Formal notice to collect debt - my story

Discussion in 'Cashflow forum' started by SGPS, Nov 26, 2012.

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  1. SGPS

    SGPS UKBF Regular Free Member

    168 31
    Good evening all

    Some of you may remember some not. In basics i had a small embroidery company that unfortunately encountered some problems.
    , pretty much from day one.

    For those interested i will share with you some of my story. For those not please feel free to skip the story and just answer or guide me with the question in hand.

    I would also like to apologise if i have posted this in the incorrect area of the forum.

    My story began at the age of 23 when i left working for a family company that was started from scratch when i was 17. As in insight this company quickly grew and within only a few years employed between 80-100 people and was turning over nearly 14million, my attitude and demand to learn grew as quickly as the business, i learnt from their mistakes, i helped fixed the problems and played a major role in its functions. It was an interesting time i enjoyed my job, i was constantly in demand and my skills and experiences expanded so vastly. I enjoyed business, i enjoyed the long hours, the money, the chase and making decisions that made a difference. Ill be honest i was never sat on the board table but my role was key to its structure.

    Then a few more years later the recession hit just shortly after theyd made some risky aquisitions, which if youd have asked me wouldnt have done the business any good even if the recession didnt hit.

    Sometime sooner the company hit serious finacial difficulty and unfotunately went into adminsitration at this time i had been left to do what i could to save money where i could and shut down sites accross the northwest. I remember trying sell 20ft mixing vessels by telesales, not the easiest sale in a recession ill be honest, but i got rid of themin the end. By this point the company was on its lasts legs and running on fumes and they needed investement to continue trading, it was a roller coaster of a ride. And if im honest i struggled to keep myself busy and actually do the company any good, i tried to leave but my commitments where firmly in the ground. So i took over a small department of the company that serviced its customers for workwear and uniforms etc. Im a quick learner, it was simple stuff and by the end had took over all the roles of the original production manager.

    By this time the company was in talks with foreign buyers and the family atmospohere was tense, we had all been on a rise and fall, cars possesed and a nice lifestyle cancelled and to make things worse i disagreed with some of the current leach management who where still rinsing the company of its money and burning cash for fun, who had supposedly stuck around to keep the company going in the right direction. I disagreed with their choices, the people they left trust in. I had seen many of these mistakes before they happened i saw the leaches taking everything they could and watched a majority of them jump ship when the ship started sinking. I was upset, i watched something working relatively well and watched people steal from my family. I quickly learnt that my family didnt appreciate being told theyve made mistakes and that there too blind to see that where still making the same ones, it was hard for me and i think i alienated myself, needless to say i kept learning the uniform part of the business and kept building on its progress. A year or so passed (ill be honest ive lost track of time over the last 6-7 years, things happen so quickly).

    The time arrived where the foreign investors where making the buyout and i could see the changes being made to the companies original values and everything the company stood for. It wasnt enoyable but i enjoyed fixing the problems with my department. At this time relations with one family member where tense, and very fake. Most of my family (who didnt work at the company) agreed with what i had been saying and i blamed this particular family member for the hell we'd all been experiencing. He realised i wasnt prepared to fit in with the rest of the company and that my department was my retreat and something which id turned around single handidly. There was a lot of comotion, id created a stare and appraisals by other staff members where in the air. Id done a good job, as i always do but it just wouldnt click with him, he didnt like it. Then one day a rumour emerged that my department was closing due to the new investors having no interest in this line of business. I must have missed the group email that day and found the news from fellow colleagues, it came as a shock and i felt pushed out, i threatened to make a fuss and look to persue them, but it felt pointless, in the end they agreed i could leave the company with short notice, set up for myself and service their customers. Without a written agreement, they where family after all....

    i left, borrowed through my teeth witha business overdraft for 20k pg'd and sat up my own business, knowing i could service these customers as a starting grid to go onto different things. Around this time my gf was around 6months pregnant, i had no fear, as there where a nice flow of orders coming through their books, which almost covered all my overheads. It seemed a good position to be in. Things where positive, the market was used to being in recession and i knew where to pick my orders up from.

    The day came i opened up the doors and spent the first few days getting all the last pieces together. when i received a text message from one of the guys where i used to work. it read something along the lines "everyones had emails about the workwear department being back open and there was loads of of stupid offers attached". I was distraught, for some reason i started fuelling the situation, i was mad infact crazily sick!. Me, my sales guy hit the phones like mad tired everything we could, but we'd been beaten to it with the good spending customers and it seemed diversion was the only option. We tried local customers and customers out of the usual field from my previous job. It was a tough few months and then the baby arrived, with a few problems at birht along the way, i wasnt speaking to most of my family it was a difficult time. My sales guy was running riot and i had a machinist practically just destroying machinery and products while i was gone. Its a simple operation ill be honest, but i guess thats what happens when you leave your trust in people.

    Xmas came, i struggled to make sales i laid of my sales guy after hed took the piss for soo long and tried to get some newbies in for the last few weeks for some trianing for the new year, they covered there heads with sales, but it was a short month and working 20hr days to get the jobs complete for delivery xmas was tough.

    January came, a tough month for me, plenty of quotes in the air, but they where struggling to close the deals. Then my baby fell very ill. I lost 3 weeks, they where horrible times. I spent my nights working by myself running the machines and leaving post it notes everywhere (id sacked my machinst by this time,i learnt you can take a horse to water but you cant make it drink) then by day bedside at the hospital.

    Luckily he was well enough to come home, i was tired and very emotional. The sales where coming in, but i was still loosing money. I then started to get introduced to larger companies, but found it very dificult to fulfill the orders as i didnt have enough finance in the business to support the customers. I turned away a lot of work, it was horrible. Id made some good contacts, but i just couldnt do enough. If things didnt improve i could see the end being near in the next few months. Some of the larger sales invoices werent coming back in quick enough and my credit lines with suppliers wherent big enough to support. I ended up giving the orders to another firm (the guy whos job i took over a few years before)

    I gave it my all, put all my eggs in one basket and went for it. Grabbed as many sales as i could and kept getting more and more. I made the decision i didnt want to owe any of my creditors any money and that all my staff would be paid there correct wages, i closed the door knowing id done my best and hadnt shafted anyone along the way. Luckily id spoke with everyone previously and theyd made prior arrangements to find new jobs, there was only 3 of them but still.

    I then spent the next few weeks passing on orders we had quoted to the other guy again as a goodwill for what later turned out to be a job offer. Which unfortunately didnt work out as one of his business partners saw my desperate situation and thought it would be good to try squeeze me for everythng he could.

    I paid up my suppliers. And found a new tennant for my unit, id left a few grand in the account so that i didnt default on the o/d until i could think of a plan. Assetts wise i had nothing of real value.

    I explained to the new tennants what happened and they where intrigued with my story and thought with my help i could help them do the same thing as i had done and cashflow was not a major issue for them.
    Posted: Nov 26, 2012 By: SGPS Member since: Jun 15, 2010
  2. SGPS

    SGPS UKBF Regular Free Member

    168 31
    Ive spent the last few months helping them set up, and im pleased to say i have duplicated those last few busy months of sales month by month with the new tennants and they have since outgrown that very unit. So it showed i just needed a bit of luck and some more cash. Two very simple things but two things i just couldnt seem to secure. They now employ 8 staff in 6 months and making a profit month on month. Ive enjoyed getting them to where i should have been going (baring in mind these guys knew nothing about this industry before).

    Ive been working part time for them for the last few months as im slowly becomming depressed with how things have turned out.

    Its been a bigger rollercoaster than the first time and its far from over which leads me to my original question in hand.

    The o/d has now defaulted and i have received a letter to file a default to take action to recover the debt which is for just over 20k.

    Now i wonder if anybody could help with my situation. I have a joint mortgage with my partner. Of which in 2006 was a 100% for 90k. It currently stands at around 84-86k. According to zoople its worth 82k (not taking into account the house next door is in ruins, with no roof etc and has been for 3 years).

    According to my bank manager the o.d was not secured against my home

    I have no savings, a part time job and weve been running on fume for months anyway. I might be able to borrow some money from family but havent asked.

    What i want to know is,

    1. what are the chances if i went bankrupt the o/r would force a sale.
    2. if i could find some money what would you anticipate Natwest accept as a full and final settlement?
    3. what should i write to back to Natwest? Should i request a copy of the original pg? should i ask them what kind of payment they are expecting?

    I think im correct in thinking the ball is in my court, ive made mistakes i know this, but i just need to get out of this in the best way i can.

    I thankyou for reading my pathetic story, but hope somebody could point me in the right direction.

    many thanks in advance
    Posted: Nov 26, 2012 By: SGPS Member since: Jun 15, 2010
  3. greengecko

    greengecko UKBF Newcomer Free Member

    254 38
    Any personal guarantees signed?

    Was the company for which the overdraft was for Limited Liability?

    Kind Regards
    Posted: Nov 26, 2012 By: greengecko Member since: Feb 3, 2010
  4. SGPS

    SGPS UKBF Regular Free Member

    168 31
    yes a personal guarantee was signed, but nothing mentioned about my property and yes a ltd compnay
    Posted: Nov 26, 2012 By: SGPS Member since: Jun 15, 2010
  5. Alan R Price

    Alan R Price UKBF Newcomer Free Member

    2,123 1,037
    1. The OR will not attempt to sell your house if there is no equity. From what you said there isn't any. Have a look at the OR's website for more information about bankruptcy and in particular what would happen to your home: If there is no equity you should be able to buy your share of the property for £1 plus a nominal amount for the costs.

    2. If you go bankrupt the NatWest debt will fall into the bankruptcy so you will not need to negotiate with the Bank anyway. If you don't go bankrupt, NatWest will be prepared to do a deal based on what they think you can afford. If you have no assets and are able to introduce third party money to offer a one-off payment you may be able to settle at about £2,000-2,500. If you get a job and are able to make monthly payments the Bank may want more. It all depends on the circumstances - there is no hard and fast rule.

    3. If you are not certain whether you gave a guarantee, ask the Bank for a copy then take some advice as to whether it is actually enforceable - banks do make mistakes.
    Posted: Nov 26, 2012 By: Alan R Price Member since: Jul 5, 2010
  6. EICIC

    EICIC UKBF Contributor Free Member

    54 7
    Its not pathetic - It the situation a lot of people find themselves in.

    If anything its admirable as you could have chucked in the towel a long time ago.

    Alan's advice is spot on.

    My first foray into the world of insolvency was negotiating equity buy backs with Insolvency guys who had been appointed by the Official receiver.

    There's no equity here so that wont happen - probably your partner will buy the equity for a pound plus costs (around 200ish) from the OR within 3 years of the bankruptcy.

    That's the time frame which the OR has to realise the assets.

    Obviously you still have to keep up the mortgage payments, and this is usually where it goes pear shaped in my experience) and your credit rating will be shot for the next 6 years.

    There really does come a point especially with a 100% mortgage on a negative equity property that you should consider renting if the mortgage payments are too high.

    Your almost certainly stuck on that product then into a SVR when it finishes.

    First though I would definitely approach the bank and make them an offer to pay a nominal amount in the interim - I've found the banks to be accommodating if you make persevere with them and if you google there are lots of template letters for this.

    Also if you decide bankruptcy is the best option check which banks offer a basic bank account and open it before you do it, it makes life easier - you still can have a debit card just and limited credit up to £500 (but in my experience none) - because a number of high street banks have pulled their facilities for bankrupts.

    Good luck
    Posted: Nov 26, 2012 By: EICIC Member since: Nov 18, 2012
  7. daveymck

    daveymck UKBF Newcomer Free Member

    106 18
    AFAIK you cant open the bank account till after you declare bankrupt all accounts open at the time of bankruptcy are frozen.

    Personally I would offer token payment of £1 to £10 ish for now if thats all you can afford, at some point they will sell it on to a DCA who tend to be much more flexible on f&f's prob looking at 30-40%. If its defaulted now they wont be adding charges or interest and from a credit rating point of view the worst has happened. Although it could be in your situation bankruptcy the better option.

    For professional free advice ring the CCCS and maybe have a look round Money Saving Extra and Consumer Action group forums lots of people in the same boat and lots of good advice.

    The banks will try and bully you with intimidating and threatening language in the letters making all sorts of demands but dont be scared there is little they can do in reality.
    Posted: Nov 26, 2012 By: daveymck Member since: Nov 14, 2012
  8. SGPS

    SGPS UKBF Regular Free Member

    168 31
    Hi guys

    Thanks for the comments above, i will have a proper read through tonight and see where my next step leads to. I think ill start with requesting the pg. I know i signed one. Horrible times!

    thanks again
    Posted: Nov 26, 2012 By: SGPS Member since: Jun 15, 2010
  9. Evesoffspring

    Evesoffspring UKBF Newcomer Free Member

    68 16
    I didn't want to pass by without saying hello and thinking of you
    I was in a similar situation a few years ago.
    It's horrible and no doubt you are suffering sleepless nights.You can and should open another basic bank account. The co-op are well known for offering basic accounts to just about all and don't be scared to tell them what might be happening. I used to look at a forum, sorry cant remember which one it was but I'm sure if you google bankrutcy forum it pops up quite high, money saving expert I think! It's full of great advice and no one is judgemental.
    Best of luck, Dont blame yourself, times are hard and you have a family which is worth more than money or any business :)
    Posted: Jan 11, 2013 By: Evesoffspring Member since: May 13, 2010
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