How to avoid repossession Telegraph.co.uk
Build a safety netBuild a financial cushion to protect against shocks. Advisers recommend enough cash to tide you over for three to six months. Keep it in an easy-access savings account.
Look at insuranceUnemployment insurance is an option. This cover, often bundled with accident or sickness insurance, normally pays a fixed monthly income, which is set at the outset. It is typically two-thirds of your take-home pay, although you can buy policies that cover just the monthly mortgage.
There is often a delay of one, two or three months before you receive the first payment – the longer this "deferment" period, the cheaper the policy, and payments are made for the maximum of a year.
This insurance is not generally available to people who are self-employed, work on contracts, or for a company that has already announced a redundancy programme.
Don't ignore problemsTO avoid repossession, take action the moment you realise there is a problem, or could be one, advisers say. Even if you have not missed a payment it is worth contacting a lender if you think this is likely in the next few months.
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Sue, an associate financial advisor talks about the credit crunch and financial problems affecting homeowners in the UK. Hear her free advice on ...
UK finance/debt/tax problem - advice much appreciated!?
My Flat, London, Zone 2 Value c £200k, mortgage c 23k. Too small but convenient location.
Late Mother's flat, London, Zone 5 Value c £150k No mortgage. Dated.
3 x Buy to let:-
1. 1 bed Flat - London, Zone 2 Value c £200k, mortgage c 33k Rental income c £800 pcm
2. 3 bed Flat - London, Zone 2 Value c £250k, mortgage c 43k Rental income c £750 pcm (under market rent - damp) Work needed.
3. 2 bed flat - London, zone 3, near Olympic site. Value c £230k, mortgage c 33k Rental income c £800 pcm
All owned over 10 years.
No real savings
Debts:£22k Inland Revenue (3 tax years plus penalties/interest)
£7.5k earlier defaulted loan - at County Court stage
Credit cards on min payment - c £8k
Issues:
1. Need to deal with debts asap
2. Concern about CGT if selling BtL / Mother's flats
3. Concern at 40% Income tax on BTL profits
4. My flat too small - other local BTL flat bigger but unsuitable environment
5. Can't decide way forward with Mother's flat
6. Reluctant to sell BTL flat
This is very complicated and a lot more information is needed to advise on the situation. However, some points about the issues raised which may anable you to take it further.
1. It seems that you are going to have to sell something to clear the debts, particularly the Revenue. They will not accept an extended repayment plan if you have assets available.
2. I don't think your decision should be driven by tax considerations. I'm not suggesting you forget about CGT but just treat it as another cost (like legal fees) and look at the commercial viability of any proposed transaction as a whole.
3. Why is this a concern? Do you mean that you have not been paying tax on these rents (possible in view of the arrears) and that you do not think you can afford to in the future? Interpreting your comment literally would imply that you have a gross income of at least £67,000 a year of which you are only paying tax on £39,000 and that you are still overspending as you are running up credit card debt. Please tell me this is not the case.
4. From a purely financial point of view I think you should sell your present residence and but something larger and more suitable for you. Buy something that you will be able to rent out in the future. After you have lived there a couple of years you can move again but retain this property. This will give you extra reliefs for CGT purposes when you do finally sell it.
If you repeat this procedure in the future the impact of CGT wil be much lower.
5. You are not getting any income from this. How long have you owned it? Don't forget your cost price is taken at probate value if you inherited this from your mother so the gain may not be all that much. Of course, sentimental reasons may complicate any decision.
6. If you do not sell your mother's flat then you may have to sell one of the BTL places. Is the value for no. 2 what you would get for it now or after the work is completed? If it is worth £250k in its present state then it is not paying it's way. To see what I mean lets look at some figures.
Sell it for £250,000.
If it cost £50,000 then you have a gain of £200,000, reduced to £120,000 by taper relief. Even assuming 40% tax this is only £48,000.
So pay the tax and mortgage to leave about £159,000.
Clear the debts (£38,000) to leave £111,000. This could bring you in £500 per month from a reasonable bank deposit. How much do you get at the moment after paying the mortgage?
It would also be available as a deposit for another BTL but aren't you a bit over-exposed to the property market now?
Hope this helps to get you thinking.
In terms of tax planning on the rest (and moving house) - you should pay an accountant!
CGT - Increasing mortgage would avoid the CGT problem now. Remember that at some stage, unless its your home, the IR will get you one way or another either with CGT when you do sell or IHT (inheritance) if you die first. However if you can't increase mortgage then your only option is to sell your house, it sounds like you want to do this anyway as its too small but none of the other current properties would be a suitable replacement, besides you are getting a good return on these investments so you should hang on to these. INCOME TAX - Wherever possible you should have your mortgage debts against the business assets as you can claim interest paid as a deduction against the income, thus reducing the profit that is chargeable to income tax. Therefore you should move your mortgage on your home to one of the businesses.
SUMMARY (based on the limited info I have)
If I was you I would sell your flat, repay the debts as quickly as possible and move into your mothers flat, just for a while. That way your house is expempt from CGT assuming you have always lived in it, whilst you have owned it. The gain on your mothers flat will be calculated gain x period occupied/period owned. I am hoping you have only just inherited this so living in it for a short time only will make a good % so you can sell it, paying minimal CGT tax as you will have occupied it for quite alot of the time you owned it. You will then have the proceeds of both properties, less the 23k mortgage and 37.5 debts to buy the bigger property you want, whilst keeping the BTL.
Remember if you do re-organise or re-mortgage, make sure they are on the BTL to get the interest as an income tax deduction.
It would be worth paying an accountant and getting some proper tax planning for the future so you can minise tax by plan the future disposal of assets in a timely way so as to take full advantage of annual allowances, business taper reliefs (these increase annualy so you want to dispose of in the start of a new year, not the end of the last one to get an extra year) and so on. I would charge you about £50 per hour for this kind of advise, but would need all the facts and figures, my answer is based on very limited information that you have provided.
How can I solve my Debt problem as an Overseas student in the Uk?
I have lived in the uk for 8 years now as an overseas student and my visa runs out in a couple of months . I have no intentions on staying here and I'm in huge debt , credit cards , overdrafts etc . There is no way I will be able to pay it all . Should I see Citizens Advice Beaureu ? I am lost about this and dont know what to do? Please help?
As a Brit - I want to thank you for coming over to our country, using our resources and leaving a mass of debt behind you. Be very proud! And please don't come back.
Contact each of your debtors, explain the situation and ask them for reduced payment terms.
Mental Health & Debt Problems (UK)?
I would appreciate any advice from the UK on this issue please -
I experienced a period of mental health problems which caused me to be off work for 6 months and necessitated being under the care of a consultant psychiatrist. During that time my debt problems became acute and I took out a bank loan with the aim of consolidating debt.
With hindsight this was not a wise decision and made during a period where I was not thinking straight about issues and has – a year on – only really compounded the problem.
I was never sectioned or admitted as an inpatient to hospital so I presume that I was legally competent to enter into a contract (even if it was not the rational thing for me to do!) Basically I want to know whether my mental health can be used a mitigating factor in relation to dealing with what has become a substantial debt problem.
Try talking to Mind's solicitors about this. They have a free legal line and you pay only for the call. There usually is a Que and a wait of over half an hour but you will talk to a mental health solicitor who may be able to advise you better.
The number is: 02085 192 122
Open Monday, Wednesday, Friday 2 - 4.30 Ask to be put through to the legal line when they answer.
Edit
I would think that not being sectioned is not necessarily a reason to say your mental health problems did not contribute to your debt situation. Sectioning is to prevent physical harm to you or others. You can still have problems that lead to irrational acts and be in the community. You had a psychiatrist and was on the sick because of it therefore you have proof that you at least needed psychiatric help at that time.
do this in writing as well , and keep a copy
if they ever try to take you to court you have proof that you were willing to try and repay the loan
as you said in your question , you were never sectioned or even an inpatient so your mental situation will not be a factor
i know people that actually get themselves made inpatients so that there debt is cleared , that is in scotland
all the best
Ian
My partner and I are in a similar situation.
very often your creditor will ask for a higher payment than you can afford.
My boyfriend's creditors were putting him on a lower repayment plan but each creditor said they could not ofer any lower than £40 a month..well thats BS because we do NOT have that x 11 Creditors!
We only have £48 in total every month to repay all 11 creditors.
We are in this because he had a mental breakdown and I am looking after him. The cccs have been great and have told us what to say and what rights we have and the fact that my partner has had a mental breakdown (he also agreed to things while on meds and without talking to me) and his co's got very un helpful and were calling everyday!
what also happened was that they kept saying oh well just pay £40 to stop the debt being officially registered with Equifax and going to a debt collector (we stupidly agreed as we were worried) and we have wasted 6 months struggling paying that. The CCCS have said not to as it's bullying techniques and that, the money could have been used better. so in hindsight we should have asked for help A lot earlier! :0)
So please before you contact ANYBODY! contact the CCCS
to get some advice :0) ..
Their number is : 0800 138 1111
and website is cccs.co.uk
bad debt (uk) please help?
my best friends b/f has lots of debt (approx £40000) problem is she loves him and wants a life inc a mortgage with him, can any one give me some advice to better his credit rating or maybe suggest a mortgage company who would allow this debt to be put onto the mortgage! please help as hes at rock bottom and she doesnt know what to do, she feels like chucking it all away but loves him 2 much & know he wants help to get his self out the hole! but is on anti depressents so everythings just a fuzz! i need advice to go talk some sence 2 them! - p.s the debt is from an ex partner and ex business that folded!
Tell them to go to their nearest Citizens Advice Bureau, or contact the Consumer Credit Agency; they are the ONLY organisations within the UK that provide truly impartial, professional and free debt advice. Any of these consolidation loans or massive mortgages are a con in the long term and will just get them into more trouble.
They may just have to face the likely reality that a mortgage is not possible for them at this time though; it could be renting or nothing for the time being.
every problem has a solution! remember.
He'll be restricted for about 2/3yrs or could be a year or 2 more but this may be better for him to start again. I would recomment speaking to the CAB as they will be able to advise on what to do . Or there are agencies now advertised on TV that can help with a debt management plan.
Good luck.
www.nacab.org.uk
Firstly he needs to stop getting into any more debt and that includes a large mortgage.
The CAB will give you various options and they are totally confidential.
You can also view your experian credit file to give you an idea what is in your credit file.
www.creditexpert.com
I am a great believer in that if the two of them worked together working hard and earning lots of money to pay off the debt they deserve all the good luck they can get!
So that will rule out "starting a family" for a while...
The way to go is either bankrupcy or an IVA but you need a professional advisor to look at the situation and decide which option is going to be best.
Either way, his credit rating is goosed. Forget the whole mortgage thing for the next five years.
Here's a good, independent place to start.
www.insolvencyhelpline.co.uk
A friend made bad decisions and got in bad credit card and unsecured loan debt in UK.?
(About 50k between various cards etc)In a panic, he has defaulted on payments and disappeared for a while. He intends to go to Europe for a while and sort himself out so that eventually he can try and sort out his debts back here. How likely is it that the banks or debt collectors will issue him with CCJs if he has no known address in UK? And are the banks likely to investigate him for fraud if he disappears for a while, even though he wants to resolve the problem when possible? He is very scared that he may be arrested at the airport leaving or returning to UK.. (He badly regrets it believe me, so please no smart ass comments...) Any info from people who are in the field would be greatly appreciated! Ps, my friend does not know I'm asking for advice!)
Whether or not there will be any criminal proceedings regarding his outstanding debts depends on the nature of the debt and whether or not the credit facility was taken out fraudulently. If he committed fraud taking out the loan (giving false employment details, false names etc) then he could face criminal proceedings. This is an unlikely thing, but possible. They would not deem it fraud if he disappeared for a while, UNLESS he took out the credit so that he could disappear. This would be taking out credit facility with no intent to repay, but the amount would need to be considerable in order to make it financially worthy for the company to get lawyers to take your friend to court (it's all a costly business). We're talking hundreds of thousands of pounds.
Your friend will get CCJ's and defaults regardless of his current address. They will all be done against his 'last known' address, which is all the law requires.
It is highly unlikely there will be any police waiting for him at the airport (unless he has committed MAJOR fraud and even then they would need to know he's on his way!).
Most companies will be glad to hear from him and will enter into payment arrangements. In fact, all of them will.
The worse that will happen is that his credit rating will be stuffed up for a fair while (at least 6 years) and he'll have trouble getting bank accounts etc in the future. The debts will lie dormant until a time when they can track him down and then issue CCJ's etc.
If he is so worried, just go bankrupt and then go off into Europe, it'll be a weight of his mind and he'll be able to straighten himself out.
http://www.insolvency.gov.uk/
(UK) My Girlfriend has a £3,000 debt on credit cards, please help!?
My Girlfriend has a £3,000 debt on credit cards and is getting to the stage where she can only pay off the interest each month and a 'card protection' and 'insurance' fee, so the £3,000 deficit remains (and gets worse).
I help her out now and again and she switches cards every year so they are interest free. Are there any helplines/ government bodies available for advice on how to combat such problems? Any Advice ? Thanks
(PS, please take this seriously, no "she should find a richer man" or "she should stop buying clothes". After all, these were my first two suggestions to her!)
Perhaps she should take out a bank loan for £3,000 and repay the card. The interest on teh loan will be less and she will see the balance go down each month if she just pays as much as she is paying now. It might be even cheaper if you, if you wanted to, took out the loan
Unpaid debts in the UK?
I have unpaid debts in the UK approx 20-25K maybe more. I live overseas due to work. I know these debts have been passed to a collection agency, I have received no correspondence regarding this as my previous housemates did not forward my mail to me. I was told that they had told the collection agencies which country I had moved to but still have not heard anything. I need to return to the UK for business for my work, my question is if these agencies have gone to court regarding this and summons have been served, which I have not received will a warrant be out for me? Is this classed as fraud? I was paying and then my finances went down hill whilst still in the UK and hence I had problems paying.
Any serious advice would be much appreciated
This is not fraud, just unpaid debt. When you return back to the UK, they will then try to collect from you, but you will not go to jail for this debt if you had no money to pay. The only law in the UK about not paying debt, is that if you have money to pay them and refuse to pay them under a UK court order, they then can put you in jail. But in your situation, you are making no money in the UK, so you are fine.
what's the cheapest way to declare bankruptcy in the UK?
i have a client who has large debts - to the extent that a voluntary agreement with creditors seems unlikely to make sense - i've googled the problem but am only coming up with 'free advice' from companies who want to sell their services - voluntary agreements, negotiations etc.
what i need to know is whether you can declare yourself bankrupt and what's the cheapst way of doing it? i'm a counsellor and don't have the financial expertise to answer this and it sounds lame, in my ears, to say - go see the CAB...any knowledgeable help out there?
thanks in advance
I think you need to refer your client to these sites:
http://www.adversemonkey.co.uk/credit-problems/bankruptcy.htm
http://www.thisismoney.co.uk/help-and-advice/advice-banks/article.html?in_advicepage_id=100&in_article_id=395884&in_page_id=90
Apparently your client simply needs to go to his/her local court to do this, with no solicitors involved. It seems that the only cost is court fees on the 3rd anniversary of declaration of bankruptcy, and even those court fees may be waived if you are on income support. Sounds pretty low-cost to me.
Hope your client is OK - can't be easy to have heavy financial burdens.
A debt being sold to a third party ?
I'm in big trouble, and have to get myself into gear in going bankrupt, which is hard.
The debts incurred have been down to various problems, and used to be irrelevant with my old income, though life has changed dramatically since, and I don't consider myself irresponsible, though maybe in the eyes of the lenders, I have.
MBNA are currently registering (or threatening to), a default against me and are selling my debt to a third party.
Could this be a "backstreet loan shark", or another threat, and more importantly - can I get out of the poo by going bankrupt?
Suicide often seems the best option, but the timing and the reason is wrong.
Can I have some sensible UK based advice on my situation, bearing in mind CAB dropped my case (my fault), and the fact that now I am actually working for a company (rather than working for myself) and now earn a pittance.
Before you make any rush decisions check out www.cccs.co.uk this is a free debt advice service. Do not think they will believe you irresponsible people get into debt for a lot of reasons. The company they will have sold the debt to is a debt recovery company andthey have to go by certain rules so ddon'tbe intimidated. You are not the first and you will not be the last to get yourself into debt.
What can the debt collection agency do if I cancel a BT contract before it ends?
I have recently canceled a BT internet contract due to an unexpected circumstance that forced me to leave the UK (I was an overseas student in London). I never want to leave the contract behind irresponsibly, so I contacted BT and tried to explain my situation in order to negotiate for a lower cancellation fee. However, BT came back threatening me with legal actions without any willingness to discuss. They insisted that I pay a one-time payment (~£600) covering the remaining contract. Even though I am not living in London at the moment and will not have the chance to return in the near future, I still want to deal with this problem nicely without messing with my credit. I am hoping to hear any similar experiences or advice so that I can put myself in a better position to negotiate without being patronized by their attitude. I am grateful to any of your advice!
1. If this debt eventually goes to a debt collection agency, can the agency take money from my bank account in Britain to recover their debt (would they be able to get a court order)?
2. Since I simply terminated the contract before it ends and haven’t used the service (unlike credit card debts), is this sort of debt equally serious?
3. Given that I am not a British citizen and have no property in Britain; would the debt collection agency be able to trace me if I had the chance the return to complete my studies?
It is very difficult to advise without knowing all the facts. It seems prima face that BT wish to activate the agreed cancellation clause. If you wish to pay this then you will not be in breach of contract as it specifically caters for this eventuality. The best way to discharge ones contractual obligations is to fulfil them.
However, if you refuse, then you will then be in breach and they may refer you to the collection agency. Several thing can happen here but it is unlikely they will be in a position to recover any real property as you have left the country. It is very unlikelty they will try to recover from your bank account. They may have a go through your bank mandate should you not have cancelled it. It is more likely you will be placed on a bad credit list as the agency will report you have gone .
When you return to the country this may catch up with you. Any new agreement of this type will certainly ask for previous addresses. This is how they track who is who.
Your task will be to avoid this.
If you have a problem with BT or you believe you were mis-sold the contract by some form of misrepresentation then you can challenge the validity of the contract. However, if you signed with full information on the cancellation costs and are now refusing to cough up you will look like a bad debtor in both the eyes of BT and the law.
I hope this helps.
xxFJ
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