My husband is thinking of bankruptcy

[ridingsolo]

My husband owned a fairly successful restaurant but during covid and then afterwards it became less successful, he now has a huge amount of debt (upwards of £100,000) one of them being a government covid loan. He lost his business premises a month ago and spent £4000 on legal fees to see if his landlord unfairly took away the premises (he always paid his rent, but the law company says he doesn't have a leg to stand on) most of what he owes is to suppliers, HMRC, government loan and credit cards. We live in a rented property and I own my own house that I bought before I even met him, I have a mortgage that I am solely in charge of.
My husband has been talking a lot of bankruptcy and I'm terrified, we have a 9 month old baby, I'm 35 and he's 41, I feel we are too old to start again. He's also just found out from the doctor that he has arthritis, he struggles to get out of bed in the morning. I feel like I'm in a film where everything goes wrong only there is no happy ending, sometimes shit happens to people and it keeps happening right? Has anyone been through this bankruptcy process themselves, could it be the right thing for us?

You need to talk to an insolvency practitioner. The limited company is its own entity and can be liquidated. If any of the supplier accounts have a personal guarantee (most do) then he will have to repay them (or do an IVA to repay a %). The IP will look at how the covid loan was used and if it seems that it was mainly taken in drawings that will be looked at also

Because it’s one of the few where you can be imprisoned for non-payment.

Who paid the legal fees? Company account or personal payment?

Sounds like the vast majority of the debt is company debt which can be written off!

We havnt even been billed yet

He needs advice. Please get him to take some financial advice from an accountant. If it's Ltd is there actually any personal liability? Insolvent rather than bankrupt? Payments to BBL (Bounce Back loan) or HMRC wouldn't be my primary concern!

This is sound advice OP, please do this

Put simply he can't pay back some suppliers and not others...it's all, nothing or some percentage to ALL people owed money. He can't decide to pay Joe Bloggs £5k and nothing to the inland revenue....

The company needs "bankrupting", you will need an insolvency practitioner to help you do this.

Suggest divorcing.

Not because you aren’t getting along, but it’s the best way to protect your (joint) assets.

You can have all the make up sex you want later.

OP - I'm a practising Insolvency Practitioner. You mention a Limited company- from what you say that needs to go into liquidation. Unless there are untoward dealings in the company that will deal with the company liabilities. He then needs to look at his personal position and determine exactly what he is liable for - a company director is not made liable for the Company's debts unless he has been in breach of the Insolvency Act. He needs to see an Insolvency Practitioner - we are all over the country. His accountant may recommend one or look a local one up on the Institute of Chartered Accountants in England Wales website. There's lots of us on there. Book a consultation and one of my fellow IPs will be able to give advice and guidance. He needs to follow the advice given and all should get sorted. Your personal assets should be unaffected.

Also (although I'm not an insolvent practitioner) as I understand it the Council Tax debt is owed by both of you jointly and severally.

You're currently expecting (pending expert advice) that DH will go bankrupt, his debts will be wiped out and he'll have to live with the consequences. But you probably want to try and keep your personal credit record as clean as possible.

You need expert advice to disentangle his limited companies debt, his personal debt and your personal debt.

I agree that paying off debts to small suppliers while ignoring HMRC is a tempting but disastrous plan.

@HarpyValley this is very very rare indeed- however they are one of the ones who whilst it doesn't show as a CCJ will indeed send the bailiffs round if they get a magistrates order and do have a right to take assets from either of you if you are both on the bill. if they can get through the door that is . If you are at risk of this OP-please don't answer the door or open it to unexpected callers, take action on the personal front (stepchange etc can have an order in very quickly once you take positive action) and get that UC application in asap as it will drastically reduce what is due on things like council tax- - you can only backdate so far as well- so don't shilly-shally on it.

Should be - unless he’s inadvertently drawn money from the business which is not accounted for as profit - if he’s done that - even by accident you’ll sell the matter to some bunch like Manolete and he’ll be fucked.

Yes it’s comparatively rare, there are about 100 people imprisoned for non-payment of CT each year, but as neither the OP nor her DH are currently working, the option of an attachment of earnings order is closed off to the council which increases the chance very slightly. But it is still rare and hopefully the OP will be able to sort it out as one of the priorities, especially if she follows advice to submit a UC claim.

@ridingsolo as others have said Council tax non payment can easily get you a CCJ and court baliff who can seize assets of either of yours. And the CCJ will mess up your credit score.

In reality bankruptcy is only going to be worthwhile if you can budget and manage what income you have coming in against your essential expenditure. Rent, Council tax, gas electricity , water and food. Those are the key areas.

If he’s ill too then you might need to get a job. Make sure he’s ceased trading before UC claim too. Check out the rules in self employment and UC.

These two are good posts.

Step 1. Stop spending money.
Step 2. Work out what's personal and what's company debt.
Step 3. Go and see an insolvency practitioner as reffed above.

Once he's done all of the above you can work out your personal situation, but I don't think your assets are joint in marriage for the purposes of insolvency.

The posts about council tax are worthwhile too.

The most important thing OP is to take quick action- which I know feels nigh on impossible when stuck in the middle of it- but will take the immediate pressure off. We had to do it and claim for 6 weeks whilst sorting out some positive forwards moves- we didn't have a lot of personal debt and were able to sort intermediate and essential payments (just) whilst getting the business aspect folded. We were actually massively shafted by an overseas distributor on non payment - which is why we had to liquidate. It happens to many - it feels like it's just you at the time!!

My DH went bankrupt years ago in the 90/ recession
2 houses a flat and a business over 100k worth

because his ex wife insisted on being on the mortgage of the houses despite being married when my DH went bankrupt they couldn’t touch him for the shortfall of the mortgage so they chased his ex wife for years 😂it still affects her now as she paid a few pounds and each time she did it restarted the 12 year that then could chase her

Things may have changed and probably have since then but my DH credit is perfect he’s bought and sold several houses since and leased several cars so it’s not the end of the world far from it .

with regard to baliffs and debt collectors
if they turn up at your house DO NOT LET THEM IN EVER - No matter what they say ask or threaten do not let a baliffs or debt collector across the door
& ensure that you always keep the doors and windows locked .

Debt collectors will threaten you will all sorts even coming back with the police ( they won’t ) you can’t even get the police out if your being robbed and murdered 😂

So take great pleasure in telling them to fuck off and fuck off again
or if your polite tell them to write to you outlining there’s request

Council tax is the one debt you don’t want to get behind on and not pay

but unless it’s a magistrate baliff a debt collector can’t do much unless you let them in

honestly it’s not the end of the world - it might feel like it but it’s a debt your DH can’t pay back and it’s the cost of doing business sometimes
keep yourself as separate as you can financially from your DH and you will get through this

The hardest thing I think is feeling shameful as years ago bankruptcy was seen to be shameful - what will the neighbours think family think- and that’s what debt collectors prey on that you don’t want to air your problems in public

When the debt collectors used to call my husband he would take the piss
they would ask him to identify himself blah blah and he would say stuff like his name was Jesus Christ and he was the new messiah 😂

or they would ask if he was working and he would say no sorry I’ve just got out of prison for armed robbery 😂😂

I know it sounds stupid but he wasn’t going to pay it back as he couldn’t but he still had some debt collectors on his case despite being bankrupt so he just took the piss out of them

after a few calls and shitty letter they gave up

@Im99912 it's certainly a character building experience! The positive is I know all sorts of shit these days good and bad about business and debt etc

@Crikeyalmighty 😂😂
it will either break you or make you
and yes you learn lots of stuff you wouldn’t have even thought of

but my DH never lost his sense of humour and had the attitude what the worse they can do ..
They can’t put me up against a wall and shoot me 😂

he enjoyed winding up the debt collectors I think to the point where they probably tossed coins to see who would have to contact the crazy man who said he was Jesus Christ 😂

Your DH needs to speak to an insolvency practitioner and take advice.

If you’ve paid your rent and bills and have food would try not to sweat it OP.

This is always a possibility when you open a business and it’s a pain but it will get dealt with.

@Im99912 mine definitely did lose his sense of humour!! And it was left to me to cope with it all (we both work together) however he was doing the positive stuff going forward, negotiating doing exactly the same thing but with another very well funded and old company taking the risk- 16 years later that's still the deal we have and was always a much better option if I'm honest

They won't take anything of yours provided you live in England? Your husband's debts are his debts, not yours. They cannot take your assets. They also have to leave your husband with enough money to contribute his share to household expenses when working out his payments.
The debts of the Ltd company will not be paid by anyone unless the company has assets. If it has, these will be sold to go towards the debt.

The worst thing you can do is get divorced. In a divorce, everything will be classed as marital assets and split accordingly, including your house and car.

A stupid suggestion