I am starting a new small business and an IVA

[simplesimon]

I am starting a new small business and will be a director.I am also entering an IVA. Just wondering how is the pence per £ is calculated.
I don't know what my wage will be because it really depend on how the company performs.
I would normally take a small wage which would be topped up with a dividend later in the year.
Any help welcome.
Si

[MelanieGiles]

Hi simon and welcome to the forum

The pence in the £ is worked out by dividing the amount that you can repay creditors by the amount you actually owe. So if you have £10,000 available and you owe £40,000 you can pay 25% of the debt and this is therefore referred to as 25p in the £.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[simplesimon]

Thanks for the quick response, (you work to late)

What I can't understand is how to arrive at the amount that I can repay. I don't really know what I will be able to afford because of a new business,
I have around £57K debt cards/loans, house value around £215K outstanding £176K (Jointly owed with my wife)
I got into trouble before taking too much out of my previous business to pay personnel debts, thus not leaving enough for tax at the end of the year.(that business went into liquidation)

This time I am looking at paying my self on a paye basis and paying tax as I go. Hense taking a small wage £6-8K made up with dividends when and if the company does well.
What would my affordability be in this case and will I need to show end of year accounts ?

Many thanx
Si

[MelanieGiles]

Simon

Given the equity in your property, I would seriously consider re-mortgaging to pull out your share and then use the money to make a full and final settlement with creditors.

A 95% loan to value mortgage will raise approximately £202k after costs, thus releasing £26k, which would enable a decent offer to be made to creditors. The additional borrowings would cost approximately £140 per month on an interest only basis, which I imaging is far less that you are paying in monthly repayments.

The think to be careful of here, is that your income will fluctuate with the start up of your new business. If you are tempted to take out further secured borrowings, then you must be convinced that these can be repaid, as your home is at risk if you default. You will also need to get your wife to agree to this as she is a joint owner.

I do a lot of these types of voluntary arrangements in my practice, as creditors like them because they get paid earlier and it is a good way for you to put your debts behind you and move forward.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk