# 32 yr old self-employed architect mortgage arrears, going broke



## Carolina (24 Jul 2009)

I am posting this for my brother

Age: 32 
not married

Annual gross income from employment or profession:  25,000 
net income: 6,000 !

Type of employment: architect, one man practice

spending more than he earns

Rough estimate of value of home: 250K
Amount outstanding on your mortgage: 300K 
What interest rate are you paying?  6%

Other borrowings – car loans/personal loans etc
10K overdraft

business has 25k overdraft and owes 25K VAT

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? 

Savings and investments: none

Do you have a pension scheme? no

Do you own any investment or other property? 100K in unmortgaged foreign property

Ages of children: 8

Life insurance: none 

outgoings: car 200/month (needed for job)



What specific question do you have or what issues are of concern to you?

My brother is 3 months behind on his mortgage which is at 6% as it is subprime. It is interest only and he is in negative equity of 50K. 

He owes 4.5K on his mortgage, 10K on overdraft and another 5k in unpaid bills so that's 20K personal debts

His company owes 50K to the bank and the revenue. He has been building up his practice for 4 years and it seems to be doing OK with good word of mouth and I know he is good at his job but it is loss making at this year and last year (he only expects about 25K gross income this year). His rent is double the market rate and he is locked in for the next 9 months.

I worry that his house will be repossessed soon or else the revenue will catch up with him or the banks will call in their overdrafts.

He lives a very frugal lifestyle, never wastes money on personal items and has tiny food bills.

What should he do?

Is it an option to shut the business and leave the revenue and bank short?
Obviously he should sell his investment property.


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## csirl (24 Jul 2009)

> Obviously he should sell his investment property.


 
This sounds like the best option - will clear all his debts if it gets the price you've quoted.



> Is it an option to shut the business and leave the revenue and bank short?


 
No hope of ever getting credit again in the near future if he leaves the bank short - will make it difficult to continue in business.

Revenue have some very strict laws against what they call "phoenix companies" whereby someone shuts down because of owed taxes/VAT and starts again. 

Considering that he seems to have enough personal wealth (property) to cover his debts, I dont see why he needs to consider not paying debts?


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## chlipps (24 Jul 2009)

Yes looks like the investment property has to go

Can he rent out a room in his house to try get in some extra cash

He also needs to consider part-time career change. I acknowledge not much work out there at the moment but he should consider some part-time work in hotel or supermarket.. or other to bring in additional income


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## Mumha (27 Jul 2009)

Is it possible to even sell his investment property ? Where is it located ?


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