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Ask Buachaill Your Own Question
Buachaill
Buachaill, Barrister
Category: Law
Satisfied Customers: 10537
Experience:  Barrister 17 years experience
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Hi Jo My business went into administration in January this

Resolved Question:

Hi Jo
My business went into administration in January this year and I had 2 personal guarantees:
Positive Cashflow Ltd had a £100K personal guarantee against an invoice discounting facility. They were quick to start proceedings against me before they had had a chance to collect monies from the creditors of the company and the initial paperwork stated that they were claiming £130K. I disputed this figure and the case was sent to ‘multitrack’. Their solicitors have now confirmed the outstanding balance of £47,475 and they have closed the file. I believe that I will have to accept this figure. My first Question is how to confirm I agree but also that I do not have the means to pay. Do I need it to go to the judge to allow him to decide the monthly repayment?
Lloyds Bank also have a £100K personal guarantee. They have now sent it to Northampton CCMCC. Including costs they are claiming £116,821. I believe that I will also have to confirm this amount but again have no means to pay. If I go back and confirm giving my financial status that is poor I am again in the hands of the judge.
I am currently looking for work so my outgoings are more than my income, I’m getting behind on everything and have an arrangement with the Stepchange charity for a token payment plan to my personal creditors which amounts to around £75K. I own my house jointly with my wife with about £80K of equity. 3 kids 10,13,15 years.
What do we think might happen?
Any help would be appreciated.
Submitted: 2 years ago.
Category: Law
Expert:  Buachaill replied 2 years ago.
Buachaill :

1. Given the level of debts against you and the fact that there is more than one creditor, I would advise you to go bankrupt. This is the only way in which you will get out of the current impasse. The actual bankruptcy period will only be a year and you will be able to retain your half share in your house as well.

Buachaill :

2. ULtimately, having personal repayment orders made by a judge will only cripple you into the future. Currently, you cannot afford to pay anything as you have no income. Ultimately, a judge can only make a repayment order in relation to any income you might have.

Buachaill :

3. I would advise you to speak to a personal insolvency practitioner and assess the route into and out of bankruptcy. Essentially, these two personal guarantees have made it impossible to leave behind the failure of your business. So you need personal bankruptcy as well.

Customer:

How would I retain the house in bankruptcy, that's the part that gives me sleepless nights?

Buachaill :

4. Effectively, you have only a half share in the house, worth £40,000. However, there is provision in the bankruptcy rules that the debtor can retain his private residence in certain circumstances if no one wants to purchase it. Here you should speak with the insolvency practitioner about your situation. given that there are four children involved, it is likely that you will keep it, or else agree to a contribution over a further three years so you can keep the half share in the house.

Customer:

OK:

Customer:

should I declare myself bankrupt prior to the court cases reaching a conclusion or afterwards so that they are included?

Customer:

How much will it cost me to declare myself bankrupt

Customer:

What is the situation with company directorships, does the 1 year rule apply

Customer:

what are the implications of bankruptcy outside of the normal credit issues, which are bad anyway

Buachaill :

5. I would advise you to declare yourself bankrupt before the court cases reach a conclusion as if execution processes, such as sending the judgment to bailiffs start, then you could find your goods or car being taken. So go bankrupt before you have judgments being executed against you. It will probably cost about £5,000 to go bankrupt. You should agree this with the insolvency practitioner. Thirdly, you cannot act as a company director whilst declaring yourself bankrupt. So you will have to resign any directorships during bankruptcy. Finally, the main impact of bankruptcy is that you will have no credit card, nor will you be able to get things on hire or lease. But don't fear it. Nowadays it is a straightforward process.

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