Please help, self employed and huge debts. Can't eat or sleep.

[lostfarmer]

Hi there,

 

I've just found this forum and really wondered whether anyone had any advice for me. I am self employed in a partnership, have been for over 6 years. Business started well but then I split from my partner (life, not business) 2years ago, and coupled with the downturn business really suffered.

 

I have got into a situation where i have been robbing Peter to pay Paul, and now have nothing left. Ironically business has now picked up, but because I've borrowed so heavily I now cannot afford to service my debts, particularly the credit cards.

 

I owe 37000 in unsecured debt- this is my debt, not the companies. I've never missed a payment but will do soon- there is nothing left.

 

My question really is, is it possible to enter into a DMP whilst 'ringfencing' the business account (which has an overdraft) so that I can continue trading? I've asked CCCS and Payplan and they say yes but not with them as they have to include all creditors and treat them equally. Whilst I understand this, surely if I don't have access to the business account I can't trade and therefore will be in a worse position?

 

It's got to the point that this is all I think of now.. I can't concentrate on anything else and I feel sick all the time.

 

Any help would be gratefully, really gratefully recieved,

 

Thanks,

 

LF

[blueda]

Hi lostfarmer and welcome to CAG, i dont have any personal experience with cccs, for years i was with a private debt management company, which dealt with my private debt and did not affect my business. It looks to me that you do need to keep your private debt seperate from your business debt, such as perhaps cccs handles your personal debt only, and another company ( perhaps a private one ) handles your business debt, or one company handles both seperately, other caggers will be along with further advice.

[lostfarmer]

Thank you for your reply, it's really appreciated. My business debts are not heavy and should disappear this coming year as my order book is considerably up on the last two years.

 

What I am really worried about is that my business bank account (Partnership Account) is with one of my personal creditors... I don't know whether it's possible to set up a DMP and not include one of the creditors (I hold a credit card with them with a reasonably small balance)? PayPlan said point blank that I would not be able to use my business overdraft to trade if I was on a DMP and this will mean losing my business.

 

Any more help and I would be really grateful,

 

Thanks

 

LF

[MandM]

Why enter a DMP? Why not manage this yourself? (it's what I and many others have done).

 

when I worked out my I&E i put Barclaycard down as a priority debt as I have a Barclays current account and they (by their annoying off-setting rule) could take the arrears from my current account.

 

Have you done an I & E yet?

 

M

 

PS read this>>>>>>>http://www.consumeractiongroup.co.uk/forum/debt-collection-industry/236823-urgent-issue-has-effected.html

Edited December 6, 2009 by MandM
added link

[blueda]

As MandM has said you could with the help of the posters on this site manage the debts yourself, you can contact the creditors and explain your financial difficulty and ask that they accepy lower payments and stop the interest for the meantime. How old are the debts and did you pay any PPI. ?

Edited December 6, 2009 by blueda
added content

[nick20045]

Ok. Let me see if I get this correct. (At last I found your thread lol).

 

You are in business with your now ex (be it partner or ex wife). Although seperated you are still in business together and continue to be in business together.

 

You CANNOT use your business account to pay off personal debts. I would actually think that that my fall as fraudulant use of company funds.

 

I am going to give you a few options. Obviously you will have to discuss these with your business partner but, they are not illegal. You will need to get these witnessed by a solicitor to make them legal and binding. (The reason I am saying this is just in case your ex may take advantage to possibly take over the business............ NOTE: I am not implying this is the case but best to take safeguards. Also as I am not a solicitor and neither do I pose as one, your solicitor can verify that they are legally correct).

 

1: You and your partner in conjuction together and by mutual consent do hereby agree to loan to Mr X (being you) as a business investment the sum of £XXXXXX (make sure that this sum does not effect the safe running of the business) redeemable over 5 years back to the business at a monthly rate of £xxxx. The rate of interest in this investment is to be at the rate of X% per annum. The payments to be automatically deducted from Mr X's income monthly.

 

explanation: Ex will be making some money out of the deal so she should be sweet about it. 2: It is a business investment so it is for making money and not using business funds by deception 3: It is legal

 

To work out payments over 5 years just phone a bank. Ask them borrow £xxxxxx over 5 years. What is the percentage rate and how much per month. When they tell you the final total what it will be, then deduct what you originally borrowed. That is what the business has made in profit as interest. DO NOT FORGET 50% of that interest goes back to you being one of the directors. She only gets the other 50%. Also if rate is say 5% it is a lot better then on the credit cards which can be something like 30%. If the business has a good credit rating with the bank, you could actually borrow the money from the bank at say 5% and agree to pay back to the business at say 9%. This will then be still a business venture.

 

Option 2: You can lease your share of the business to your ex for a certain amount of years for £XXXX. e.g. You lease your share to her (this is providing she has savings available) for say 5 years for the sum of £XX whereby during that 5 years you are now an employee and not a director any more of the business.

 

In short, during the lease what you get is a monthly wage less NI and Tax same as an employee. During that time your ex takes the profits. (You will have to work out a fair term). Not a good choice BUT you can use the cash from the lease to pay off most of the debt.

 

Option 3: You sell your share to Mr Y (say a brother, your dad or a trusted relative). You sell it at a token payment of £1.

 

This will not sort out the debt problem but at least as you now have no business they cannot touch that. Once the problem is sorted, then you "buy back" your business off your relative. In the meantime, while you have not title to the business you still work there "as agent of said buyer". (In short you still work there. You legally have no title but still do same work and still get same profits. It is just a matter that instead of being for example Bahamas Holidays agency Owners Mr X and Mrs Ex it is now Bahamas Holiday agency Owners Mr Y and Mrs Ex.

 

Last option: Go to your solicitors. Show him the position. Ask him to write letters to all debtors explaining the situation. Ask him to tell them that this is ONLY a short term problem but until matters are sorted you wish:

a: Interest to freeze

b: A minimum token payment that is acceptable to all

 

Your solicitor will tell them that this is advisable compared to possible bankruptcy in which case then they will only receive token awards after administration. (Note: If your solicitor writes this for you 99% they will accept because when a solicitor writes such a letter it is taken as an undertaking).

 

Hope above helps. Have a good breath of air. Give them a good read and consider the options.

 

Sorry I do not know anything about the services you referred to BUT be warned. Usually companies that offer debt conciliation finish costing you an arm and a leg. They do not do it for nothing. So........ head up. And consider if any of the above may be acceptable.

Edited December 7, 2009 by nick20045

[loobyloo85]

Hi, I know that all debts need to be included in a DMP. You could draw up an income and expenditure as above, write to all creditors explaining your current financial situation, and that you are willing to offer ... amount as a monthly payment until you get back on your feet.

[MandM]

Hi, I know that all debts need to be included in a DMP. You could draw up an income and expenditure as above, write to all creditors explaining your current financial situation, and that you are willing to offer ... amount as a monthly payment until you get back on your feet.

 

Start with this and lets see where we go from there. I & E first. Do you have a good template?

 

M

[cosalt]

Ok. Let me see if I get this correct. (At last I found your thread lol).

 

You are in business with your now ex (be it partner or ex wife). Although seperated you are still in business together and continue to be in business together.

 

You CANNOT use your business account to pay off personal debts. I would actually think that that my fall as fraudulant use of company funds.

 

I am going to give you a few options. Obviously you will have to discuss these with your business partner but, they are not illegal. You will need to get these witnessed by a solicitor to make them legal and binding. (The reason I am saying this is just in case your ex may take advantage to possibly take over the business............ NOTE: I am not implying this is the case but best to take safeguards. Also as I am not a solicitor and neither do I pose as one, your solicitor can verify that they are legally correct).

 

1: You and your partner in conjuction together and by mutual consent do hereby agree to loan to Mr X (being you) as a business investment the sum of £XXXXXX (make sure that this sum does not effect the safe running of the business) redeemable over 5 years back to the business at a monthly rate of £xxxx. The rate of interest in this investment is to be at the rate of X% per annum. The payments to be automatically deducted from Mr X's income monthly.

 

explanation: Ex will be making some money out of the deal so she should be sweet about it. 2: It is a business investment so it is for making money and not using business funds by deception 3: It is legal

 

To work out payments over 5 years just phone a bank. Ask them borrow £xxxxxx over 5 years. What is the percentage rate and how much per month. When they tell you the final total what it will be, then deduct what you originally borrowed. That is what the business has made in profit as interest. DO NOT FORGET 50% of that interest goes back to you being one of the directors. She only gets the other 50%. Also if rate is say 5% it is a lot better then on the credit cards which can be something like 30%. If the business has a good credit rating with the bank, you could actually borrow the money from the bank at say 5% and agree to pay back to the business at say 9%. This will then be still a business venture.

 

Option 2: You can lease your share of the business to your ex for a certain amount of years for £XXXX. e.g. You lease your share to her (this is providing she has savings available) for say 5 years for the sum of £XX whereby during that 5 years you are now an employee and not a director any more of the business.

 

In short, during the lease what you get is a monthly wage less NI and Tax same as an employee. During that time your ex takes the profits. (You will have to work out a fair term). Not a good choice BUT you can use the cash from the lease to pay off most of the debt.

 

Option 3: You sell your share to Mr Y (say a brother, your dad or a trusted relative). You sell it at a token payment of £1.

 

This will not sort out the debt problem but at least as you now have no business they cannot touch that. Once the problem is sorted, then you "buy back" your business off your relative. In the meantime, while you have not title to the business you still work there "as agent of said buyer". (In short you still work there. You legally have no title but still do same work and still get same profits. It is just a matter that instead of being for example Bahamas Holidays agency Owners Mr X and Mrs Ex it is now Bahamas Holiday agency Owners Mr Y and Mrs Ex.

 

Last option: Go to your solicitors. Show him the position. Ask him to write letters to all debtors explaining the situation. Ask him to tell them that this is ONLY a short term problem but until matters are sorted you wish:

a: Interest to freeze

b: A minimum token payment that is acceptable to all

 

Your solicitor will tell them that this is advisable compared to possible bankruptcy in which case then they will only receive token awards after administration. (Note: If your solicitor writes this for you 99% they will accept because when a solicitor writes such a letter it is taken as an undertaking).

 

Hope above helps. Have a good breath of air. Give them a good read and consider the options.

 

Sorry I do not know anything about the services you referred to BUT be warned. Usually companies that offer debt conciliation finish costing you an arm and a leg. They do not do it for nothing. So........ head up. And consider if any of the above may be acceptable.

 

He said in his first post he is a self employed partner. Most of what you said does not apply. As a partnership there is no company, purely a trading name of the partners.

 

My wife and I have personal and business debts of over £100k ( same thing in a partnership ) I have not paid ( can't afford to ) anything in over 12 months. Offered token payments, they refused. Fortunately 90% of our debts are unenforcable due to no / incorrect agreements, the rest have messed up big time by defaulting with no or incorrect default notices.

 

12 months ago I was in despair, no idea what to do, then I found CAG, wrote to all my creditors asking for documents and took control. The debts have not gone away but now I control them and not the other way round ! I put my family and essential expenses first ( there is nothing left after this ! ) and am still trading.

 

Good luck !

[MandM]

He said in his first post he is a self employed partner. Most of what you said does not apply. As a partnership there is no company, purely a trading name of the partners.

 

My wife and I have personal and business debts of over £100k ( same thing in a partnership ) I have not paid ( can't afford to ) anything in over 12 months. Offered token payments, they refused. Fortunately 90% of our debts are unenforcable due to no / incorrect agreements, the rest have messed up big time by defaulting with no or incorrect default notices.

 

12 months ago I was in despair, no idea what to do, then I found CAG, wrote to all my creditors asking for documents and took control. The debts have not gone away but now I control them and not the other way round ! I put my family and essential expenses first ( there is nothing left after this ! ) and am still trading.

 

Good luck !

 

Sound advice and further proof it can be done.

 

M

[cosalt]

Sound advice and further proof it can be done.

 

M

 

Thanks, I am aware my debts won't just disappear but I also have no sympathy with my creditors as the way they handled my accounts and responded to my difficulties has caused most of the problems.

 

Out of my 15 + creditors, only one showed any compassion and without any fuss restructured my payments to suit me - without penalty, and guess what that account is now paid off in full. ( thanks RFS )

 

Even if the others do take me to court ( do they dare without the correct paperwork ? ) They can only make me pay what I can afford, and as debt is a civil matter not a criminal matter they can't jail me or take my family away, and thats all that I am really concerned about.

 

Cosalt

[MandM]

Thanks, I am aware my debts won't just disappear but I also have no sympathy with my creditors as the way they handled my accounts and responded to my difficulties has caused most of the problems.

 

Out of my 15 + creditors, only one showed any compassion and without any fuss restructured my payments to suit me - without penalty, and guess what that account is now paid off in full. ( thanks RFS )

 

Even if the others do take me to court ( do they dare without the correct paperwork ? ) They can only make me pay what I can afford, and as debt is a civil matter not a criminal matter they can't jail me or take my family away, and thats all that I am really concerned about.

 

Cosalt

 

Well I hope Lostfarmer pops back on to read this. My position is similar to your own and I too am back in full control. I wish you the very best of luck

 

M

[Jan4a]

Option 3: You sell your share to Mr Y (say a brother, your dad or a trusted relative). You sell it at a token payment of £1.

 

This will not sort out the debt problem but at least as you now have no business they cannot touch that. Once the problem is sorted, then you "buy back" your business off your relative. In the meantime, while you have not title to the business you still work there "as agent of said buyer". (In short you still work there. You legally have no title but still do same work and still get same profits. It is just a matter that instead of being for example Bahamas Holidays agency Owners Mr X and Mrs Ex it is now Bahamas Holiday agency Owners Mr Y and Mrs Ex.

 

 

Used to work for an accountant/tax advisor. Not an expert but I think it is possible to sell your half of a partnership but be careful - if you sell to relative for £1 you are very likely to have Revenue after you. Don't go this route without taking accountancy/tax advice first.