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P E R S O N A L A D V I C E

Personal Debt Advice For Business Owners

In many cases it is necessary for owner directors' or self employed sole traders' to borrow in their own name to inject cash into a business. In addition, a personal guarantee for a loan taken in the name of the company may have had to be given by the business owner.

This is not a problem when the business is successful, as drawings from the business can be used to meet the payments on such debts. A problem arises if the company gets into financial difficulty as it may not be able to maintain regular salary , repayments to loans or credit card debt which you have taken on behalf of the business.

If the business fails who is liable for the debt?

If you are a company director and the company fails, then generally you are not liable for any outstanding debts.

If you gave a personal guarantee to obtain a credit facility such as a loan in a business' name and the business is unable to repay the loan then you will be held personally responsible for repaying the outstanding debt.

If you took a debt in your name and put the money into the business however the business can no longer afford the repayments then you will be personally responsible for repaying the debt.

If you are a self employed sole trader and your business is not a limited company then you are classed as self employed. Any borrowing that has been taken out will normally be in the personal name of the business owner who agreed that the business would take the loan. If repayments cannot be met by the business then it is the responsibility of the person whose name the debts are in to repay the debt.
 
What happens if I am personally liable for a debt but cannot afford to pay it?

If you are an owner director or sole trader and find yourself in this position, there are a number of solutions available to assist you, these include

Consolidation Debt Management Plan Individaual Voluntary Arrangement Bankruptcy

Anglian Accountancy and Insolvency 01-01

2016 Maitland & Associates Accountants. Part of the Anglian Accountancy & Insolvency LTD Group. No. 09944696

PO BOX 1545, Bedford, Bedfordshire, MK42 5DL

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