Spongebob plus personal bankruptcy

[finally_crashed]

As per title really. My business has failed due to mental health issues.

I owe a great deal to HMRC in CT from the last year. More in VAT. I haven’t filed the last 6 months of VAT accounts (ie. two returns).

Due to my mental health and lack of business (ie. earnings), I plan to apply
for personal bankruptcy.

I guess that my question is: do I follow the Spongebob plan or is it irrelevant if I go bankrupt personally?

If I apply for bankruptcy then my understanding is that the receiver will shut the business on my behalf and wipe off HMRC debts. Instead of me waiting for Companies House to strike my business off.

Is that correct?

I also have a business credit card for which I’ve signed a personal guarantee. Despite that, I assume that if I’m personally insolvent the guarantee will be written off?

Really shit times for me and my family. I don’t want to shirk responsibility. But it’s the only way that we can move forwards with a roof over our heads...

 

[finally_crashed]

FWIW - I’ve just received my welcome email - including a warning that my post may be deleted due to it being a new account.

The account is indeed new. But purely because my question is business-sensitive.I do have an actual long running (and paid) account on here.

Therefore I’d rather this post is not tied to my actual account on here, nor to my business

 

[Spongebob]

If you file for personal bankruptcy you really don’t need to do anything else with regard to the company. The Official Receiver will deal with everything.

All your personal debts will be included in your bankruptcy. This includes any liability under a personal guarantee.

Do you have equity in your home?

 

[RobinBHM]

If you dont do your annual return companys house will eventually strike off anyway.

Do you need to go personally bankrupt? -all the debts die with your company other than those which have a bridge to you via PG. Although those can be negotiated, so you have to repay the whole amount.

 

[finally_crashed]

If you file for personal bankruptcy you really don’t need to do anything else with regard to the company. The Official Receiver will deal with everything.

All your personal debts will be included in your bankruptcy. This includes any liability under a personal guarantee.

Do you have equity in your home?

Thanks ever so much guys.

To answer your questions:

I sold my share of the home to my (ex) wife a little over two years ago. I now rent. The buy-out was small and the money has gone.

The only assets I have are a laptop on HP through the business. And a mountain bike - also on HP but personally. The bike is the only escape I have to mitigate my mental health issues.

I need the laptop in order to freelance after bankruptcy. That’s crucial. It’s worth more than £500 which I believe is the limit for personal bankruptcy? Not to mention the fact that it’s on HP through the business.

The bike is also on HP. I have another if it comes to it.

I have a car on HP too. But lowest price on Parker’s is 1200 so I’m hoping that the receiver won’t bother getting rid. Worst case is that my parents buy it from the receiver.

So many factors. I had a complete breakdown three months ago and I need to sort this.

Thank you all so much for any advice.

 

[Mr D]

The HP stuff needs dealing with. It's not owned by you.

 

[finally_crashed]

Thanks Sherlock. Very constructive.

In order to pay as much as possible to the receivers (because I have a conscience)...

Your post is not helpful in any sense of the word.

 

[mattk]

I'm still a bit confused why you are considering personal bankruptcy as your personal liabilities sound small. Doing freelance work is a good step, are your HP payments affordable if you can get some work? You risk losing your car and bike, as well as creating potential issues with applying for banking services going forwards. Or am I missing something?

 

[RobinBHM]

I'm still a bit confused why you are considering personal bankruptcy as your personal liabilities sound small. Doing freelance work is a good step, are your HP payments affordable if you can get some work? You risk losing your car and bike, as well as creating potential issues with applying for banking services going forwards. Or am I missing something?

Yes, I didnt understand the personal bankruptcy part.
Maybe personal debts.

 

[Chris Ashdown]

Sorry to hear of your situation, it sound like you have been through a lot over the last couple of years

Even when things look black there is always a way forward

Citizens advice I would guess you have been in touch with but if that's not the case then normally a good place to start with

A computer is a tool of your trade, but the HP company may or may not bother with recovering it

Maybe a change of occupation would give you a less stressful job for a year or more and get you back on your feet, maybe a visit to some employment agency's to see whats around

I lost my business a couple of years ago and the lack of pressure did wonders after a couple of days absorbing what had happened, Bankruptcy may well do the same for you and life starts again
Good Luck

 

[Mr D]

Thanks Sherlock. Very constructive.

In order to pay as much as possible to the receivers (because I have a conscience)...

Your post is not helpful in any sense of the word.

Then you may lose the HP items in order to pay as much as possible to the receivers. There, feel better now?

Or you could deal with the HP companies. Perhaps even pay them off.

 

[finally_crashed]

Thank you everyone.

There’s a bit more to the personal bankruptcy than is apparent - as an example, a company credit card which has been personally guaranteed by me.

The stress over the last 6-12 months has just been unbearable, text after email after letter. I’ve been swimming upriver and losing the battle against the current. Please accept my apologies for my outburst above, I’ve been at the end of my tether for some time now.

@Chris Ashdown, you hit the nail on the head. I need to reset and am considering exactly what you propose. Take a 9-5 in a separate industry, maybe even part time. Appreciate that work stays at work once I’m clocked off. Rediscover my interests and learn from my mistakes..

@Mr D Apologies directly to you. All I can do regarding HP is to wait and see what they say. Ultimately, they’re only possessions after all.

 

[Mr D]

Besides bankruptcy there may be other options.

Try Stepchange - a charity dealing with debt. They offer phone advice and can manage a debt management plan for free.

Sometimes bankruptcy is the best option, clear everything. Not always an ideal option though.

 

[Lisa Thomas]

How much are your total personal debts?

 

[Lisa Thomas]

Take advice on Bankruptcy to ensure it's the right option for you:

Stepchange contact details are here:

https://www.stepchange.org/contact-us.aspx

 

[Alan R Price]

My two penn'orth:

1. Write out a list of all your personal debts, including anything like personal guarantees for company debts.
   
2. Include an overdrawn director's loan account if you have one.
3. If the hire purchase agreements are in the company's name, leave them off the list.
4. Assuming your name was taken off the property when you sold your interest to your ex-wife, if your personal debts are less than £20,000, your assets less than £1,000 and you have minimal surplus income, you can apply for a debt relief order ("bankruptcy lite"), which will cost you £90.
5. You will be disqualified from acting as a director while the DRO is in force, so you would resign as a director beforehand and your responsibilities and powers in relation to the company will cease. The company will then in all likelihood be struck off and cease to exist, or be placed into compulsory liquidation, when the official receiver will be appointed liquidator.
6. Once you have resigned as a director, you will have no duty or power to manage the company or its affairs, although if it goes into compulsory liquidation, you will be obliged to cooperate with the official receiver and deliver up the company's records, be interviewed by him and provide information about the company's history and current position.
7. As regards the items on HP, if the payments are not kept up, the finance company will probably be able to repossess the goods. It might be possible to have the agreements transferred into third party names or to get a third party to keep up the payments so you don't lose use of the goods.
   
8. If an HP agreement is in the company's name, it falls outside the scope of the DRO, as does the asset it covers. If the agreement is in your name, you do not own the goods until they are paid for in full, so they do not fall into the DRO "pool" when calculating the value of your assets (which must not exceed £1,000) although the debt does.

I hope this is helpful.