Bankruptcy advice

[november90]

Before I go into this, I am going to say firstly this situation is not my own. I'm posting on behalf of someone for some advice.

The person, let's call him jack, has had his business for 30 years and he is in his 60s. It's in the building trade and times have been difficult over the past couple of years but he has been able to keep his and his families head above water. Jacks wife took early retirement after suffering breast cancer so she only gets a private pension which isn't much. Due to the coronaviris jack is now without paying, and being in the holding trade this will likely be for some time. His business is a LTD business so he gets no gouverment support unlike self employed/employed. He cannot pay his bills, he cannot get a business loan (he tried but it did not benifit him) and he's heartbroken thinking his only option is to declare bankruptcy.
Does anyone have any advice? Would doing so make him loose his home? His daughter and grandchild also live there.
Would a DMP be suitable despite the fact currently he has no income at the moment? He is desperately applying for another/any job).
Are there relied schemes?
I've told him to ring step change tomorrow but I know just reaching out for some advice so poor jack might get some sleep tonight :(

It depends how much debt he has,if it’s only a small amount then I would try and work on it, ring creditors ask for breaks etc or set up a payment plan. Bankruptcy is only the very last resort!! also when your made bankrupt they sometimes take away your car unless you can prove you need it for a very valid reason. It will stay on jacks credit report for 6 years at least, might eve be longer? meaning he can’t get credit or remortgage. Some employers ask if you’ve been made bankrupt and if you have they probably won’t employ him.

If he’s got a lot of debt and he doesn’t need credit or need to remortgage in the future, then it’s worth the risk to wipe the slate clean. Good luck

You worry that you may lose your home. You can file bankruptcy even if there is equity in your home. If you owe more money to your creditors than the value of what you own you are considered insolvent. ... With up-to-date mortgage payments filing for bankruptcy does not mean you will automatically lose your house.

What are his outgoings made up of mainly?

Even though he is self-employed he should still be able to furlough himself and claim 80% of whatever salary he paid himself. This is most likely c.£12k (so 80% of that).

He should then apply (jointly with his wife) for universal credit to see if he is eligible for any top up.

If he pays a mortgage he should call and get a 3 month mortgage holiday.

He should call and see if the Council will let him have his 'free' two months now instead of early next year.

He can also defer tax payments to HMRC if he calls them (he will need to pay eventually but not right now if, for example, he owes VAT or an on account personal tax in July).

Do they have spare rooms? Can they get a lodger?

Some credit card companies and loan providers are giving payment holidays if he has any of them.

He should go through every household expenditure and pare back to the minimum.

Step change don't deal with the self employed - there is a more specific advice line that should be used:

www.businessdebtline.org/EW/Pages/About/howwecanhelpyou.aspx

If he has no income he can't do a DMP.

Wheresmymojo has given really sound advice as to what your friend should do.

If he declares bankruptcy his share in the property (value less mortgage divided by number of owners) will be included as an asset - it won't be excluded and it has nothing to do with mortgage payments being up to date or not or who lives there. If there's value in it they will have it. Someone can buy his share from the bankruptcy estate but sounds like that wouldn't be possible.

Declaring bankruptcy means that you are acknowledging that you cannot pay your debts. You are either income/expenditure insolvent (lack of cash), asset/liability insolvent (own less than you owe). It is absolutely the last resort, would be very disruptive and your friend should explore all other options before considering it.