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Ash
Ash, Solicitor
Category: Law
Satisfied Customers: 10915
Experience:  Solicitor with 5+ years experience
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my wife and i put our company into liquidation 2 years ago

Customer Question

my wife and i put our company into liquidation 2 years ago as it could not afford to carry on, we are now being sued by a law firm acting on behalf of the liquidators for 40k from dividends they say we should not have paid ourselves, basically our £2500 wages each month, we are currntly with step change debt charity as our finances are not good but we are paying the mortgage etc on time each month, we are thinking of doing an IVA as we have no means to pay this, is our house at risk as we have some equity in it
Submitted: 3 years ago.
Category: Law
Expert:  Ash replied 3 years ago.

Alex Watts :

Hello my name is Alex and I will help you with this. Please note that I am a working Solicitor and may be on and offline as I have to attend Court and meet with clients, even at weekends. As such you may not get an instant response when you reply, but rest assured I will be giving your question my immediate attention upon return You do not need to wait here as you will get an email when I reply.

Alex Watts :

How much do you owe in total to your creditors? How much equity do you have please?

JACUSTOMER-xfo6d0g8- :

I have 15 in personal debts which are being paid at a nominal rate as agreed with Step change so these are not proving to be a problem, its just this 40 k we are being asked for by the liquidation lawyers, we have about 80 k in equity.

Alex Watts :

Will they not accept a lesser amount or accept a charge on your property so when you eventually come to sell they can have the £40k? Do you accept you owe the £40k?

JACUSTOMER-xfo6d0g8- :

I have been told by a few IVA companies that they cannot force us to sell our house, worst case senario would be to apply to put a charge on it if and when we sell it in the future, i do feel that we were mis advised by our accountant about paying ourselves 2500 per month in dividends and only 400 in wages as to keep our tax down, we just went on his advise and we not aware we were doing anything wrong.

Alex Watts :

For an IVA then yes, they can not force you to sell your house. But 75% of those attending the IVA must vote to approve it. If they know you have £80k in equity and you are offering a small amount to creditors it may not be approved.

Alex Watts :

But with an IVA then your house is safe, although you may have to release some equity.

Alex Watts :

They may agree to just hold a charge over it on agreement that you either paid £ x monthly or they obtained funds when you sold.

Alex Watts :

But those are two options

Alex Watts :

1) IVA to reduce debts but risk having to release some equity

Alex Watts :

2) See if they will accept a charge over the property on payment of £ x per month or when you sell the house

JACUSTOMER-xfo6d0g8- :

As my wife and i have a poor credit rating now we have tried re-mortagging and all the banks are an absolute no no, our mortgage was a self cert 10 years ago so that does not help.

Alex Watts :

I see. Sadly then you can only see if they would accept a charge.

Alex Watts :

If they refuse then if you can not pay they can take you to Court. If they win then they could apply for a charge on the house and force a sale.

JACUSTOMER-xfo6d0g8- :

and if they wont accept a charge what then?

Alex Watts :

So the best option would be to either an IVA or a charge.

Alex Watts :

IVA - but you are left with the equity to try and release.

Alex Watts :

Creditors simply wont accept you having £80k equity and they, for example getting 30p in the £

Alex Watts :

Step Change may also be able to arrange a repayment plan but given the sums of £40k for a debt it may be too big for the creditor to accept.

JACUSTOMER-xfo6d0g8- :

If we could agree a, 300 ound per month payment just on this alone do you think this would be accepted

Alex Watts :

Have you spoken to an Insolvency Practioner yet?

Alex Watts :

Well - its a commercial decision for them.

Alex Watts :

I can not say whether it would be bearing in mind it would take over 11 years to pay off

Alex Watts :

All I can do is give you the legal situation as I see it sadly

JACUSTOMER-xfo6d0g8- :

We simply cannot afford to see and legal side unless its just for a meeting or two, its just all we could afford

Alex Watts :

Yes indeed.

Alex Watts :

Then you should set out your income and expenses and show them what you have.

Alex Watts :

Offer to allow them to put a charge to secure the debt on repayment of £300 a month and see what they say

Alex Watts :

Does this help

JACUSTOMER-xfo6d0g8- :

As it is now they have given us 28 days to respond, we have told them we are trying to find the finances knowing full well we have no way of getting them, stalling basically, what would you advise to do next, contact an IVA firm, or deal with them direct

Alex Watts :

I would contact an IVA firm first.

Alex Watts :

Unless you want to allow them for a charge.

Alex Watts :

If you want to allow the charge then speak to the creditor.

Alex Watts :

If you do not want to then speak to an Insolvency Practioner

Alex Watts :

Does this help you?

JACUSTOMER-xfo6d0g8- :

Me and my wife dont mind going for an IVA at all really we just dont want to loose our house

Alex Watts :

Yes, if you have an IVA you won't lose your house unless you break the IVA

Alex Watts :

Does that help you?

JACUSTOMER-xfo6d0g8- :

Sorry just one last question before i forget, do we have any case with our accountant as we were just taking his advise but being paid this way, both myself and my wife had no experience with limited companies and we only went ltd, as advised, to stop this exact thing happening!!

Alex Watts :

Yes you may have a claim against the accountant for breach of contract and/or negligence if he gave you bad advice.

Alex Watts :

But to bring a claim against him you have 3 years from the date of advice and you would certainly need a Solicitor given the value of the claim against them

Alex Watts :

Does that help?

Alex Watts :

Can I clarify anything for you about your question today? If not, can I invite you to leave feedback on my service which I hope has been excellent. If you need more help then please click reply. For future information I am always available to answer questions for you, just start it ‘For Alex W’

Or you can bookmark my page http://www.justanswer.co.uk/law/expert-alexwatts/

JACUSTOMER-xfo6d0g8- :

ok so thats a no no really, thanks for your advise lesson learnd for the future i suppose, its nice to know we prob wont loose our home even if we get a bad credit rating for 5 or 6 years, thanks.

Alex Watts :

Yes that is right, just make sure you keep to any IVA term

Alex Watts :

Is there anything else I can help with tonight?

Alex Watts :

If not could I invite you to leave feedback before you leave tonght

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