Well, sorry to have to say it, but you may well have to pay the £499. We often see cases like yours on this forum where the keeper failed to update his V5 for the vehicle. Most cases end badly. Those that do succeed are where the move of address coincides with a PCN, not where the V5 is never updated, as seems to be your case. Other unusual circumstances may also get an OOT SD accepted. However so far nothing in your narrative suggests anything unusual.
English civil law is very harsh, taking no consideration of ability to pay the debt; its a debt, so it must be paid. It may, however, be possible to agree a payment plan with the bailiffs.
The alternative is to submit an Out-of-Time Statutory Declaration to the Traffic Enforcement Centre, (TEC), that you never received the original PCN. Unfortunately, you also must submit an explanation of why, in your opinion, the PCN was never received. In addition, the council can object to your OOT SD, on the basis that they sent everything to the address as per the V5, but received no reply. TEC will then reject your OOT. Up to now it is all free except for a solicitor to witness the OOT SD, (or free at the local county court). After a rejection you can ask a county court judge to review the case, about £110 for a papers-based review, and £455 for an interview with the judge. These sums are not normally recoverable.
Incidentally the sale of your car is irrelevant; the bailiffs are chasing a debt, not a car.
