Please tell me we are not in huge trouble.

[HeartofSlices]

Just as we got together, DH was made redundant from his job and was forced to go self employed. His income took a huge dive and as a result, his house was repossessed. Since then, we have rented together and managed to keep our heads above water despite a low income. We have a disabled DD so I am a stay at home carer and have no income apart from carer's allowance and DLA. We have managed to keep our heads above water, but DH has a tax debt of about 10k that we just can't afford to pay off at the moment.

Recently, we have been sent debt collection letters from between 20 and 40k, relating to the repossessed house. Obviously we have no means to pay this kind of money back. The house was repossessed about five years ago and we had no idea there was this kind of deficit.

DH wants to cut his losses and bankrupt himself. He doesn't have a bank account himself at the moment anyway, we just use mine, and we don't have any assets that could be taken away. Although he's self employed, he's not a company director, just a sole trader making peanuts.

I know these are pretty huge debts but I feel like we have done so well clearing away the mess from his redundancy. The house was in DH's name only as he had bought it with an ex and I don't really feel they are pursuing this debt with any seriousness. There has never been a CCJ issued in five years, the bank just sold the debt to a debt collection company who keep making "offers" to clear it. Friends have advised us to just ignore it. They said that as we have never acknowledged the debt, after 6 years it can't be enforced?

The tax bill is more serious, as DH is continuing to accrue more debt here. I feel like going bankrupt won't make this problem go away, and I know HMRC will pursue it, though they haven't yet.

Now DH has been given the opportunity to take over an existing business in 18 months ish. This is an amazing opportunity, as it's a successful business and in all likelihood will triple our income.

DH wants to bankrupt himself now and get it over with, so he is not taking any of this baggage into the new business. I am not sure if we should wait and see what happens. Chances are if we are earning more then we could make offers on the debts and pay them off.

I feel like we need proper financial advice, but not sure who to go to. Is it an accountant, or the CAB that we would need?

Please don't judge us, I know that hiding from debt is not morally right, but all of this has been caused by the recession and we really have done our best to get out of it all. We pay out hundreds of pounds a month to clear
debts we accrued while DH was out of work and we really don't have anything spare.

Now we have a fabulous opportunity that could solve all our problems. I just don't want our old problems to ruin it.

Thanks for reading.

CAB would be my first stop. I don't know if you can simply ignore the debt from the house being repossessed so I guess they would have advice on that.

I don't think tax payments would be voided in a bankruptcy, so you'd need to check that.

DP could also find that he cannot take over the company if he's been bankrupt. He'd need to take advice on that, too - being discharged by then might not be enough, and he may not be discharged yet anyway.

I'd take some serious financial advice.

My dad had to go bankrupt because of a tax debt so I think it would clear it.

I also don't think DH would be a company director if he took over the business, and it isn't a limited company, so I don't think bankruptcy would affect it? In 18 months I doubt he would be discharged, so that's another thing we need advice on really.

I would also recommend Stepchange for debt advice. They can advise whether bankruptcy is your best option, and deal with creditors for you. All for free.

Most bankruptcies are discharged after 12 months, so if you have an 18 month timeline you could be OK. But some restrictions do linger after discharge as well, or if things depend on credit checks then the bankruptcy will stay on it for 6 years so that can affect it too.

Your DH should probably get his own bank account now so he can keep his finances separate. Barclays and Co-op offer basic accounts which accept those with poor credit and won't be shut down after bankruptcy.

HMRC debts can be included in bankruptcy. HMRC are known to threaten bankruptcy against debtors and that could work in your favour, as they would have to pay the fees then (it costs about £750 if you declare it yourself).

It's worth going to CAB to get a full benefits check as well. You mention getting CA and DLA but not Child Tax Credits. You'd be eligible for an increased amount with a child on DLA, so if you're not claiming that then you should be. Also you get a disabled child premium on HB if you're renting, so worth looking into that.

Thank you Pet. We do get those benefits already thanks, I didn't mention them for brevity's sake but thankfully we have had some great advice from a disability charity who helped us with everything we were entitled to for DD.

I've just been over to StepChange website and sent them an email explaining everything. Hopefully they will give us some helpful advice. With DD it is very difficult to get the time to see someone at CAB or an accountant face to face.

The business DH would be taking over is run by a family friend, he has known and worked with DH for 15years, and wants DH to take over when he retires.

At the moment, an offer has been made but we don't know the ins and outs of how it will work. If DH goes bankrupt, could he have a business account, for example? Most of the business is run on cash so Dh doesn't think it will be too much of a problem if not, he will just have to tell customers it's cash only, which isn't unusual in that field.

I don't know much about business debts, but there is a specialist free advice service for business debts/SE called Business Debtline which can give more help. Generally bankrupts can get personal basic accounts at Barclays and Co-op (Co-op must be applied for before bankruptcy), but I don't know if they can be used for business.

Just to second step change, they are amazing and will work with you and as long as you're completely honest with them, they will help you, won't judge and will hopefully ease a massive burden by dealing with all this-together.
I've buried my head in the sand and the hardest part was admitting it and warning to get help.
You've made the first step.
Good luck:)