i am not yet insolvent but writing is on the wall

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rupert.hu
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by rupert.hu » Fri Jan 15, 2010 9:38 am
i am not yet insolvent but the writing is on the wall. my problem is that i have been renovating a property which has gone over budget, i need to finish the build to sell it and have room on my c/c to do this. if i have a mad splurge on the cards and then hold my hands up and go for an iva, am i likely to get a load of flack from the c/c co'? ie spending all the money when i know i cant repay it. sale of the property if and when i can sell it will cover the debt's. i had planned to take out a bigger mortgage but this is now not possible due to self employment earnings going through the floor. any advise gratefully recieved.

 

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Michael Peoples
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by Michael Peoples » Fri Jan 15, 2010 9:55 am
Hi Rupert and welcome to the Forum.
If you are sure that you could sell the property and repay the debts further borrowing would not be a problem. However, if there is going to be a shortfall and in today's market a sale is not guaranteed, it may be better to call a halt and look to sell the property as it stands and offer the proceeds to your creditors.

The fact that you still have borrowing capacity does not mean that you are not insolvent and you should certainly seek some advice from an IP firm to discuss your options. Being self employed has it's own issues when it comes to insolvency so ensure you speak to someone experienced in dealing with trading IVAs.

 

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MelanieGiles
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by MelanieGiles » Fri Jan 15, 2010 8:38 pm
I would be very nervous about advising you to do this Rupert, as even if the property could sell for a sufficient price to cover your debts, it may take some time to do in which case creditors may get very impatient, and you could be heavily criticised by a subsequent Trustee in bankruptcy if you used borrowed money to fund this at a time when you knew that you could not repay that money under usual contractual terms.

Why not try and find a buyer for the property in its current state? Many property developers will buy partially completed properties and then finish them off for sale - you might even be able to interest someone in entering into a joint venture with you if you look around.

 

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rupert.hu
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by rupert.hu » Sat Jan 16, 2010 4:48 pm
thanks for the advice. i am going to have to bite the bullet! i will get in touch with an advisor. thanks again
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