Bankruptcy / IVA

[dannster]

Hi all,

I posted on here a few months ago about my financial situation with a business debt. I owed at the time around £130,000 in unpaid tax and VAT from being a sole trader from 2005 - 2011.

Most of that debt was judged from my first tax return which was £25k. Because I didn't submit any returns from 2007 onwards they judged that I was earning the same, if not more, so judged my tax debt to be high.

I've submitted my returns and it turned out that I didn't owe as much tax. My returns for years 2007 onwards were no higher than £2,500 each yeah. However, because there was a cut-off time for 2007-2008's return, it looks like HMRC won't process that one so they're charging me £18,000 from what they judged it to be.

That's highly frustrating, but understandable considering I had all this time to sort it out.

The revised debt is £86,000 and I have until next Thursday 28th June to sort out.

I rent, don't have any assets and earn £23k a year in marketing (not a professional). I'd prefer to go down the IVA route but understand it may not be possible because I may not earn enough?

I don't want to be made bankrupt, but I'm prepared for it if it doesn't happen.

I can't adjourn the bankruptcy hearing because they've done it already and marked it as final.

So what I need to know is...

a) Can I submit an IVA proposal in time?
b) What's the liklihood that they'll accept it?
c) What would my repayments be?
d) If I'm made bankrupt, how much disposable income would I have considering I don't have much really after rent and bills any way.

And finally, I need to get in touch with an insolvency practitioner. Are there any here that can help? What would the cost of that process be? And can it be resolved in a week?

On top of this I'm suffering from depression (as a result of this), and would like to get it resolved ASAP so I can begin to move on from it.

Any help would be greatly appreciated.

Many thanks,
Dan

 

[internetspaceships]

If youre earning £23000 pa and you're renting why would you want to saddle yourself with an £86,000 debt for probably the rest of your life?

 

[OldWelshGuy]

My Understanding is that even at this l;ate stage if an IVA is practical, they will accept. After all Bankruptcy is always the final step, and the guy in charge will want to know that every possible avenue has been investigated before he/she will be willing to issue a bankruptcy decision.

 

[OldWelshGuy]

If youre earning £23000 pa and you're renting why would you want to saddle yourself with an £86,000 debt for probably the rest of your life?

I believe that under the IVA laws it is a 5 year maximum? Happy to be proven wrong though.

 

[internetspaceships]

I'm also assuming from the way you've posted that you've had no professional help through this?

I believe that under the IVA laws it is a 5 year maximum? Happy to be proven wrong though.

Sure but why pay for 5 years when he could go bankrupt and it's probably dealt with faster?

 

[OldWelshGuy]

I agree it seems to me like a stright choice of
1. all your available income for 12 months
2. all your available income for 60 months.

hardly phone a friend material is it

BUT thankfully you are speaking to an IP now who will put you straight

 

[dannster]

Thanks guys, most appreciated.

I don't want to have this debt over me for the rest of my life and I agree that I'd rather be paying it back for a shorter period!

How long is a payment arrangement order?

Would you know of any insolvency practitioners worth recommending? I've googled but I'm dubious. It's all kinda new to me.

 

[Spongebob]

If you don't have any assets to protect then almost certainly bankruptcy is the preferable option.

An IVA will normally last for 5 years.

An Income Payments Arrangement under your bankruptcy will normally last for 3 years.

However, an IPA will be based upon your net income after paying your rent and other essential living costs. On an income of £23k it shouldn't be too difficult to justify essential outgoings that leave next to nothing available to contribute to an IPA. In essence, you should be able to get away with paying nothing at all!

If you need more specific advice feel free to PM me.

 

[RBS]

Just reading this thread and thinking - what stops people getting loans, max out CC`s, buying stuff on credit and then going bankrupt?? Free money ??? Sounds just so easy to write all debt off.

 

[lead]

you should consult a good legal adviser. In fact approaching a good & reliable finance attorney would be better to get good solution.

 

[Spongebob]

Just reading this thread and thinking - what stops people getting loans, max out CC`s, buying stuff on credit and then going bankrupt?? Free money ??? Sounds just so easy to write all debt off.

It probably is that easy to fleece banks and credit card companies in this way; however, they'll only let you do it once.

My advice though, is reserved for genuine business people who have acted honourably but found themselves in an insolvent situation. This can literally happen to anyone, and is a very frightening position to be in.

I hope that my advice can hep people sort out their immediate problems and start again.

 

[dannster]

Thanks for your advice guys

I spoke to the CCCS and I've decided to go ahead with the bankruptcy.

 

[gordano]

Just reading this thread and thinking - what stops people getting loans, max out CC`s, buying stuff on credit and then going bankrupt?? Free money ??? Sounds just so easy to write all debt off.

If you take on more debts "knowing that you are likely to be made bankrupt" then those debts would normally survive the bankruptcy, e.g. they will have to be paid back later and will not be written off by the bankruptcy process.

 

[RBS]

If you take on more debts "knowing that you are likely to be made bankrupt" then those debts would normally survive the bankruptcy, e.g. they will have to be paid back later and will not be written off by the bankruptcy process.

Never heard of this. What`s the point of bankrucpy then?

 

[Alan R Price]

If you take on more debts "knowing that you are likely to be made bankrupt" then those debts would normally survive the bankruptcy, e.g. they will have to be paid back later and will not be written off by the bankruptcy process.

As an insolvency practitioner this is news to me. Can you quote chapter and verse? It seems I may have missed some new legislation. :|

 

[Alan R Price]

Thanks for your advice guys

I spoke to the CCCS and I've decided to go ahead with the bankruptcy.

I have only just seen this thread. I am an insolvency practitioner. I think you have made the correct decision: I don't think you would have gained anything from an IVA - quite the opposite, in fact.

If you need more information about the bankruptcy process, have a look at the official receiver/Insolvency Service website: http://www.bis.gov.uk/assets/insolvency/docs/publication-word/guide-to-bankruptcy.doc.