Sole trader - can you still get money owed

john1002

I am currently owed money by a sole trader that used to run a limited company that is currently been wound up, there is a report that shows he owes quite a it in a directors loan and the insolvancy company has suggested he made be made bankrupt if he cant repay it.

I always thought with a sole trader my money was more safe than a limited company as I could go after there house or other assets to try and get paid but now I am unsure.

At the end of the day if he cant pay due to no money i am left out of pocket?

Any pointers?

John

LittleVoice

If it is he as the sole trader who owes you the money and not the limited company, then you need to ensure that you are listed as a creditor if he does go through bankruptcy. When his assets are then used to pay his creditors you should get the same proportion of dividend (maybe 100%) as the limited company.

[You would only benefit from his house if it was his house. Not everyone lives in a house they own.]

hippyadam

Right well firstly you need to clarify some points.

1. Who did you invoice the Ltd co or the sole trader?

2. Was it the Ltd co or the sole trader who asked you to provide your goods/services?

3. Did they sign any documentation? POD's delivery slip, terms & conditions?

Basically you do have the premise correct, a Ltd company is limited because it has limited liability. A sole trader is personally responsible for any debts rung up by his business.

So you really need to know exactly who it is that owes this money first, & then you can work out the best way to try & recoup it...

john1002

hippyadam,

Invoiced the sole trader

Sole trader

Yes

But I suppose as a sole trader even if you are declared bankrupt you can still operate and not pay the bills.

Regards

John

LittleVoice

john1002 wrote: »

But I suppose as a sole trader even if you are declared bankrupt you can still operate and not pay the bills.

If you are bankrupt you are not supposed to use credit. So things would have to be paid for up front, thus there shouldn't be a question of not paying bills.

hippyadam

The sole trader is liable you are correct. As someone else has stated if he is planning to go bankrupt you need to get the name & contact of the trustee so you can go on the list of creditors.

However he may just be bluffing, i would recommend you contact him asap to sound him out. If he isn't willing to discuss it or give details of who is handling his bankruptcy he may just well be trying to avoid payment.

In which case it may be worth investigating the services of a professional credit recovery agency. If you do decide to go down that road remember the 2 golden rules...

Pay no money up front & don't take out a subscription! No reputable company will want your money first or will want you to sign a binding contract!