Self Employed and DMP

[OvertheRainbow]

Hi

We currently have these debts:


HALIFAX CC 1623 02/07/2007
A&L O/D 2000 26/04/2008
MBNA CC 2070 29/10/2008
FIRST DIRECT CC 2084 02/08/2005
B'CARD CC 2165 27/04/2009
MBNA CC 2573 02/05/2008
B'CARD CC 2903 11/02/2009
VIRGIN CC 3790 20/07/2005
B'CARD CC 4134 24/01/2007
MBNA CC 3914 16/04/2009
HALIFAX CC 7261 22/08/2007
ULSTER BANK BUSINESS O/D 5000 01/10/2008
ULSTER BANK PERSONAL O/D 2000 20/06/1994
A&L LOAN 564 19/01/2009

Total owed £42895

Up to this month, there was just one missed payment (halifax)

Realising, having paid of £20k in 18mths, we could not sustain these payments, primarily due to husbands' sole trader business profit declining, we began to look at DMP.

We have been talking to Payplan and were due to start payments until they told us that we cannot included business o/d because business is still trading. But then DH also has personal o/d with same bank, as you can see, so does that mean we should not include it either?

We have managed to open new current personal account but had zero luck opening business account, which I realised legally we do not need to have but bank t&c's do not allow business use on personal account. Had we have known we couldn't put business account into DMP we could have saved alot of time.

So presently we have sent letter with £1 token payment to all c/c's but haven't contacted o/d providers. To my mind we have to clear DH personal o/d before we can proceed with DMP.

What do others think, and alos UE route, I am ignorant to this path....

Ta Ta

[BBoo]

Re: Self Employed and DMP

Personal Overdraft should definitely be included, BUT make sure you have a parachute account opened first.

Nat West do a basic Business Account which you should be able to get. I believe they're the only bank to offer this.

As a sole trader, is the business debt not also your husband's personal debt. I'd ask Payplan to put it down as it is a personal debt. They can always turn round and say no.

[OvertheRainbow]

Re: Self Employed and DMP

Thanks for reply BBoo

Payplan state that because business is still operational, they can't include the bank account.

No Natwest in Northern Ireland, they directed us to Ulster Bank - vicious circle!

Thankfully got Co-Op cashminder open for my salary already

[BBoo]

Re: Self Employed and DMP

Why exactly can a debt from a business still running be included in a DMP? Effectively it's just a work extension of your personal overdraft and they'll include that.

If the business is struggling and the debt likely to get larger, I can see the sense in not including it, but at the end of the day, you do not have the protection oflimited liability, so if you want it included I see no reason why it shouldn't be.

The whole idea is to get you out of debt, not leave you with debts incurring interest and charges at some unearthly rate. Coopers-Matthews Solicitors agree with me:

Sole Traders

As with company directors, sole traders can continue to run their business while carrying out a debt management plan.

Tell Payplan to put it down!

[Never-In-Doubt]

Re: Self Employed and DMP

Or you could dump payplan and consider using our preferred DMP specialist who will be able to sort a wider range of issues for you, including any possible financial hardship - and best of all, it's free

If you're interested in having more control, using "our man" to help you get started etc then PM me and i'll line you up

[OvertheRainbow]

Re: Self Employed and DMP

Why exactly can a debt from a business still running be included in a DMP? Effectively it's just a work extension of your personal overdraft and they'll include that.

If the business is struggling and the debt likely to get larger, I can see the sense in not including it, but at the end of the day, you do not have the protection oflimited liability, so if you want it included I see no reason why it shouldn't be.

The whole idea is to get you out of debt, not leave you with debts incurring interest and charges at some unearthly rate. Coopers-Matthews Solicitors agree with me:

Sole Traders

As with company directors, sole traders can continue to run their business while carrying out a debt management plan.

Tell Payplan to put it down!

LOL - I have no idea what Payplan are talking about either, I completely agree with you - why have DMP and an existing o/d running. Kind of defeats the purpose in my mind.

[OvertheRainbow]

Re: Self Employed and DMP

Thanks 'Niddy' - PM'd as requested.

[garlok]

Re: Self Employed and DMP

Just a gentle word of caution before anything is taken as read. A couple of years ago ALL self employment, clubs, associations, partnerships (whether limited liability or not) agency work, etc was brought under the auspices of the Companies Act 1986, its accounting rules and the regulations governing corporation tax EXACTLY the same as a limited company. So get some accountancy advice before moving this particular element onto a combined DMP.

From our own experiences its possible for example for a the balances from a F & F on a business account/loan to be brought onto the balance sheets as profit and be taxed accordingly under corporation rax rules. Sorry but be a little careful would be my take here.

regards
Garlok

[OvertheRainbow]

Re: Self Employed and DMP

Thanks Garlok

Spoke to our accountant at the very start of this process, he wanted us to go B/R route but admitted to having no knowledge about the process and put us in touch with firm of solictors who specialise in the same.

Read lots and decided we didn't want to do this

DH has just become liable for tax on business profit, first payment due Jan 2013. Acct talked about moving to ltd co soon to allow us to pay corporation tax rather than standard but we have not yet put this in practice, other than to register co name and send zero return for last three years.

[garlok]

Re: Self Employed and DMP

Glad you did not go the BR route, it has to be personal choice. However if you are personnally BR you cannot be a director of a limited company. There are a lot of advantages to being a limited company in exchange for some tighter accounting rules although even that is disappearing fast as as I said above. A lot depends on your business and what you do. I won't ask, but if you work from home up to 40% of certain expenses can be booked as long as there are only the two of you, employing no one and the business does not occupy more than 40% of the floor area of the rpoperty. These figures vary from time to time, so you have to keep your eye on the material sent to you by the Revenue, but most times as well there is no liability as such for business rate either. Its worth looking into as it can save you some money on tax liabilities perfectly legitimately. As self employed you still have to pay twice a year don't you? The only thing you have to take into account is the employers contribution element of National Insurance. The overall balance we have found is in favour of limited company.

regards
Garlok

[OvertheRainbow]

Re: Self Employed and DMP

Yes our accountant also finds in favour of a limited company but is still undecided about when is the best time to move from sole trader status.................our debt may be a factor as getting bank account etc could be difficult.

You are also correct in saying we have to pay twice a year - starting Jan 13 and again in June. First payment is as you probably know, what we owe plus 50% of projected - such charmers in the IR!

I wish I knew all of this when we started the business but hey ho!!

[OvertheRainbow]

Re: Self Employed and DMP

Every so often you meet an 'earth angel'..................today I spoke to one, and feel very lucky to have met such a charming, understanding person.

Thank you!

[OvertheRainbow]

Re: Self Employed and DMP

Thought a month down the line I should give an update to help those trying to make decisions about DMP's move forward.

Having been introduced to the preferred DMP charity of this website, I started again to try and get this sorted. Finally I met someone who actually understood how self employment works - what a Godsend.

We have, as hoped, been able to include ALL the debts including the business o/d (which Payplan would not let us include) Our DMP manager worked out what we could afford, no easy task given that DH is self employed and I get a mileage allowance from work which varies constantly.

So we are almost there 9/12 creditors have accepted the plan, we will pay £110 monthly which will allow us to have luxury items like food and heat.............although our debt free day is light years away but thats a worry for another day (in the future I plan to off F&F)

The phone calls are a pain..........really only Santander who want to 'chat' to me daily, but again our great DMP provider has asked that we log all calls and he will write to them re harassment! I am getting very good at dealing with these calls, refuse to answer security questions and ask why they are calling when we asked for all correspondance to be in writing. I then mention banking code and would you believe they are now hanging up on me!

Next month should bring answers, and hopefully acceptances from outstanding creditors and then we are good to go as they say.

Anyone considering DMP - I would very much advocate it as the way to but we certainly could not have got this far without the help of this site and their introduction to their preferred charity.

Many many thanks

[Susie]

Re: Self Employed and DMP

Well done and how good to hear of a DMP provider who understands that you do need to eat occasionally! Glad you are sorted out and hopefully the other 3 creditors will fall into line pretty quickly as well for you so you can get on with your life without the stress/

Well done Niddy for finding them as well