with you to decide on your best way forward..
If you have defiantely decided to walk away from your business then they not the best to advise, as they are there to help people who are in debt but want to remain trading.. They also have a website you can look at..
See post by needhelpfast... http://www.debthelpuk.co.uk/cgi-bin/forum/YaBB.pl?num=1214829348
Jayne
Senior Member
Re: going bust
Reply #6 - Jul 16th, 2008, 7:23pm
So many questions! Quote: Can I continue working as a self-employed plumber?
What happens to contracts that are partially completed, i.e. plumbing contracts that haven't been completely fulfilled. I ask because I've not completed a contract on a job, but the agent is happy for me to complete the work and pay me the same amount even if I have gone bankrupt - but am I allowed to do this?
Do I get to keep my van? - Value, 0. Needs work doing to it.
What will happen with my plumbing merchant accounts? e.g. if I need a boiler, but know I'm going bankrupt... can I still get it?
I was self employed and continued to be so after going B. Totally different business though.
Different answers depend on whether you go B or IVA. IVA is rarely a good option but it might be good for you.
B route is what I know about from experience: Your name and your trading name will appear in the newspaper as B - which may affect business. I assume you are sole trader and not Ltd company? All bank a/c are frozen then usually closed - If you have a business Bank a/c that will be closed. You will need to open up new bank a/c afterwards. I'm not sure if you will be able to get a business bank a/c. I just worked via my cash a/c with the Nationwide. About the partly completed contract of course, just like if you were working for an employer - you could continue going to work and earning as much money as you can!
The O.R will only want assets that can be worth something substantial when sold on. General rule is you can keep a car valued under 2,000. Van is tool of your business and worthless!
After B you cannot seek credit anywhere for more than 500 until you are discharged. And you have to tell the creditors that you are B. You have to run your business without any credit. Discharge is usually max of 12 months later, sometimes less.
IVA - I'm not sure but it may be possible then to keep your current bank a/c business bank a/c. Not sure if you are allowed to get credit to run your business though if you are in IVA. Others may know more about this. Also I think your name does not appear in the paper - but even so names of people who are B or in IVA are publically available on lists on the internet if anyone wanted to check up on you.
Your first question: Quote: Can I continue working as a self-employed plumber?
What you need to ask is how you and your wife can afford your lifestyle. From my earlier post you need 2,500 or more per month to live on. So, if you are both working you need to raise combined gross salaries of 35k.
To put that another way, with your wifes current earnings you need to earn at least 27,200 per year gross whether that is through paid employment or self employment.
adacrash
Topic Starter
Junior Member
Re: going bust
Reply #7 - Jul 16th, 2008, 8:14pm
thanks for all your coments i dont like the sound of a iva unless its one payment then its over....want to be free... money i earn will be mine and not anyone elses......will the tax man take a final payment offer lower that the 11,000 i owe him?
confused.com
Gold Member
Re: going bust
Reply #8 - Jul 17th, 2008, 4:24pm
Hi Ada
It will all depend on the route you take. I'd do as Plummie suggested and contact Business Debtline - they're geared up to offer smaller businesses good advice. Once you arm yourself with all the information, you'll feel much more in control of your situation.
Good luck Mr C
adacrash
Topic Starter
Junior Member
Re: going bust
Reply #9 - Jul 18th, 2008, 10:40am
Going to call dept line today....things have got worst my van now is in garge with est cost of 1600 to get back on road...then with all this stress i fell 6ft from a ladder and landded heaverily on my right angle which i thought i broke but half a day weighting in a and e and exray says im just a big woss....
so as things stand no work coming in ..no van to go to work have to use wifes car......
if i use money to fix van then go bust in a few weeks , will it look bad ?????...
so many questions but as post by needhelpfast said, forget it all amitt defeat...
as confussed .com says ........Personally, I'd approach my mortgage provider first and see if they can help. I know you're 2 months behind but they might still want to help, especially as you have equity.
how will they help me ? ive not paid any off my credit cards for 2 years no 1 pound have they recived....if my morgage company lend me more i still cant afford it ....unless work picks up or swap to intrest only morgage?//
any help as always very very much recived........
ps sorry about spelling[im bleep at that as well]
oh and lastly what happens to on going jobs say i priced for a bathroom 500 to fit i got my deposit 200 and fitted all bathroom except shower screen and shower valve [got to wait for tiler] got paid 200 so total is 400 the lady still owes me 100 when i go back.......
what happens if between then i go br..
same with stock i buy some coper pipe by the bundle and some is left over or a boiler is fitted but not billed for .......
im all at sea..........please help.....i do have 2 new builds on the go at the mo thats why i ask...
« Last Edit: Jul 18th, 2008, 10:49am by adacrash »
I know it's easy to say but try and relax a little.
I can't help with the work questions, but my advice with the van is to get it sorted if you can, it's your livelyhood and the OR can't punish you for keeping that going.
With regards to the mortgage company rather than lending more money they may be able to look at adding overdue payments on to the end of your mortgage (i.e., extending the term) or spreading the payments acroos the remaining term. They don't work the same as credit card companies and it is in their interest to try and keep you in the house paying your mortgage (less hassle for them). My advice would be to speak to your mortgage lender. (remember it's only my opinion!)
I'm sure there will be some experts around shortly to help out and give some sound advice.
Keep your chin up, we were in a right mess before the kind folks on here helped us sort situation out and we are laughing now.
Re: going bust
Reply #12 - Jul 18th, 2008, 2:32pm
I do feel for you ... when the world looks as though it can't get any worse and then BANG! It will get better, believe me.
As Brando and I have suggested, speak to your mortgage provider. They will not want you to default on your mortgage and they 'should' try and help you if at all possible. Consider switching to interest only even if it just gives you some breathing space. Anyway, it's only a phone call and if they can't help, well at least you tried.
Is there any way you could look for work as an employee? Maybe do both (you do private jobs in your own time). I realise it's not as easy as that, but good tradesmen are always in demand and you might just get lucky. At least being employed, you'll have a regular guaranteed income.
Looking at your i&e, as Jayne has already said, you need to increase your income significantly. Some of the items on the list are high and smoking wouldn't be allowed (would need to come from surplus income). If you don't think you could significantly increase your income (or reduce your outgoings) , then you might just have to bite the bullet and let the house be repo'd. Any equity would be lost but then the debts all gone too. It's basically what I first said, "how much do you want to keep the house?"
Did I read correctly that you haven't paid your credit cards for two years? At what stage is the collection on these?
Try and work through this as calmly as possible. There will be a solution and as soon as you start to feel in control, you'll feel much better.
Good luck Mr C
« Last Edit: Jul 18th, 2008, 2:45pm by confused.com »
adacrash
Topic Starter
Junior Member
Re: going bust
Reply #13 - Jul 18th, 2008, 2:37pm
yes you read correctly i have paid my egg 6000 ish or barc visa 3500 or barc master 3000 or my citi 3000 a penny in 2 years they send letters but they go in the bu=in and i hear nothig from them ...the phone rings a lot though but the answer phone takes care of them
At what stage is the collection on these? not sure what you mean.......they are all maxed out and no card has been isueed for a while so ........?
First of all - DO ring the Business Debt Helpline. My (self employed) partner has been in turmoil for 12 months and I've been writing on this board for over 6 months and we could not (because of the business and house) reach a decision.
Eventually - My partner rang the BDHL and his mind was clear within a twenty minute phone call... and it was all made perfectly clear. I also liked the fact that they give you no-nonsense advice... they do not pull any punches or give you a load of official between the lines advice either. They are very very good - no disrespect to any forums or similar, but these people know and understand every business situation and have met you a milion times. Please do call them - what harm can it do?
Also: Start putting some money away if you can. You have to think of you and yours now... so start now. You may need to rent eventually - whether you want to or not it just may be your best option one day.
YOUR BUSINESS: It would be interesting to know how you get your work... is it adverts, word of mouth, online, though an agency, or a combination of these... remember, there is every chance that no matter what you do you will not lose all your customers in your game... so that's one positive perhaps? - I'm wondering if going Bankrupt would have a negative affect on your business to any great extent. If you are called ABC Plumbers, and you are used to having payment made to that name and that's the only thing that will be greatly affected, then you can call your business by your name instead 'I Adacrash' - changing your business in this way may not wreck it completely and therefore you know your earning potential can continue - albeit a bit different... Obviously, you know the ins and outs of this better than anyone but is there a way of continuing your business without a massive impact on it - if so, then, that is half the battle.
Suppliers obviously matter if you need to keep them - and again, I can only say consider what you do here if you are reliant on a particular supplier. Perhaps you have a bit of time to think this through - thereby protecting your main business concern - if this is ine of them.
YOUR HOME: I know this one well - I have argued black and blue with my partner about not wanting to lose my home... as it happens, we did ourselves out of any possible equity by remortgaging a year or so ago and will lose it now. I have recently had to accept that it has to go. I am now looking forward to a move that up until 2 months ago the idea brought me to tears... and we are paying a lot less. We are considering this a bit like a 3 year holiday from a house responsibility - rent is less than mortgage, if boiler blows we call a landlord, and we've found a house that is brilliant... you have time to find the right one. Is it the end of the world to you to lose this? - With 25k equity, you will certainly lose that especially as it is in your name only. However - you could perhaps pull some of this back in the meantime by asking your mortgage company for a mortgage holiday or reduced payments for a while - maybe gaining a few hundred pounds per month until your decision is made, the house is sold or whatever.
VAT / Tax: Each situation is different but we have paid only 2k vat this year (2008) - instead of the 12k due - and the last time they received a full return and payment was September 2007 - the December one was around 4k and we've paid 2k of that around March. We have been on to them, made excuses, paid a little, made more excuses and promises etc... and managed to keep them from the door - but I must say it's been scarey that one! But the point is - maybe a plan to keep things at bay whilst you make your decision ??? This is a hard one as you never quite know what could happen, all I can say is, we have been trying really hard to pull our problems round and the vat just got worse. We did not intend to go this long - but eventually, things mounted up and took over.
One call I had once made me really think - I phoned one of these places where you can sell your house and rent it back - and of course its not an answer really - BUT - the guy I spoke to said... just stop paying this and that, and so what - what can they do??? Let them CCJ you, your credit can't get any worse can it. Just make sure you pay this and that... like I say, it wasn't an answer, but it did make me start to think more about what matters and what doesn't. The problem was, it came too late - by this time I was already on the bottom of the slippery slope.
There was another consideration we made during the process and nearly went down this path:
You have about 23k of debt that is directly associated to your immediate business that you really do need to either get rid of or pay off - those are the only 2 solutions. Remortgaging your house could pay this - BUT - your mortgage would then go up even more... but it would reduce your outgoings and put your business back in check - Yes??? - At a cost of course. - Everything else you could leave because the worse that will happen is that it will end up being attached to your house because of unpaid CCJ's eventually. (I am not certain but I do not think credit card companies can make you go BR - only secured debts and vat etc) - This just means that when you sell your house the debts will be paid before you get any further accrued equity. All in all I would say that if your going to lose things that are important, then doing something like this is highly unlikely to be the answer. It will add up to 20k to any future equity loss, increase your mortgage to perhaps 1000 per month, which you would have to know is totally handleable without a problem on an ongoing basis, and is only of any use to you if going bankrupt would mean you cannot continue to trade or rebuild your business.
The alternative is to consider bankrtuptcy - writing off 38K+ and renting a property for say 650pm. Making the path clear for a brighter future. What you need to consider mainly is that you can continue to trade. And you probably can. It is likely that your OR will allow this as a sole trader. But if Ltd then you cannot be a Director whilst BR. If you are a Ltd Company you cannot trade under the same name again in most cases. If you are a sole trader, you can trade under the same name. So you get to start again, albeit in a rented house.
I do not think a lot of what I have said is what would be considered good sensible advice. I suppose that is because I know you have a lot to consider and I know you will be in turmoil making this decision. In my experience the longer it takes you to decide that BR is inevitable the longer you will fret and stress, the greater your debt will increase, even though you think you can gain control, you cannot get in control of this situation unless you can earn all your required overheads including rents and business bills due each month + mortgage etc and thats before you start trying to keep you and your family in food, clothes etc.
Is your main worry / concern losing your house or losing your business - or both? If your main concern is that you simply want to rid yourself of all this worry and debt and you are happy to go an work for someone else, then going to work for someone else and then going BR may be the easiest solution of all - getting rid of all your debt in one - but you will have to put your equity up - unless by some miracle someone can buy that equity for you.
The nice thing is you have a great family and I am sure that this will get you through anything - and they will all be much happier if you are too.
Talk to the business debtline first and foremost - that is your first port of call.
Kind regards and good luck - but keep posting your thoughts and concerns on the board. It will help you to get through this.
NHF x
« Last Edit: Jul 19th, 2008, 12:58am by needhelpfast »
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