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bankzero
| 20-05-2007 02:35 PM |
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Joined: 20 May 2007 Posts: 4 | Hi, Im not really sure where to start as it seems that there is more than one problem involved. About 3 years ago we took out a really big loan to finance a business, however in the 1st year our business went bad and we borrowed more money to try and make up for what we lost and to put some revenue back into the business. Unfortunately this didnt pay off and our business went from bad to worse and we lost everything. Now we are in around 50,000 pounds worth of debt and its spiriling out of control. We dont live in the UK so affording the payments is umbearable (we havent missed a payment ever) but i dont think i can deal with it anymore. I went to my bank for some advice but they told me that without residency in the uk they wont even rearrange anything or reduce our payments. Our outgoings are 800 pounds and our incomings are 800 pounds. That leaves us with nothing. It was never meant to get this out of control and im really not sure which way to turn. Any advice would be more than welcomed Thanks. |
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livvyboy
| 20-05-2007 07:56 PM |
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Joined: 20 May 2007 Posts: 2 | Hi Bankzero Things seem to be very tight. What do you want to do in terms of your debt? Do you want to walk away from the business and debt or do you want to try and turn things around for your business? What country do you live in? Post back Livvy |
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bankzero
| 21-05-2007 09:36 AM |
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Joined: 20 May 2007 Posts: 4 | Hello, thanks for your reply. We live in Turkey. We have left the business as we couldnt carry on anymore. the problem is, for us bankruptcy isnt an option because we have a house in the uk, we didnt buy it that long ago so it hasnt made much equity so selling also is not another option we can take to help pay off the loans. The bank said the only way they can help is if we were to reside back in the uk, get 6 months of bank wages, then possibly they could look at us taking out yet another loan (a bigger one than the one we have now) and combining payments. Its amazing how they can try and get you deeper into debt, then try and help you with your money problems. Thanks. |
| DW George | 21-05-2007 10:15 AM |
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Joined: 01 May 2007 Posts: 174 My Profile | Hi bankzero, Welcome to the forum. Are your debts with Turkish companies or UK companies. Re- your house, depending on the peculiarities of Turkish bankruptcy, it may well be worth considering this as an option if you feel you can't cope and need to walk away from the problem. Bankruptcy liquidates all your assets to pay off the debt. Unless Turkish law is different, there is no minimum dividend you have to attain to become bankrupt. So the small amount of equity in your house will be released and added to your estate. The money in your estate will be then shared out amongst your creditors. If you wish to keep your house you may be able to get a friend or relative to buy out the equity in your house. |
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Dave
| 21-05-2007 10:49 AM |
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Joined: 08 May 2007 Posts: 4 | Hi Bankzero, I really sympathise with you mate. I was in a similar position myself not so long ago. It makes home life a chore and as you said - everything just sprials out of control. I can't imagine how much worse that must be living abroad as well. There is no perfect option for you that will solve all your problems. You have to bear in mind here that you really are in trouble. As far as your options go you go only have a couple that I can see. If you owe £50,000 and you can't pay more than £800 a month absolute maximum then it's going to take you at least 7 years but probably 10 years or more to pay off depending on the interest rate. If you stop meeting these payments which is inevitable if your outgoings are the same as your income then eventually, your house in the UK will be taken from you along with the things in it, TV's and sofas etc. So I'd say this option was out for you as like you said, you just can't keep making these payments. So, that leaves you with 3 other options. 1. Move back to the UK and set-up a reduced payment scheme of some sort. I wouldn't say this was a great option though as if you halve the amount you are paying in, it will take you twice to three times as long to pay it all back - maybe 20 years plus. Do you really want to do that? 2. Look at an IVA. An IVA is a great way to get yourself out of trouble. It allows you to say right - "I can only afford to pay £100 or £200 a month off to all my creditors and that's it, I can't do anymore. Your creditors HAVE to accept this and you agree to pay that £200 for 5 years. Once the five years is up, all remaining debts are cancelled and you are debt free. It will of course affect your credit rating but let's be honest - you're past the point of trying to protect your credit rating. In any case it will stay on your credit record for 6 years, then you will be ok again. So you won't be able to get any loans probably over that time but you will be able to keep your house which is a major bonus. There are other rules that apply here but that's the crux of it. You should speak to a FREE debt management company that deals specifically with IVAs and they will help you along the process. The idea of this is that you are not borrowing any more money to consolidate your loans. To set this up you need to speak to a licensed insolvency practicioner. They will NOT try to sell you a loan which is what you need. 3. Bankcruptcy is your final option. I know it feels like the worst thing in the world but it often is the best option. Again, you need to speak to a licensed insolvency practicioner to discuss this to make damn sure it is the right option for you. You may lose your house in the UK but as you said, you don't have much equity in your house anyway so you need to weigh up if you are losing anything. To go bankcrupt now is not such a bad thing despite what you may have heard. It would allow you to be totally debt free straight away. In most cases you are discharged within one year. While you are in bankruptcy (prob one year) you cannot borrow more than £500 from anyone legally but after you are discharged, you can then borrow again. It doesn't come off your credit record for 6 years though so realistically, your credit rating will be shot and no-one will lend you any money anyway but then you're probably not that keen to be in debt again anyway?! Really consider this option and make sure you contact a professional insolvency practicioner for their advice. They really are helpful and will guide you through the best course of action for you. At the end of the day you have a very difficult choice to make. You either pay it back and be in debt for years and years with a ruined credit rating or you don't pay it back, be debt free now and have a ruined credit rating. Your final choice obviously depends on your house in the UK and what you want to do with that but look into it - you'll find a way through.. I hope this is helpful to you. I've been through this myself and it was a very difficult time but you will come out the other end. Don't worry too much about it, there are bigger things to worry about than money. Keep telling yourself that and you will come out the other side probably a stronger person. Good luck. Dave |
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bankzero
| 24-05-2007 01:29 PM |
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Joined: 20 May 2007 Posts: 4 | Thank you all so much for your replies, and especially the last one as there was a lot of effort put into that and it must have taken a while. Well the debts are from the UK infact, and they were taken out with 3 seperate loan companies, two with the bank and the other one with black horse. We have looked at every avenue and were thinking to return to the UK, but there is always a gap inbetween going back and finding work, and also taking our house back on which we worked out at costing us just over a 1,000 pounds a month maybe slightly more now. We are well and tryly stuck because we could never afford jobs to cover the cost of our loans as well as our mortage. At least here accomodation is cheap and anything we earn is going towards our loans. Its such a stuggle. I really dont know what way to turn, and I would be prepared to talk to someone to help us but I dont know any genuine people or places to go to (any links phone numbers etc would be really helpful) I keep telling myself there is more in life to worry about thank money, but its so much easier said than done! and when you cant see light at the end of the tunnel, thats hard. What started off as a great business venture lost us everything, including our sanity. Well heres looking forward to your replies and links if anyone can help with that. Thanks again. |
| DW George | 24-05-2007 02:56 PM |
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Joined: 01 May 2007 Posts: 174 My Profile | Bankzero Good to hear from you. You have a few options. How long have you been out of the country, officially. Your creditors can petition for your bankruptcy if, "you normally live in or within the last three years have had residential or business connections within England and Wales." So it wouldn't be a good idea to ignore the debts. If you meet the residency criteria and if you have a little equity then it may well be a good idea to go bankrupt. For some information on the how creditors can recover their money click here. How motivated are you to pay off all the debt no matter how long it takes? If you are so motivated then you could debt manage your way out of the problem. Debt consolidation is another option. But only do this is you monthly repayments are going to be reduced and the interest rates are lower. Although, if the debts are personal loans, ie you are locked into a contract, there may be some form of penalty payment. Ask for an early settlement figure to judge how cheap this option is. Hope this helps Good luck and stay in touch George Agencies to talk to CCCs Payplan |
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livvyboy
| 24-05-2007 03:15 PM |
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Joined: 20 May 2007 Posts: 2 | Bankzero Hi there. I was in similar circumstances as you, although not living in Turkey. I had a carpet fitting business and although I was doing well, two large companies which owed me a substantial amount of money went tits up. This gave me a terrible cash flow problem which ended up in my bankruptcy. This happened a few years ago now and I have managed to build up another successful company now. I've now use the leasons I have learned from that experience to avoid a repeat of that problem. So what I'm saying is if you do have to go bankrupt then you're right its just money, don't sweat the small stuff. What happened with your business? Just being nosey :-) Good luck "Success consists of going from failure to failure without loss of enthusiasm." Winnie |
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bankzero
| 24-05-2007 04:05 PM |
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Joined: 20 May 2007 Posts: 4 | Thanks for the links I will certainly look into them. It sounds like many people have been in a similar situation which makes me feel a little less iscolated. Maybe one good thing for me is that I am still young so time is on my side. Well I have lived in Turkey on and off for the past 7 years but opened up a business back in 2004. We initially borrowed the money to lease and run a small hotel which we did. But due to bad tourism and the recent attacks on Turkey it left people not wanting to come out, hence for us not many customers. That happened in the 1st year and we thought things could get better so we took out a further 2 loans to make ends meet. Unfortunately that way of thinking didnt pay off. But we have learnt from our mistakes and wont be doing that again. Another way around it I thought was to combine our payments into our mortage? could this be an option? It would certainly make them more managable. Well thanks again for you replies, I apreciate them. |
| DW George | 24-05-2007 05:12 PM |
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Joined: 01 May 2007 Posts: 174 My Profile | Bankzero I don't know if you read my post ^ regarding using the equity in your house. Do you have credit card loans or are they personal loans. The difference being that you can pay off cc loans immediately but with personal loans you are tied to a contractual term. Early payment does not necessary save that much money. You can use the equity in your house by taking out a secured loan either through your current mortgage providers (first charge) or through a specialist secured loan company (second charge). Bear in mind that the interest rates on these loans are volatile and can increase if the Bank of England base rate increases, as it has done over the last six months. With a secured loan you are entering into a fixed term, so if things pick up, and I'm sure they will, early settlement will incur a financial penalty. |
| James H | 27-05-2007 03:43 PM |
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Joined: 27 May 2007 Posts: 32 My Profile | Hi Bankzero The posts issued for you are educational and worthwhile. My advice......do not refinance or consider a debt management plan Neither will go anywhere near solving your problem and both will cost you money in the mid to long term between charges for administration or simply prolonged interest arrangements. One correction that I would make to a piece of advice posted......your creditors DO NOT need to accept an IVA proposal. They do have the right to object. This can lead to bankruptcy, which for you looks like happening anyway. I will not bore you with a full explanation, instead study this and other websites in detail. Your house will have to realise it's equity for your creditors, but it is NOT automatically sold. Contributions can be zero dependant upon your disposable income. The advantages of bankruptcy can easily outway the negative side and with your life progressing outwith the UK perhaps you should jump before enduring further stress and eventually being pushed anyway. Good Luck. |
