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HMRC | Homeowners | Bankruptcy Avoidance

Homeowners Bankruptcy Avoidance

Avoiding bankruptcy when you have assets such as a home with equity or other assets that you don’t want to lose is essential.

Generally its HMRC or council tax that makes most individuals bankrupt in the UK.

We often find that people just simply don’t understand the implications of being made bankrupt.

If you are reading this and have received a statutory demand and have tried to get help but for whatever reason find that the outfit that you have been to just isn’t really speaking your language then its imperative that you don’t stop and give up looking for help. Its critical that you get it.

When you are made bankrupt and you are a homeowner or even receive an inheritance. Then you will be fooled to think that for example a £3000.00 debt will only be a £3000.00 debt after you have been made bankrupt it wont!

Look at this: 

Mr F is made bankrupt in march 2015. He is a homeowner with sufficient equity to clear all his debts.

He was made bankrupt by HMRC for £10,841.39

in 22 months the costs relating to the trustees fees are broken down as follows:

Statutory interest:-                                   £ 1639.00

Trustees costs:-                                         £19,128.30

Estimated Additional costs:-                  £ 5000.00 

Trustees Disbursements:-                       £   886.99

Estimated additional disbursements:-£    250.00

Legal Fees:-                                                £ 4781.85

Estimated additional legal fees             £ 1000.00

Agents fees:-                                              £  722.00

VAT                                                             £ 6353.87

Insolvency Service:-                               £ 1224.84

Petitioning Creditor costs:-                   £ 2297.00

Secretary of State Fees:-                        £11,957.53

Total amount required to pay off all bankruptcy debts and achieve annulment £66,083.55      

 

So now you can see how a debt for £10,841.39 can escalate in 22 months to £66,083.55  

If you are that homeowner facing bankruptcy but hesitating in drawing the money out of a property to pay the debt then now you can see why its worth doing whatever it takes to get a debt paid when you are a potential bankrupt homeowner seeking assistance.

 

Director Protection When A Company is Facing Liquidation or Insolvency Proceedings

Director Protection When A Company is Facing Liquidation or Insolvency Proceedings: T: 01425 600129 (local rate)

“That will never happen to me. My business and my team are far to strong and organised for that to ever happen“.

Theres no company director out there who is exempt from a business failure. People built their businesses with the best intentions in mind at the time and more often than not will have signed personal guarantees with banks, taken advice from accountants that they thought they could trust and believed that these specialist would prove invaluable in saving money, retaining incomes and no matter what happened in the future would be able to steer the business through anything it was to ever encounter. During down times may have accrued an overdrawn directors loan. There’s also a very good chance that a business partner who you thought would be a perfect fit turns out to be the total opposite of what you had hoped for.

The facts are that 80% of new businesses fail in the first 2 years. Entrepreneurs that start up businesses and companies do so on the basis that they believe that they can make a success of a product or service they believe in and have decided to ‘set up shop’.

If you are a director who is heading for the rocks or who has hit the rocks and all kinds of new administration and litigation processes are visiting you? Then you really need to take action. This is what we say a majority of the time. See if you recognise any familiarities with yourself.

We are in late March 2017.  Things have changed.

Not so long ago you had a fully equipped team and could reach out and get what you need at any given moment.

Not so long ago you lead your business from the front. But since certain staff and team members proved themselves you have taken a bit of a step back and let the manger/s lead. You may have given or offered your book keeper or accountant a share in the business.  Theres been a sudden change in your personal life and you have spoken about it in confidence to certain members of your most trusted circles. But now are aware that perhaps you should have kept your personal business to yourself because in speaking about it has made that sore subject matter a talking point which makes you feel as though the attention has moved onto your problems instead of knuckling down on a professional basis and keeping the business and the team strong. Forcing the team to provide solutions to problems instead of coming to you with the problems.

Remember that people are selfish. You may have thought naively that your team were 100% committed to you. But the only reason they are committed to you is because you are paying them to be. Would they walk with you if you couldn’t pay them? Definitely not is the answer. So if you are under any illusions of anything different then you must without hesitation remove the rose tinted spectacles that you are viewing the world with!

Observationally the important times for making the right decisions in is between your 40’s and 50’s generally. The reason is that theres a very good chance that you have significant years of business experience behind you and have now been able to prove that concepts work or don’t work. The years of experience are important because you can apply your wisdom to present and future situations.

Providing you are blessed with good physical and mental health during your 20’s and 30’s then theres time for rebuilding and moving on from a situation that went or goes wrong. (Providing you have the right attitude of course)

40’s and 50’s are a different matter. The pressure is on to get it right! Theres not many chances left and if you are in this position and have every intention of continuing the future years as an entrepreneur then you’ve got to get it right.

So making the right choices and creating the right moves is pretty important. Theres no time to hide behind people that you have engaged and paid for who have already proved themselves to be the problem.

This is the hard bit.

Your instincts are there for a reason. If you feel that they are and have been the problem or contributed in any way to the decision making process that has placed you in your current position. But you feel that they owe you. Or you feel if only that they could just finish this that and the other. Then take control yourself and do whats needed to navigate your way out of this predicament.

We know why some accountants do this. we see it time and time again.

Your company and business if it has any life in it at all and is a worthwhile concept that needs reform then administration is a good way of handing the wheel over to generally an Insolvency Practitioner. (make sure you find a dynamic one, and one who can share your vision and who can demonstrate what the strategy is going to be). An administration is a great way of recovering the companies position.

The alternatives are:

CVA-Company Voluntary Arrangement-Providing 75% of the total amount of debt owed can agree to the proposal then this can be liberating for the company or business.

Company Liquidation- When the business is over and theres no recovery position then a Directors liquidation should be more advantageous. The reason is that you will go through the process of shutting the company down properly. All difficult areas will be covered. This is where Director Protection is critical and will make the absolute difference between a good result with no or marginal complications or you have chosen the wrong liquidator and your world and life as you know it is going to significantly change.

Don’t be afraid of alienating people if its those very people that have contributed to the current position.  I would say that it is critical to make your own decisions. You are the one thats responsible for your company director obligations despite how much you had thought that it was sorted and under control via a 3rd party. Its you!!!

 

Here’s the important bit:

If your company is facing liquidation and you believe that you have left yourself open and exposed and may need director protection. Then delaying isn’t going to help.

The process with both involuntary and voluntary company liquidation is that reports need to be prepared and submitted to the Secretary of State.

If you lined up 10 Insolvency Practitioners and gave them the same liquidation to manage you would find that they would all have a varying way of dealing with it. Often is the case that they are afraid to speak openly.

They could help and assist you by explaining to you varying options that will help you personally but are unlikely to suggest things that will really help you because they are looking at what is in it for them most of the time.

If you are feeling browbeaten by the process then its critical that you pick yourself up, brush yourself down, figure out a plan and go through the problem areas and speak to someone that can afford the time to give you to ensure you understand everything and the implications of certain actions.

In a nutshell you need a pro active accountancy firm or Insolvency Practitioners. A face to face meeting, a contact telephone number where you can speak to them when you need to.

23rd March 2017

 

 

 

 

 

 

When is my name removed from the Insolvency Register?

Your bankruptcy is completely removed from the Insolvency Register 15 months after you entered into bankruptcy or 3 months after discharge. The Insolvency Register (Google it) is a public record of all those persons currently involved in Debt Relief Orders, Individual Voluntary Arrangements and Bankruptcies i.e. court sanctioned arrangements.

You are automatically discharged after 12 months and in some cases people are even discharged before the end of the 12 month period.

These include persons whose circumstances are unlikely to change viz. pensioners, people on DLA, etc. It is important that you obtain a certificate of discharge when you have completed the 12 month period and submit copies to the three main credit reference agencies, as there can be delays before information is updated. There is a charge for the discharge certificate, but it’s worth paying.

Bankruptcy UK specialises in taking people through the bankruptcy process in a straightforward manner. We will guide you through the process then submit the bankruptcy application online. Court appearances are no longer required for bankruptcy. Call us for a chat about your circumstances on 01425 600129.

Will I still have to pay Council Tax arrears if Bankrupt?

Council Tax may generally be included in a bankruptcy, but there might be complications if a Liability Order has already been issued and an arrangement with Bailiffs has been made e.g. £150 x 6 payments. Under these circumstances, you might be obliged to complete the arrangement despite having gone bankrupt and the Official Receiver might not intervene.

It is therefore very important that you make an arrangement with your Council before they issue a Liability Order. A Liability Order is the seventh and final stage a Council will take to recover outstanding council tax. You would have had plenty of notice that trouble is coming and it can be avoided by simply offering a low, affordable amount.

Bankruptcy UK specialises in taking people through the bankruptcy process in a straightforward manner. We will assess your circumstances then submit the bankruptcy application online. Court appearances are no longer required for bankruptcy. Call us for a chat about your circumstances on 01425 600129.

How do I apply for bankruptcy? I have around £25k debt and mortgage arrears

The former Debtors Petition and Statement of Affairs have since been replaced by an 8-part online form which you can access by entering ‘Apply for Bankruptcy’ into Google and following the prompts on the Insolvency Service’s website. You will initially be asked to provide some basic information, at which point a 12-digit security code will be emailed to you. Once you have this, you may proceed.

Care needs to be taken when completing the income and expenditure section as, if it is found that there is surplus income, you could be placed in an Income Payments Agreement (IPA) for 36 months. We were very surprised to find the Insolvency Service generously inviting us to claim costs for things like hairdressing, social clubs, alcohol, tobacco, entertainment, newspapers, magazines and gifts – but guess what? These things are not allowed!

We counted around 18 separate items that would definitely not be allowed and if you happened to include any of these in your income and expenditure, you would have unwittingly painted yourself into a corner. If you consider that an IPA of £250pm will cost £9000 over three years, we recommend you speak to our advisors. We are very aware of the importance of the income and expenditure and know exactly what may be claimed and for what amount.

Please note that entering into bankruptcy will not directly affect your property (you mentioned arrears) but if you intend giving up the property, any shortfall will also be included in the bankruptcy. We have found cases where people are in hopeless negative equity and really struggling with high monthly payments on mortgages / secured loans – in these cases, it might be best to surrender the property and go into rented.

Bankruptcy UK specialises in taking people through the bankruptcy process in a straightforward manner. We will assess your circumstances then submit the bankruptcy application online. Court appearances are no longer required for bankruptcy. Call us for an informal chat on 01425 600129.

If I am an accountant how will bankruptcy affect me?

I am an accountant thinking of going bankrupt – how will it affect me? I have personal guarantees that I cannot meet. I am a partner of a licensed practice and looking for help with this debt. What should I do?

If you have unmanageable debt and need a fresh start, bankruptcy could be the answer. You didn’t mention whether you are a Director of the company; if you are, you will need to step down from that role, but can reapply  after 12 months. Likewise, there may be restrictions on practicing as a Chartered Accountant during the same period, though lesser roles might not be a problem.

We would also need to establish what assets you have and whether these might be under threat. For example, if you owned a property with negligible equity it wouldn’t be under any immediate threat. You could argue, however, that even if there was, say, £30,000 equity and the personal guarantees totalled £150,000, it might still be in your best interests to proceed. Until we have a complete picture we can’t say for certain and we therefore ask you to call in when you have time.

Bankruptcy UK specialises in taking people through the bankruptcy process in a straightforward manner. We will assess your circumstances then submit the bankruptcy application online. Court appearances are no longer required for bankruptcy. Call us for an informal chat on 01425 600129.

 

Is bankruptcy really the only way out?

My husband has divorced me from his finances. I have been dependant on him for the last 3 years as I am a live at home mother. When I met him I had a £50,000 liability to Northern Rock for a 120% mortgaged property that was repossessed and I have been repaying the shortfall for the past 4 years.  I have two other debts which are credit cards totalling £7,000.00. I am just wondering if there is any other option.

bankruptcy-solicitor

We could try a full and final settlement with Northern Rock and then obtain a payment holiday with the possibility of freezing the interest payments and reducing the payment down to £1.00 per month for a period of 6 months. This would give you the opportunity to get yourself repositioned and placed where you have an income and can manage your debts independently without 3rd party assistance. In many instances we are able to negotiate positive solutions with lenders that people generally are not aware of.

However, this will require you coming up with some money and if this is not possible bankruptcy is without doubt the best solution, as the amounts involved are sizeable. A plus point is that you will not have to attend court as everything is processed online and over the phone.

Bankruptcy UK specialises in taking people through the bankruptcy process in a straightforward manner. We will assess your circumstances then submit the bankruptcy application online. Court appearances are no longer required for bankruptcy. Call us for an informal chat on 01425 600129.

Will I have a monthly payment once bankrupt?

This will depend on your current income and expenditure, and whether you have any surplus income after all your expenses. This is arguably the most important element of the service we offer, as it is important that you claim the maximum allowable limit for all expenses.

We know the limits and have an outstanding track record in helping people avoid having to pay anything after bankruptcy, known as an Income Payments Arrangement or IPA. If you are placed in an IPA it will be for 36 months and this can amount to a lot of money over the period.

The Insolvency Service has made things tough for those attempting their own bankruptcy, as all manner of non-allowable expenses have been included on the online application. For example, we were astonished to see things like tobacco, alcohol, entertainment and club subscriptions included in the form, as we know these are not allowed.

In fact, we counted around 15 of these non-allowable expenses and if you had included any of them in reducing your surplus income to zero, you would find yourself involved in an IPA. We have a few tricks of our own for avoiding excessive IPAs so call us if you need help.

Bankruptcy UK specialises in taking people through the bankruptcy process in a straightforward manner. We will assess your circumstances then submit the bankruptcy application online. Court appearances are no longer required for bankruptcy. Call us for an informal chat on 01425 600129.

Will the Official Receiver tell my job I’m bankrupt?

Not directly, but if you went bankrupt earlier in the year (February / March) your company would almost certainly not be aware of it. The reason for this is that your tax code would not change to NT as is usually the case in bankruptcy, as there would be no time to set up the processes.

If you went bankrupt after April 6th, the Insolvency Service would advise HMRC to instruct the company you work for to change your tax code to ‘NT’ or no tax (without providing a reason as to why). The tax you would have paid is redirected to a different source and used to offset administration costs and to distribute among the creditors. This arrangement ceases at the end of the tax year and your tax code reverts to whatever it was.

Bankruptcy UK specialises in taking people through the bankruptcy process in a straightforward manner. We will assess your circumstances then submit the bankruptcy application online. Court appearances are no longer required for bankruptcy. Call us for an informal chat on 01425 600129.

Do I keep my household goods in bankruptcy?

I’ve received conflicting information about two things recently: cars and household goods in bankruptcy. Is there any official directive about whether the value of cars that may be kept and whether household goods are safe in bankruptcy?

Yes there is, but few people know about them. At the risk of sounding bookish, paragraph 30.145 on the Insolvency Service’s Technical Manual (you can find this online) clearly states that the prescribed limit for cars is £1000, provided they are needed for work or for care work. However, this figure is not set in stone and this number is often stretched according to circumstances. For example, a Senior Manager or company rep might need a slightly better car in terms of company policy and the Insolvency Service can’t make any decision that might result in the loss of a job.

Regarding household goods, these are safe in bankruptcy. paragraph 31.10.11 on the Insolvency Service’s Technical Manual says, and we quote: Such clothing, bedding, furniture or household equipment and provisions as are necessary for satisfying the basic domestic needs of the bankrupt and his/her family do not form part of the bankrupt’s estate. Amazingly, we’ve heard about Debt Advisers saying that household goods are attached in bankruptcy, but nobody comes to the house at any point in bankruptcy.

Bankruptcy UK specialises in taking people through the bankruptcy process in a straightforward manner. We will assess your circumstances then submit the bankruptcy application online. Court appearances are no longer required for bankruptcy. Call us for an informal chat on 01425 600129.

 

 

Bankruptcy UK

Bankruptcy UK