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| T O P I C R E V I E W |
| itshouldhavebeenme |
Posted - 02 September 2008 : 12:31:16
Hi Guys,
I am new to this forum but feel that I would like to share my experiences as I am sure there must be others in a similar position contemplating their options also at the moment as we head for difficult times.
Our situation is that myself and wife have been married for 19 years have 2 dependants and own a small limited company which we have built up over the past 2 years, because of the nature of the busines, our pay very much depends on our performance. We employ 2 people and we all have a very good working relationship, due to our honest and transparent approach with our staff.
Just recently the business has taken a downturn in trade due to the Credit Crunch which has put pressure on our ability and justification to continue to draw the same levels of income from the business, its a bit of a catch 22 situation, we need to pay our personal bills to survive whilst at the same time do what we can in order to keep the business going.
We have made a decison now that we must do everything we can in order to keep the business going as we have put so much in to it, we have been involved in the same industry together for the past 15 years so its all we know, we also have a sense of responsibility and pride at stake, as our employees left sound and secure jobs to join our venture, to which we are grateful for.
Because we have a significant amount of personal debts, namely personal loans and credit cards and coupled with the fact that we have little or no equity our house, this probably makes us insolvent now as house prices have dropped, so the the most obvious choice would be BR, which would mean we would have to transfer the ownership of the business to someone else to manage and run.
The final straw came this month when Northern Rock increased our interest only mortgage payment from £1434 per month [as we were on a fixed deal] to £2182 and this coupled with the reduced income from the downturn in our business means that we have to take some serious course of action quickly.
We have been with Northern Rock for years and they were happy to just keep renewing our fixed deal every 2 years, as mentioned, we are on an interest only mortgage and I think if we are honest, this has given us a false sense of security living in a house that we really could not afford, it was ok when times were good, but never thought things would come to this ever.
My wife is very tearful at the moment, I think she knows what the right decision is, but is very apprehensive about seeing it through due to the humiliation factor, e.g. what will our friends, relatives and neighbours would say.
Personally, I am past this point now as I see it as a relief from keeping things together for many years, whilst having to put on a brave face, its just been hand to mouth now for so long, we might have been earning good money, but because our outgoings have been so severe, there has been little or no money left in our bank account after all the DD have gone out.
I think the upsetting thing is that we are decent responsible people who have always paid our bills on time every month, we have never even been late with a credit card payment and to think we are even considering BR doesn’t seem right, are we missing something or jumping ahead to soon? or is it that we just have the intelligence to recognise that we are heading for a problem earlier than perhaps most people would do?
We have just put our house on the market [yesterday] so lets see what happens, I am not hopeful that we can draw even enough to even pay off the mortgage let alone the secured loan we have also.
One of the most important things in all this is to have the full support from my wife and family before we do anything, I want her to be aware of all the consequences whatever the course of action we take and her to feel completely comfortable with whatever we decide to do.
If we do offload the house and rent somewhere, this could relieve us of our main problem and we can start rebuilding our lives again, alternativly, we could hand the keys back to NR, but im sure this will effect us drastically, as on a forced sale they will probably only draw 90% of the debt owed, if they are lucky, which still means that they will come after us for the shortfall, so is it worth it?
Thanks for reading, I would appreciate any comments anyone can offer and will update this post next week...
M |
| 5 L A T E S T R E P L I E S (Newest First) |
| JulianDonnelly |
Posted - 03 September 2008 : 13:58:11
Hi M,
To answer your question, and shortfall in the sale of the property would become a new unsecured debt to yourself and can be included in an IVA or BR.
The issue you have is that you actually have a few options. Without going into huge detail regarding your situation, it would be very difficult to advise the right course of action. Did you speak to one of my colleagues on the helpline for some free advice?
Julian Donnelly
Spokesperson for www.Bankruptcyhelp.org.uk
Don't forget the helpline on 0800 078 9367 |
| itshouldhavebeenme |
Posted - 03 September 2008 : 13:52:33
Thanks Guys for your kind words of encouragement, its good to know thats its not just us in this position!
I think that the main thing is accepting that there is a problem and then planning around what the best solution is, IVA or bankrupcy and then planning your life around it.
Thank you harbourmaster, that is a very kind offer, I am sure my wife would appreciate a chat at some point, although I do think she has started to accept that we need to do something now hopefully.
The IVA route may possibly be the best route for us as potentially its the least disruptive for our business, as far as our debts go we owe NR £337K and have a further secured loan of £40K, if we can sell our house for £340K [which is hopefully realistic, bearing in mind it was probably worth £400k only a year ago!] we could at least settle NR.
If this were to happen and we did settle NR, what would happen to the remaining secured £40K loan, am I right in thinking that this would then become an unsecured loan? If this were the case, then can this debt [which is effectivly a shortfall or neg equity] be added to an IVA with all our other personal loan debts and CC debts, which would probably add up to c£80K?
I realise that an IVA would stay with us for 5 years, which is longer than BR, but the plan would be if we could rent somewhere [albeit not as extravagent as what we have been used to] in that time and have a manageable IVA payment, this would put less burden on the business to pay ourselves what we requre in order to survive if we stay as we are, which is clearly not going to happen.
So, I know its a lot of ifs buts and maybes, but just wondered how this would be viewed by creditors and wheter this would be a reasonable viable way of looking at it?
Any comments would be greatly appreciated.... Thanks.
M
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| JulianDonnelly |
Posted - 02 September 2008 : 14:14:49
As you see, you are not alone :)
Julian Donnelly
Spokesperson for www.Bankruptcyhelp.org.uk
Don't forget the helpline on 0800 078 9367 |
| harbourmaster |
Posted - 02 September 2008 : 13:51:41
Hi there M
That could be our story too. We had spent 7 years building up a business with a monthly salary run of up to £50,000. Like you when things were good we spent up to our then current income. Things happened aboout 3 years ago and we started to reduce the business, we closed down all the high street offices and eventually transferred the business to a friend and client on 1st June this year. This kept the 3 remaining staff who had been loyal to us in good jobs. When things started to slow down we both put more of our own money and equity from some of the properties into the business with the expectation that it would be ok in the future. It wasn't!!
Our Northern Rock mortgage came to the end of a 2 year fix and they are not interested in offering a better deal (only to new customers, it may be relevant to explain that we are mortgage brokers so do know the current state of play with NR)We put our own house on the market in Feb this year for £470K which, if sold would have sorted out a good deal of our debts. We then reduced it to £410K but still not had any interest. Our one hope is that as thier is an audit trail the OR will be able to see that we were trying. My wife has been through exactly what yours is going through and it took her about 10 days to accept it. We found it a great help to talk to our close friends. Do not worry about your staff just think about your family. Even up to last week I was still worried about other people, even th etennant sin some of our other houses, but... when you have been through what we have and are doing now I think its about time to look after number 1 and try and get your own life sorted out. I have found this site to be a great help. I spent 40 mins on the phone with one of the experts yesterday and would encourage you to do th esame. They really do know what they aretalking aboout. If your wife needs to talk to someone who is about 2 weeks ahead of her in th eprocess let me know and I am sure mine will talk things through with her. As Jo says, keep smiling. |
| JulianDonnelly |
Posted - 02 September 2008 : 12:45:40
Hi M and welcome to the forum.
Regrettably, yours is a story I'm hearing all too frequently at the moment. You are not alone!
Yours is quite a complicated case (with the business etc) and needs to be handled properly. I would suggest speaking to one of my colleagues on the helpline who would be happy to give you some free advice and point you in the right direction.
Hope this helps and good luck!
Julian Donnelly
Spokesperson for www.Bankruptcyhelp.org.uk
Don't forget the helpline on 0800 078 9367 |
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