I’m totally lost - any advice appreciated

[MrsXx4]

Please could someone tell me if I’m about to get myself in deep financial trouble. I am totally clueless, I’m trying to read all the information I can but I need blunt facts that I can understand.

I have a credit card that has gotten out of control, it’s up to £13k and now with coronavirus I’m struggling to meet the minimum payments, I’ve never missed a payment but it is a struggle and I will never be able to clear it. I am considering declaring myself bankrupt as on top of this credit card I have quite a few things I’ve bought on finance over the years, but I used to be in a much much better financial position and it’s only recently that it’s all become far too much. I’m currently not working as I left to go on maternity leave and didn’t need to return at the time but my ds is now coming up to 2 and my job no longer exists partly due to the virus and decisions my old company were forced to make, I always had a fall back position there before the virus hit.

Of course I can look for another job and have been but I can’t afford the childcare either and have no family support. But I will continue to look into this.

My husband owns his own company and has taken a real hit himself, we are very much in this together he isn’t trying to stitch me up but we are both at our wits end and he has suggested declaring myself bankrupt could be a start in clearing this mess. I know I will be blacklisted and it’ll be on my credit record etc but I don’t understand what that means other than not being able to apply for credit etc which I am ok with.

This is where more complications start, we rent in a very expensive area and our house is very big as I said we were in a very different financial position when we moved here and we have gradually lost everything and keep losing. My husband would like to buy a house but purchase it / mortgage it(?) through his company. Mortgage repayments would be much lower than what we pay in rent, we also pay for parking where we are now costing £500 per quarter. Whereas if we moved to a house we would have parking / driveway.

What implications are there if I am bankrupt and the house is bought in a company name? We are happily married I’ve no concerns about being separated in the future but obviously you just never know what’s around the corner and if we were to split am I up shit creek?

Please can anyone advise?

I would get sone advice before going down the bankruptcy route and I would definitely get advice on buying the house through a company, especially as you've said that the company had taken a big hit.

Some things that you could try are taking a job that works around your DHs hours, moving to a cheaper house, getting a "side hustle" basically something you make/sell or do in your spare time.

Have you contacted the credit card company and asked them to reduce the interest rate too?

And have you gone through absolutely every household bill and tried to reduce it?

Have a look at Dave Ramsey too. His method can be hard but if you follow it, you could be debt feee in a matter of months with the implications of bankruptcy

You need to do a full Statement of Affairs for your joint income and outgoings and debts.

www.moneysavingexpert.com/banking/budget-planning/

It sounds very complicated and perhaps unwise to declare bankruptcy but it could be the right option for you.

I am wary of your husband purchasing the house ‘through his company’ - this sounds like it would not be a marital asset in a divorce and you would be in a vulnerable position. I know you are happily married and in it together right now but it would be unwise to plan on the basis of good times forever.

Be aware that by going bankrupt you would be disqualifying yourself from some potential jobs in the future. Some jobs in finance for example wouldn’t hire anyone who had once been bankrupt.

Another thing that you might want to consider is that if you and your DH split, lots of landlords won't want bankrupts as tenants.

Thank you for your comments. I’m going to be taking on board everything mentioned.

If I want advice on this would I make an appointment at citizens advice? I’ve no idea about any of this, I feel really naive and silly but (and this isn’t a boast) I’ve never had to worry about money before which is why I am probably in such a massive mess now. I’ve buried my head in the sand and we have carried on living beyond our means when changes have taken place.

I am very much a realist about my marriage and yes absolutely I need and want to make sure I am protected in the event of separation and divorce.

I second the advice about going to moneysavingexpert. There is a special board on there about bankruptcy and some people really know their stuff. Good luck.

@ancientgran

I second the advice about going to moneysavingexpert. There is a special board on there about bankruptcy and some people really know their stuff. Good luck.

Yes - and even if you end up at Citizens Advice, OP, they’ll want to see figures for all your debts and outgoings so start filling in the budget planner. Once you post it on MSE you’ll get lots of specific advice and then you can decide where to go/what to do next.

You need advice to work out if it's your best option. CAB would be a good start, or Step Change.

Call Stepchange.

Going bankrupt is, rightly, a very serious step and is going to be far harder than you think it is.

Also, buying a house "through the company" sounds like a tax dodge - I hope your DH has very good financial and legal advice about that.

Ok I’ve spent time going through all of my outgoings and making lists of all agreement numbers and where I am on each loan. I’ve spoken to credit card company about next steps and they offered a payment holiday which will be 3 months which may just give me a bit of headspace to think all this through.

I’ve absolutely no idea regarding the house purchase and what the implications are, my husband also probably doesn’t know, it’s not something we have even remotely looked into it’s just been discussed as ‘an option’ but I want my own advice and to understand 1, is this legal, how does it work etc and 2, where I stand if we split and the house is in the company name.

Above all else I want to protect my son and myself and make sure we are set up to survive on our own if we ever needed to. I’ve read ALOT of threads on here and it does leave you a bit cynical.

Have you cut down on your mobile & tv payments as well as household bills?

I see a lot of household income and expenditures from people in debt and usually the two things that stand out the most are the mobile and tv expenditure, although obviously this doesn't apply to everyone in debt.

Well done OP. Very positive steps.

At the moment, because of Covid, companies are generally very open to things like payment holidays. You just have to keep communications with them going.

Do you get Sky? You can cut it to £5 a month atm.

Are you a shareholder in his company?

You may need to get creative in terms of work. Cannot you find a side gig you can do from home with your DC sleep or could you work opposite hours to your DH. I would not be considering bankruptcy in your situation because with some hard work that is a level of debt that could generally be paid off.

I would suggest using the 3 month payment holiday to contact Stepchange and get a long term plan in place. They'll be able to help with the debt situation but I think you'll need specialist legal advice on the house issue.

Exactly what I was thinking Blackcat

Oh thank you, I will look into sky. I would be happy to cancel sky as we never really watch it. My mobile phone bill isn’t too high I don’t think? Amy husbands phone is through his company as he only has one that he uses for both business and personal.

Yes I’ve been on the job hunt this morning since posting and have applied for a few night jobs like packing in the supermarket and sorting parcels etc. I’m willing to graft and night work would mean no childcare costs!

I’m not sure about the shareholder question. My husband said he would list me as a director if we were to buy a house through the company but I know I sound like a broken record, but I don’t know or understand that part just yet. I’ll need to get myself clued up before anything happens there. Also, if I am listed as a director does that complicate me getting a night job? I just have no idea, but I’m off to Google and research!

If you buy a house through the company you will pay capital gains tax when you sell it. Not a good idea

I’m not sure about the shareholder question. My husband said he would list me as a director if we were to buy a house through the company but I know I sound like a broken record, but I don’t know or understand that part just yet. I’ll need to get myself clued up before anything happens there. Also, if I am listed as a director does that complicate me getting a night job? I just have no idea, but I’m off to Google and research!

No reason why you can’t be a director and have a job, so don’t worry about that.

But - if you go bankrupt you can’t be a director.

If your DH is in it together with you, tackle the debts jointly. It will make all the difference.

I also don't understand how his company would get a mortgage?!

Also you say this:

we rent in a very expensive area and our house is very big

@PaperTowels

I also don't understand how his company would get a mortgage?!

Also you say this:

we rent in a very expensive area and our house is very big

Yes, I don’t understand what this comment means. I said up thread that we have carried on living beyond our means when financial changes have taken place and we just kept hoping things would get back to how they were previously. I also had the security of knowing I could go back to my well paid job at any point, and that was the plan to do so in March and my son was going to nursery 3 days a week but we went into lockdown and now my old job is no longer an option and my son never started at nursery.

This is only very recently getting on top of us, since May time we are starting to loose grip and realising that we aren’t even making a dent in what we need to pay back.

We are also discussing moving somewhere cheaper/smaller but we are in a contract here until next summer.

Is there a break clause in your rental contract OP? Could you negotiate reduced rent with the landlord? If they say no they might let you out of the contract early if they find new tenants. Always worth an ask.

Yes that’s definitely worth an ask. We did ask about reducing our parking payment but they weren’t very helpful and said we could park offsite and give up our spaces but then we’d need to find parking in the city centre, pay for permits no doubt and walk however far to our house which isn’t so easy with a 2 year old in tow. I never thought to ask what help was available for our rent after that but always worth asking the questions.

Also I don't know what your income is (and please don't feel like you have to say!) but have you checked your entitlement to benefits? Might be a long shot but even a few quid a month UC might help.

Are there things you can sell in the house? Wardrobes that you haven't sorted for a while, bikes in the shed you don't ride. If you're not working at the minute you could put a few hours towards decluttering and selling what you can to prepare for moving house if you need to. Something practical to get stuck into might lift you a bit OP.

I hope you manage to find a solution.