Your Questions About Debt Busting

William asks…

My ltd company has gone bust owing £12000 due to bad debt, i have made no personal assurances, am i liable?

I am a plumber who has been left with a debt of £17000 after the company i was sub contracting for went bust, i dont have the funds to continue trading and have lost £5000 of my own money, however i also owe a bank £12000 i have only been trading for 4 months and before this was trading well. I have not signed any personall assurances and the loan was not secured. Am i personnally liable for any of the loss? this has been a very bad experiance and all i want is to start working for someone else again, can i just write this debt off?

John answers:

Yes a limited company is a legal “person”. It can sue, be sued and be made bankrupt all in its own name. The bankruptcy will probably involve selling your van, tools and any other company assets and each creditor will get a percentage of the cash they raise. You may even be able to buy these assets at an agreed price with the insolvency practitioner.

I think you become barred from running a company until the bankruptcy becomes “discharged”.


Helen asks…

Question about debt & bankruptcy?

Hey everybody,

I’ll be 23 in a few months. I’ve already been married & we bought a house [but due to a pipe busting in the winter & causing a ton of mold & then five trees falling on the house in a wind storm that the insurance company did not want to fix], the home ended up going into foreclosure. The loan was not in my name, however my name was on the deed. I’m not married anymore & the last time I checked my credit, the house did not show up but, I think that was before it was actually foreclosed on.

He & I have two credit cards [probably $6000 of debt total] that I have to pay half off of [so, about $3000 right there.]
Then I have a Kohls & Macys card [about $700 total].
Then I have three other items that are not credit cards that come to about $1,050.

Total, I have just a little under $5,000 worth of debt which I know doesn’t seem like much but, after I deduct all my bills, I don’t have much money left. Things keep popping up left & right like medical expenses & tires for the car, etc & whenever I think I’m starting to get ahead, I end up even further in debt. I already have two jobs, I already save as much money as I can. Every bit of debt that I have has already gone to collection agencies so I can’t go online & pay on anything.

I’m just wondering if [since my credit is already horrible] I should just file for bankruptcy. If I did, would the foreclosure still show up [assuming that has affected my credit]? Would it be easier to rebuild my credit after bankruptcy or repair it by paying everything off? If bankruptcy is my best option, how long will it affect me? Will I be able to rent an apartment? What if a few years from now, I want to buy a house or condo? If bankruptcy is not my best option, is there any programs that aren’t scams that I could use to consolidate or something? Not sure if this makes a difference but, I do have a 2007 car that I bought brand new. I have three years left of payments & I’m current on it. I’m thinking about trading it in for a vehicle with AWD.

Serious answers only please. I’m trying to figure out what steps that will help me further myself faster. Thanks in advance.

John answers:

Don’t file for bankruptcy!!! You don’t need to man. Your debt isn’t that bad at all. My wife and I had $23,000 in debt and we paid it off in 1 1/2 years. We were only working part time each and I was going to school full time. Bankruptcy is just a cop out. $5,000 in debt is nothing.

The best advice I can give you is to read Dave Ramsey’s book: The Total Money Makeover. It will give you a step by step plan on getting out of debt. You aren’t in that bad of a situation compared to many I have seen. I’ve seen people get out of MUCH worse situations.

Bankruptcy will affect you for the rest of your life. While it may fall off your credit report, you will be asked at most jobs if you have ever filed and that’s not good. You’ll be fine. Keep working hard.

Get some savings. I know it seems like a struggle but if you get $1000 in the bank as an emergency fund all these little things will stop popping up.

Betty asks…

Credit card debt and unemployment?

I’d like to get an idea of what my options are. I’ve contacted the credit card companies but all I get is an offer to reduce my monthly payments or a harsh reminder that “it’s your debt” and that I have to come up with the money somehow and that it’s not their responsiblity.

I want to pay my credit card debt (most of which I racked up two years when I moved out of my parent’s house for a job), but I’ve recently been laid off. My career (education) is normally pretty recession resistant, but the government cutbacks and mismanagement of educational funds have struck even the schools, and I was one of four people who found themselves out of a job.

I want to pay my debt, and I will as soon as I get a job, but it’s been going on two months now and nothing has panned out. My savings account is dwindling, and if I’m to perform financial triage, the car payment, insurance payment, and food will have to take priority.

I’ve moved into a trailer that my mother rents out, so she’s taken care of house and has even offered with the electricity (water is included in the lot payment), but I can’t expect her to cover these as well. I’ve already deferred my student loans, negotiated smaller payments…but how do you make any kind of continued payment when there is nothing coming in?

I’ve looked for a job for two months now. Teaching positions are flooded with applicants right now. I’ve tried every position in the state in my field (and some in other states)…nothing. Min. wage paying jobs won’t take me because they say I’m overqualified. I can’t omit my education and/or experience because that would leave a five year gap on my resume and be grounds for dismissal should they ever find out. I’m working with the department of labor, but they’re flooded with unemployed workers as well.

Enough about my job hunting woes though. My question is: what do I do? I’m not worried about busting my credit; I know that’s pretty much a given at this point. But I don’t want to be taken to court. I owe on three cards. On two of them, my balance is four thousand. The fourth has a balance of twelve hundred. I was making good headway on these and had scheduled out a payment plan to have all paid off within two years, but now this has happened, and I am at such a loss as to what to do.

Any advice? Anyone else going through a similar situation? With such a high balance, is there a good chance they will come after me once the money runs out…even in this economic climate? Do they offer any kind of deferment program? Can they stop incruing interest and just let me make any kind of payment (even if it’s 10 dollars a month) just until I get on my feet again? I know hospitals will, but credit card companies just seem so inflexible.
Even though I’m not a financial guru…selling the car is a horrible answer. I don’t live in a metropolitan area. There is no public transportation. If I sell the car, that would limit my job options to whatever I can reach via foot or bike. Which, considering I live in the country, would be one gas station. Plus, the car is fairly new and is in its final year of payment. I couldn’t get a reliable car like this for even twice what’s left on it. Sell the car and pay off the debt? And do what? Sit on my butt all day until I can’t afford even the money for a bag of lentils so I can avoid harassing calls on a phone I can’t afford to have? Great advice. Sheesh!

John answers:

Here’s what I did when I lost my job last year:

Prioritize what my remaining money will go to until I get another job:

1) Food (I got this down to $11 a week to feed myself.)
2) Shelter (keep paying the landlord as long as you can)
3) Transportation (need gas, even at $5 a gallon)
4) Utilities (keep the lights on. It helps make the computer work.)
5) Clothes (And I don’t mean a new pair of shoes at the mall because I’m depressed.)

The credit card companies didn’t get a dime for several months.
They called and complained and jacked around with my interest rate, but I ignored them, and told them they had no choice but to wait.
But, make sure you continue to communicate with them, even if you can’t find intelligent life on the other end of the phone.

“Sue me, and I’ll hit you over the head with a Chapter 7, and you won’t get a dime.
Don’t sue me, and you’ll start getting paid again as soon as I get another job.”

Is my credit trashed? Yes.
Do I care? No. It will clean itself up once I start making payments again.


After I got the job (two months later), here’s what I did:
1) Stayed on the same budget until I had $1,000 cash in the bank.
2) Closed ALL of my credit cards, and negotiated repayment plans. (And they cut my interest rate from 30% to 5%, on the condition that I don’t open any new credit cards with anyone else).
3) Made a written budget for every paycheck.
4) Cancel all 401K contributions (Once the debts are paid off, I’ll ramp this up to 15% before taxes)

Here’s an example:

$3000 Income after taxes.

$250 food
$600 rent
$10 renter’s insurance ($120 a year, so it gets saved until the payment is due.)
$50 car insurance ($300 a year, save until it’s due)
$100 gas
$-0- car payment (I have a paid-for truck)
$100 car repairs (The truck is 16 years old, so a $1,000 repair sometime this year won’t surprise me)
$20 clothes (one item every month or two)
$100 electric bill
$50 gas bill
$80 cable bill
$40 water bill
$800 minimums on Visa (That’s about $35,000 in debt to pay off)
$100 fun
$700 Savings / Extra Visa payments.

Hope this helps.

Carol asks…

What are good stocks to play if you are anticipating a Real Estate Bust?

Stocks that go up if there is a Real Estate Bust rather than shorting housing stocks. I’m talking debt management or other areas.

John answers:

I guess there must be some, and a broker would help you with that.
I would rather short the homebuilders, the mortgage companies, the building materials companies , appliance companies etc.

David asks…

How can you take a Republican seriously about debt reduction when they never consider Defense or Taxes?

Republicans never want to address wasteful spending on Defense contractors and they never want to address the idea of raising taxes on the wealthiest 2% – cutting unnecessary Defense spending and a tax hike on the super-rich will greatly reduce the debt.

Instead of asking the most fortunate to sacrifice and give back to the same capitalist free-enterprise system that they benefited from, Republicans would rather ask the Middle Class and poor to sacrifice, by cutting funding social programs, health care programs, public education, collective bargaining, and busting up Union/Worker Rights.

Republicans are Robin Hoods in reverse.
El Tecolote: Please tell us how Clinton’s cutting the Defense budget has anything to do with 9/11. Preventing 9/11 would require Homeland Security, FBI/CIA, and local law enforcement. Not tanks, planes, naval ships, and platoons. 9/11 was not a conventional warfare attack, and thus conventional military would not have prevented it.

Also, you’re complaining about Libya but said nothing about who started Iraq & Afghanistan. Besides Libya is now headed by NATO and the US only has a supporting role in the no-fly zone. It isn’t coming close to the cost of Iraq & Afghanistan. Nice try.
Another thing Republicans never consider – cutting government subsidies for Big Oil. Big Oil lobbyists fund Republicans.

John answers:

You can’t

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