Asking for a freind of mine who wants to remain anonymous!

Scenairo:

Unsecured debt (loans, credit cards) totalling approx #25k, secured loan of #30k. Cannot afford monthly repayments so stopped paying them all a few months ago

Wants to keep mortgage paid (obviously), just wants to know if an IVA or Banruptcy would be the best route.

Usual assets; car and house

Can her creditors recover her assests to pay off her debts (baliff type thing), can they take her car?

She's now gone self employed so can they take her business stock (sole trader) ?

 

I can only speculate like evevyone else that they most likely can but I do know that by not talking the the creditors she's making it all a whole lot worse.
Instead of worrying about the above tell her she must contact the creditors and explain her situation. Legitimate creditors to a degree, demonstrate great sympathy to clients not able to make repayments. communication though, is the key. Tell her to pick up the phone today and save herself a whole lot of trouble.

 

They can take anything which is hers. As she's a sole trader, her stock is very much at risk.

And she'll end up losing everything - the creditors will make an attachment to the house so that whenever it gets sold, she'll lose the equity.

Going bankrupt is almost certainly not the answer.

 

I strongly suggest she contacts the following people http://www.cccs.co.uk/ who will advise on her options.

They are a charity (sey up by a number of major lendors) so their service is completely free (unlike some credit bureau's.).

It often seems like the end of the world but it's not. Debts can usually be re-structured and no-ne needs to lose their house/business.

Bankruptcy is rarely a good option.

 

The recent rule changes on bankruptcy seem to give people the impression it is an easy answer.

While you can in theory be discharged from bankruptcy in a year under the new rules, this is judged on case by case basis - if you've really got into some serious debt, the discharge could still take years & years & years even under the new rules.

As someone has mentioned, a lot of reputable creditors may even reduce her debt drastically but only if she talks to them. They'd rather recover something rather than nothing.

It'll be tough, but then people need to learn the value of money (and debt).

Too many people in this situation in this country now. It's going to be a major headache within a few short years for many more people.

 

Scoob96

Her car and house depend on the equity position. If there is little or no equity in the house, there is no reason for it to be sold in the event of a bankruptcy. You say there is £30k of secured debt - is that over and above a mortgage?

Likewise the car, provided she can demonstrate that she needs it for her business and income.

As for the stock - it really depends what she does. If paying a contribution from her earnings will be more fruitful for here creditors, then its not a given her stock would be sold - particularly if that stock was needed for her to continue in business.

Having said all that, its better avoided if possible.

An IVA might be the answer, if, and only if she can make a meaningful contribution towards her creditors over the course of the arrangement.

Alternatively some form of restructuring of debt/mortage may help.

The problem with going down the informal route is that all it takes is one creditor to decide enough is enough and the whole thing falls apart.

If you can be more spcific with the values of home/mortgage/debt/car, etc, I could give you a more considered opinion.

D

 

Direct them to the Motley Fool website:-
http://boards.fool.co.uk/Index.aspx

The folks on the "Dealing with Debt" board will provide invaluable help.