How do i deal with this quagmire!!

[Dazzler66]

Thanks everyone for your imput to my previous question.


So my current situation is as follows

Small Ltd Company has been struck off & dissolved. This is after I walled away from the business following a total breakdown, lost our home, my wife & children and I eventually ended up homeless on the street, I was completely suicidal.

The business never filed accounts. My DL was c£70 - £80k and off the top of my head the business owed c£10 - 15k I. Corporation Tax.


My personal credit situation

I have decided, with the support of StepChange, to face into and deal with my unsecured credit, which stands at c£51k.

My current situation is that I live in rented accommodation, I have no assets and my only income is through Enhanced Disability Benefits & Motability. Due to the severity of my health and deterioration in my brain function & memory, I will never work again, i am aged 58.

As a consequence StepChange are leaning towards recommending me to opt for Personal Bankruptcy. I am happy to do this but I'm clearly still going to have the dark cloud of my now dissolved business hanging over me. I want to be free of anxiety & worry so I have decided to also deal with my business 'situation' at the same time, come what may!

Guidance required

I first need to rustle up the fees to cover my petition for Personal Bankruptcy.

However how do I, or what is the best way, for me to deal with the debt(s) owed to my now dissolved business?

Is there a way this can all be combined somehow, or do I have to try and deal with the Personal & Business debts separately, if so, how?

 

[Scalloway]

what is the best way, for me to deal with the debt(s) owed to my now dissolved business?

Ignore them. They died with the company.

 

[Dazzler66]

Ignore them. They died with the company.

I certainly would if I could, however, because I'm being chased to submit my Self Assesment it would effectively show I had zero income for that year

 

[StevensOnln1]

You don't owe any debts to a dissolved company as there is no longer any company for you to owe it to. If you really had no income then your self assessment would contain a bunch of zeros.

 

[Newchodge]

I certainly would if I could, however, because I'm being chased to submit my Self Assesment it would effectively show I had zero income for that year

How did you live? HMRC may view the idea that someone had zero income as surprising. If you had enough savings to live on, did you receive interest on those savings?

 

[Dazzler66]

How did you live? HMRC may view the idea that someone had zero income as surprising. If you had enough savings to live on, did you receive interest on those savings?

That's the crux of the matter, I lived on my Directors Loan Account......can you see the dilemma? So effectively I lived on money in the form of the DL, to a company that has since been struck off & dissolved.

 

[Newchodge]

That's the crux of the matter, I lived on my Directors Loan Account......can you see the dilemma? So effectively I lived on money in the form of the DL, to a company that has since been struck off & dissolved.

You received a loan which has, presumably, now been written off, so it will count as income in the year it was written off. Prior to that you received a Benefit in Kind - the value of which is, I believe, te interest that should have been paid if it were a commercial loan.

Have you spoken to @Lisa Thomas or any of the opther insolvency practitioners?

 

[Dazzler66]

You received a loan which has, presumably, now been written off, so it will count as income in the year it was written off. Prior to that you received a Benefit in Kind - the value of which is, I believe, te interest that should have been paid if it were a commercial loan.

Have you spoken to @Lisa Thomas or any of the opther insolvency practitioners?

Thanks Cyndy, no I haven't yet but I think I need to. I want to ensure I do the right thing here. @Lisa Thomas or @Chris Callaghan I would be really grateful for any thoughts on my dilemma which I've summarised above in this thread.

 

[Lisa Thomas]

The Company has been killed off via the dissolution so there is nothing you can do for it. It no longer exists and you have no capacity to do anything with it, in any event.

You just need to focus on your personal debts now, and it sounds like you have that in hand with the potential bankruptcy and advice from Stepchange.

Best of luck!

 

[ChrisCallaghan]

I agree with @Lisa Thomas . The company is gone, so there only issue from your company will be the personal tax implication of the directors loan account. Has this been declared on a self assessment tax return yet?

Assuming it has, then based on the brief summary you've described, bankruptcy does appear to be the most appropriate course of action, and keep taking guidance from Stepchange.

If you are presently struggling to find the funds to cover the cost of petitioning for your bankruptcy, you can pay in instalments when you have funds available. Once you've started your application, you can add funds when you have them available (almost like a savings account), and then complete your application when you meet the total.

 

[pentel]

I think that we are assuming the DL is overdrawn and that the OP owes the company, hence the need to deal with this on the self assessment. Some people will support their companies by throwing in funds for way longer than makes sense so that the company owes them! In this case there is nothing to put on the SA.

I may have missed where this was covered by the OP.

 

[Tables Force]

I may have missed where this was covered by the OP.

OP mentioned it in their previous thread.

www.ukbusinessforums.co.uk/threads/ltd-company-now-dissolved-struck-off-but-im-being-chased-for-my-personal-self-assessment.427695/

 

[AmazonGeek]

Agree with all above. The following is just my opinion having gone through this 20 years ago. This is not legal or commercial advice.

As far as I am concerned, one of the main functions of a limited company is to free up the stakeholders to take risks that they would not ordinarily take if they ran the could lose their house and assets - hence 'limited liability'. There are rules of course but if it all hits the fan you can walk away and the debts belong to the company, not to you. If the company fails and is liquidated, then they disappear with the company. You should not feel bad about this - it happens to hundreds of businesses every day and is just part of business.

Your personal debts are different but if you have no assets then I would absolutely declare yourself bankrupt. I wouldn't bother with an insolvency agreement or anything that requires you to pay an amount back each year. Go for bankruptcy and everything gets wiped clean and it only lasts 12 months these days. Your credit rating will tank and will need rebuilding but there are tools for this (Halifax will give you a bank account and Vanquis a credit card, although you should pay it off in full each month as the % is crazy high).

The main thing is that you will have peace of mind. And there isn't anywhere near the stigma attached any more. In fact if I was lending money I would rather give it to someone who has gone through all that than to someone who is completely green.

Well done for biting the bullet and facing up to it all, especially given what you have gone through.

 

[ChrisCallaghan]

I wouldn't bother with an insolvency agreement or anything that requires you to pay an amount back each year. Go for bankruptcy and everything gets wiped clean and it only lasts 12 months these days

Worth just mentioning that any trustee in bankruptcy will do an assessment of the bankrupts affordability. If they have any disposable income, they will be asked to make monthly payments for 3 years - this is called an Income Payments Arrangement. If they refuse, this can be forced upon the bankrupt, then becoming an Income Payment Order.

 

[Lisa Thomas]

You took the words out of my mouth, Chris!

 

[ChrisCallaghan]

You took the words out of my mouth, Chris!

People do seem to forget about/ignore IPAs/IPOs when they suggest bankruptcy!

 

[Lisa Thomas]

Common lack of understanding or experience/knowledge - especially when some people want an IVA instead and are surprised to find it's usually 5 years, potentially making it more onerous than Bankruptcy.

Note to Readers of this forum:

This is why people shouldn't rely on advice from the internet. Should always get advice from an expert and do full research to explore all options. Bankruptcy advice should only be given by someone who is FCA registered.

 

[AmazonGeek]

This is why people shouldn't rely on advice from the internet. Should always get advice from an expert and do full research to explore all options. Bankruptcy advice should only be given by someone who is FCA registered.

That was a very hard time for me and one that I don't look back on fondly. My comments had the best intentions and I did make it very clear that I was not an expert, was only speaking from personal experience 20 years ago and that it wasn't legal or commercial advice.

If this forum wants people to put their head on the block and part with personal experience, it should not then be chopped off

 

[ChrisCallaghan]

That was a very hard time for me and one that I don't look back on fondly. My comments had the best intentions and I did make it very clear that I was not an expert, was only speaking from personal experience 20 years ago and that it wasn't legal or commercial advice.

If this forum wants people to put their head on the block and part with personal experience, it should not then be chopped off

Hi @AmazonGeek , I don't believe my comments (or @Lisa Thomas 's) were intended to take away from your difficult experiences two decades ago - apologies on my part if my comments caused any offence.

However, I felt it was important to expand on your point - specifically pointing out that to imply declaring bankruptcy would mean someone could not 'bother with an insolvency agreement' could be misunderstood. Better for OP and anyone reading this thread later to have indication that they may have to make a monthly affordable contribution towards their bankruptcy estate.

Edit/addition:

For both OP and any other member who would like a better of understanding on this topic, the below page from StepChange provides a helpful summary:

Bankruptcy & Income Payment Agreements. StepChange

 

[Lisa Thomas]

That was a very hard time for me and one that I don't look back on fondly. My comments had the best intentions and I did make it very clear that I was not an expert, was only speaking from personal experience 20 years ago and that it wasn't legal or commercial advice.

If this forum wants people to put their head on the block and part with personal experience, it should not then be chopped off

Thanks AG.

No-one was chopping your head off for parting with personal experience.

It's fantastic that you are willing and able to share your own personal experience, however you told the OP that they should go bankrupt and it appears you are not qualified to do so, plus we have insufficient information from the OP to ensure that bankruptcy is the correct route in their circumstances.

You also suggested 'not to bother' with anything that requires regular repayments, which sounds like an IVA. For all we know, an IVA might have been a better option for OP.

My comment was to remind users of the internet not to reply on posts on internet forums as formal advice.