Best foot forward...sole trader bankruptcy advice...

[outofideas]

Hello , extremely nervous, ashamed and just lost so bear with me if you can.

I am self-employed and currently in an IVA, which began in January 2022.

However, I have accrued post-IVA debts, mainly with the HMRC, and have not been able to pay my self-assessment tax due and I now have debts for 22/23 overdue and 23/24 becoming due.

I have a payment holiday from my IVA until May and am trying to arrange a payment plan with HMRC, offering them £500 a month at present, I cannot easily make phone calls so I am trying to correspond with them in writing. They are currently ignoring my offer and writing to tell me how much is due/interest & penalties etc.

I believe bankruptcy may be my only option and do not know if I should do this myself or wait for the HMRC? Are the repercussions or problems with waiting to be made bankrupt over doing it yourself? I'm not sure I'd survive a day in court if this is a thing that still happens?

Due to the size and nature of my debt I am expecting a BRU and perhaps due to my income I am expecting an IPA but I'm just trying to get as prepared as possible, is this something you can advise on? I'm not sure what I'm doing but I want to do things in the most responsible way and try not to let this feel even more terrifying than it already does. I should probably never have entered the IVA and this whole situation could have been dealt with sooner and I wouldn't have been so messed up.

I struggle immensely with communicating via telephone etc which is not helping matters with HMRC but I am responding in writing to their letters.

I don't know the best action, should I try to negotiate with HMRC, advise my IP that I need my IVA to fail and then get help from an expert to help with the bankruptcy? I'm so worried about things I can't seem to make a rational decision. From a personal perspective I am still able to earn through my self-employment thankfully though it isn't a huge amount, have multiple children to support including one with disabilities and my partner is the child's carer. They are looking for work but everything is bleak out there...

I am not a homeowner, I should not have fallen into the IVA trap and this combined with the HMRC delays (not supplying a new UTR for 18+ months) and the cost of living means I've royally messed up once more...should I just hit the bankruptcy button myself or allow the IVA company to do so...if they in fact do this? I've got until May to decide...

I appreciate I must seem like a complete idiot and I probably am but I want to do the right thing somehow...

Thank you to anyone who has read all this...the stress is probably very evident.

 

[Gyumri]

should I just hit the bankruptcy button myself or allow the IVA company to do so...if they in fact do this? I've got until May to decide...

What's the problem about letting some busybody serve a bankruptcy petition on you? If you have no assets then I would put your feet up for 12 months as you are allowed to earn a crust by the trustee in bankruptcy to put food on the table.

Am I missing something? It's what thousands of people are doing if they go belly up.

12 months will wizz past and in the meantime you can learn from your experience.

I wouldn't waste £600 or whatever the fee is now to go bankrupt yourself but let some other fool do it if they have nothing better to do.

I would stop paying out in your position because you cannot afford to do so.

 

[outofideas]

What's the problem about letting some busybody serve a bankruptcy petition on you? If you have no assets then I would put your feet up for 12 months as you are allowed to earn a crust by the trustee in bankruptcy to put food on the table.

Am I missing something? It's what thousands of people are doing if they go belly up.

12 months will wizz past and in the meantime you can learn from your experience.

I wouldn't waste £600 or whatever the fee is now to go bankrupt yourself but let some other fool do it if they have nothing better to do.

I would stop paying out in your position because you cannot afford to do so.

Thanks for your reply - I think I'm just creating worries due to the stress of the whole situation.

I guess if I wait for them to 'press the button' it'll be awhile yet too...knowing the timescales may make me feel less stressed and I suppose paying myself gives me that one benefit. I'm also petrified of the idea of having to go to court in person...I hope this can be avoided.

Thank you again for your response.

 

[Lisa Thomas]

What's the problem about letting some busybody serve a bankruptcy petition on you? If you have no assets then I would put your feet up for 12 months as you are allowed to earn a crust by the trustee in bankruptcy to put food on the table.

Am I missing something? It's what thousands of people are doing if they go belly up.

Yes - there is no guarantee a) HMRC will pay thousands of pounds to issue a bankruptcy petition
B) Even if they do, it's not going to happen overnight. It's quicker for the OP to take control.

 

[Lisa Thomas]

Hello OP please don't feel ashamed of your situation.

First of all, communicate with your IP. You may find that if you breach/have breached your IVA terms then that they have to bankrupt you as part of the IVA terms (Or check your IVA and any variations on this point)

For advice, I suggest you speak to free charity: https://www.stepchange.org/

 

[outofideas]

Hello OP please don't feel ashamed of your situation.

First of all, communicate with your IP. You may find that if you breach/have breached your IVA terms then that they have to bankrupt you as part of the IVA terms (Or check your IVA and any variations on this point)

For advice, I suggest you speak to free charity

Hi there,

Thank you for being so understanding. I told them about the situation and they arranged a 6-month break in IVA payments for me to sort the issue with the post-IVA debt but so far no success with HMRC yet.

Stepchange sent me to Business Debtline who sent me to my IVA company in 2022 and now we are where we are. Am I best informing the IVA company I am not going to make any more payments and let it fail? Do you know how long this might take? I just want to do the right thing as much as possible.

 

[outofideas]

Yes - there is no guarantee a) HMRC will pay thousands of pounds to issue a bankruptcy petition
B) Even if they do, it's not going to happen overnight. It's quicker for the OP to take control.

Thank you for understanding. I believe the IVA company may proceed before the HMRC but so far we're at the point where they've given me this payment break and I haven't been able to come to an arrangement with HMRC...so I guess next step is IVA failure and...whatever comes next. Thanks again.

 

[Lisa Thomas]

Hi there,

Thank you for being so understanding. I told them about the situation and they arranged a 6-month break in IVA payments for me to sort the issue with the post-IVA debt but so far no success with HMRC yet.

Stepchange sent me to Business Debtline who sent me to my IVA company in 2022 and now we are where we are. Am I best informing the IVA company I am not going to make any more payments and let it fail? Do you know how long this might take? I just want to do the right thing as much as possible.

I can't give you advice on whether Bankruptcy is the right step (and therefore whether you should let your IVA fail) but yes, as I said above you are best speaking to your IVA firm. How long it might take them to fail your IVA will again depend on your terms and any variations approved. You need to dust off the paperwork (or ask your IP)

 

[outofideas]

I can't give you advice on whether Bankruptcy is the right step (and therefore whether you should let your IVA fail) but yes, as I said above you are best speaking to your IVA firm. How long it might take them to fail your IVA will again depend on your terms and any variations approved. You need to dust off the paperwork (or ask your IP)

Thanks, sorry for all the questions. I will speak to them asap.

 

[Lisa Thomas]

Thanks, sorry for all the questions. I will speak to them asap.

No need to apologise, that's what the forum is for!

 

[outofideas]

No need to apologise, that's what the forum is for!

Thanks so much. I just have one final question, not sure if anyone can advise ... If I wait for my IVA firm/HMRC to petition will this mean in-person court attendance? Terrifying prospect.

 

[Lisa Thomas]

There is no guarantee HMRC or your IVA Supervisor will bankrupt you.

Not sure about the hearings these days, suspect it will be something the judge can rubber stamp in their chambers without a hearing.

It's just a process, can't imagine there would be anyone at the hearing anyway except the judge and perhaps one assistant.

 

[outofideas]

There is no guarantee HMRC or your IVA Supervisor will bankrupt you.

Not sure about the hearings these days, suspect it will be something the judge can rubber stamp in their chambers without a hearing.

It's just a process, can't imagine there would be anyone at the hearing anyway except the judge and perhaps one assistant.

Thanks - I will speak to the IVA company and see what happens next. Appreciate your replies thank you.

 

[ZJ2025]

Thanks - I will speak to the IVA company and see what happens next. Appreciate your replies thank you.

Hi how did you get on I’m in a similar position no Iva thinking to declare BR out I’m so scared I’m now for a compnay also have young children

 

[Lisa Thomas]

Hi how did you get on I’m in a similar position no Iva thinking to declare BR out I’m so scared I’m now for a compnay also have young children

Have a free chat with charity Stepchange for advice on which personal insolvency procedure would suit you best:

StepChange Debt Charity. Free Expert Debt Help & Advice

 

[outofideas]

Hi how did you get on I’m in a similar position no Iva thinking to declare BR out I’m so scared I’m now for a compnay also have young children

Nothing happened as yet...I think it'll be a long process when it does begin...it's quite a complicated situ and one I'm scared of but I really don't have much insight yet I'm sorry I can't be more helpful.

 

[ZJ2025]

Ok thanks anyway