First posting - first of many questions

[Stupid]

Hello

I have been lurking in the background for a couple of days and finally plucked up courage to register and post. You guys have already been a great help in making me feel not quite so alone, but I am still really scared.

I have a question that I don't seem to be able to find an answer to in the forums.

If I understand this process correctly, you can either try to get and agreement in place which forms 60 months payments or go for a one off full and final settlement. What I don't understand is how can anyone considering an IVA do the latter? This would need a significant amount money, and if you had money, why would you need and IVA? I am considering an IVA and my husband and I have a house valued at about £260K with a mortgage of about £120, so quite a lot of equity. But surely our bank won't lend us more money than the 4 x salary, especially with my terrible credit rating,or if I am planning on going down the IVA route. Is there some wonderful secret that I don't know about?

Just for completeness of information, our current mortage would be also be one of my largest IVA creditors through business loans. However our mortgage is in perfect order, without a single missed payment in six years.

[MelanieGiles]

Hi Stupid (feels bad saying that!) and welcome to the forum

You could do a full and final settlement by selling an asset or introducing funds given to you by a third party for such purpose.

Your mortgage would not be included in the IVA as it is secured against your property, but business loans will if they are in your names rather than a limited company. What is the value of your unsecured debts, and how much disposable income do you have available each month before creditor repayments?

[Stupid]

Hi Melanie

We could only do this by remortgaging, no other options are available for raising a lump sum.

Basically we are joint directors on our company, although my husband doesn't work for the company and has an separate wage from his employer.

I work only for the company but I think we will have to cease trading very shortly. The company is limited, but understand we will still be personally liable for the business debts to the VAT and PAYE. Also possibly to the bank (although thats not confirmed. These three total approx £100K.

I have two credit cards in my personal name that I used for the business totalling £30K,
a PG in place for the business landlord with approx 18 months to run with a liability of £24K if he won't waive the lease or find another tenant,

The only thing that is truely my personal dept is a loan with HSBC for £14K.

Apart from the mortage my husband has no debts whatsoever. He has a couple of cards but they are paid off in full every month.

There will be some more business debts but we are protected from them by the limited company status, although I would dearly love to pay them too, to clear my conscience.

I have a small side company. If I can't keep the limited company going then this should give me an income of about £600 per month after tax. My husband has said he will pay all our bills from his salary so we could use about £500 of this toward debt, and keep our mortgage on track. His salary covers all out outgoings with about £300 into savings for things like car repairs, insurances and other larger annual bills.

What do you think?

[MelanieGiles]

Hi Stupid

Firstly you will not be held personally liable for the VAT and PAYE debt so long as this is in the limited company's name. If you have given the bank and landlord personal guarantees, you will of course be liable under those to the extent of the debt due to the bank.

Could you list out all of your personal and business debts so that I can advise further, but would say at this stage a payment of £500 per month looks hopeful if you are determined an IVA is the most appropriate solution for you.

What do you intend to do with the limited company? Is it going to be liquidated and does it have any assets?

[Stupid]

Such a quick response Melanie, thank you so much.

I have been told by our business advisor that because we haven't paid PAYE or VAT for over nine months, we have traded insolvently knowing we wouldn't be able to pay, and so they could insist that we do outside the protection of limited company. Are you saying thats not the case?

The company owes about £10K to various suppliers, all of which are more or less within payment terms and no one is chasing me there. I have managed to keep these bills more or less up to date.

So in total its

VAT and PAYE (if liable) £30K
HSBC Business Overdraft £35K
HSBC Business Loan £35K

Capital One Card £14K
Egg Card £14K

HSBC Personal Loan £14K

PG on rent £24K

Total £166K if liable for PAYE and VAT

[MelanieGiles]

Hi Stupid

Trading whilst insolvent is an offence under liquidation proceedings, but it does need to be proven and on the figures you have presented I do not believe that HMRC would pursue such action. Whilst your advisor may be technically accurate, these types of claim are rarely brought and are notoriously expensive to fund.

With payments of only £500 per month, coupled with a final year equity release, and IVA would appear to be a workable solution for you.

[Stupid]

Forgot to say.......

The company would have to be wound up I think. It has assets but would have very little sale value, and it would be very difficult to find a buyer anyway. Also a lot of the assets are in the fixtures and fittings which are only a couple of years old.

[Stupid]

Thank you Melanie for your input. Its much appreciated.

I wonder though how you manage to keep so many threads going at the same time without loosing track!

[MelanieGiles]

Lots of practice!!

If you could sell the remaining assets of the company, it would be well worth thinking of putting it into compulsory liquidation which will cost approximately £2,000. This crystallises the position and helps with the agreement of personal liabilities such as the guarantees.