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I have been asked for help with a situation some friends are in. As they have no internet access I thought I'd post here to see what people think would be the best way forward.

 

Cutting a long story short, three years ago when self employed they ran up a debt with the IR for +/- £13,000, now with interest and charges it stands at nearly £16,000. An arrangment was made then to pay it back in installments and this lasted a short while before payments stopped being made. Inevitably the IR have decided it is time now to follow up on this debt.

 

They wrote asking for payment and he made the mistake imo of writing back suggesting a payment of £20 a month and settlement of the debt once he had picked the right 6 numbers on Saturday. Their response was, not surprisingly, refusal to accept the offer, the threat of court action to seek insolvancy and a reminder that they will no longer accept anything but full repayment. He has three weeks to respond.

 

They have a mortgage and enough equity in the house to clear the debt but the mortgage company have refused any further advances due to his poor payment history and bad credit rating. Approaches to other loan companies have also been refused. They do not know anyone personally with access to this kind of amount who could help them.

 

My initial thoughts were that they should draw up a strict budget sheet, work out a figure that they can afford and stick to this time and hope that the IR accept another offer of installments. If nothing else, if it does go to court would this not demonstrate that they are willing to try to repay the debt if at least for the moment raising the total is impossible without selling up.

 

Is there anything else that would be worth trying? Once they say no more installment options do they really mean it? and would the courts allow the forcing of the sale of their house to recover the debt if a genuine offer of repayment by installment has been made?

 

Sorry for the lengthy post and all the questions at the end, any suggestions or comments would be appreciated.

 

Cheers

Prelim sent May '06

LBA sent June '06

Fob off now rec'd to the prelim

Copy of fob off now rec'd as response to LBA!

Full repayment of all charges since 1997 now received.

Account Closed

Donation made :)

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  • 3 weeks later...

 

Is there anything else that would be worth trying? as you have suggested befoer talk to your friend to see if he / she can draw an Income and expenditure and see what he/she can afford realistically to the IR. if it is all he can afford then that will be it . ask your friend to call National debt line, or CCS or even the CAB for further asistance

 

Once they say no more installment options do they really mean it? i am not sure about this but i knwo HMRC can mahke yoru friend BR as they do when the game is up.

 

and would the courts allow the forcing of the sale of their house to recover the debt if a genuine offer of repayment by installment has been made? too depend if he/she has a CCJ and yoru friend default then he/she may have bailiff after them, attachemnt of earning order etc.. .

However if they make your frined Br abnd there is an equity then the Official receiver may force the sale of the House to release any fund toward the debt.

 

Sorry for the lengthy post and all the questions at the end, any suggestions or comments would be appreciated.

 

Cheers

 

 

did your friend received a statutory demand or not ? i know much knowledgeable folk will come along to help you

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Thanks for taking the time to respond Phat256 :)

 

I'm posting because they do not have access to the internet. They have now drawn up a budget sheet and worked out what hey can afford. With some encouragment to cut down on the luxuries etc they can actually afford what I think is a reasonable amount - £500pcm. I have suggested they put this offer in writing. Basically saying that for everyone's benefit they want to avoid court action and that they will commit to paying this amount until cleared.

 

My view is that however they have behaved in the past, this is now a reasonable offer which they will comply with. If it goes to court it can be demonstrated that this is all they can afford without selling up. As far as I know there are no existing CCJ's.

 

The last from IR was that they would accept full payment or would instigate court action to make them insolvent - I assume this means bankrupt.

 

They did go to CAB who told them they should pay the debt off and had they considered selling the house in order to do this!

 

Cheers

Prelim sent May '06

LBA sent June '06

Fob off now rec'd to the prelim

Copy of fob off now rec'd as response to LBA!

Full repayment of all charges since 1997 now received.

Account Closed

Donation made :)

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Thanks for taking the time to respond Phat256 :)

 

I'm posting because they do not have access to the internet. They have now drawn up a budget sheet and worked out what hey can afford. With some encouragment to cut down on the luxuries etc they can actually afford what I think is a reasonable amount - £500pcm. I have suggested they put this offer in writing. Basically saying that for everyone's benefit they want to avoid court action and that they will commit to paying this amount until cleared.

 

My view is that however they have behaved in the past, this is now a reasonable offer which they will comply with. If it goes to court it can be demonstrated that this is all they can afford without selling up. As far as I know there are no existing CCJ's.

 

The last from IR was that they would accept full payment or would instigate court action to make them insolvent - I assume this means bankrupt.

 

They did go to CAB who told them they should pay the debt off and had they considered selling the house in order to do this!

 

Cheers

 

Personally I wouldn't waste the bus fare on going to CAB.I've always found them full of middle class folk who have never actually struggled with money.Just MHO.

 

As regards the offer, £500 pcm is a lot of money - are they sure they can keep up the payments? I would have thought that would be acceptable.

 

If the worst comes to the worst offer them a charge on the property rather than lose it altogether.At least that would get rid of the monthly payments & take the heat off.Look at it as an 8% remortgage rolling up.

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