Bankruptcy advice

deemjay68

About two year ago my business partner walked out of the company leaving it in a financial muddle. I could not trade out of the big black hole following us and after a medical issue walked out of the company. I was MD and partner was 50% shareholder. The business had about £80,000 in secured debts on me. I was / am liable. Knowing there was little or no chance of trading out I ceased trading accordingly. During the past year I began trading under an old LTD company to earn money for myself. Not a lot but enough to live on. I attempted to grow this company to repay the debts but frankly I just can't. Both companies are LTD.
My current company has a cash position of only £4k roughly but it's all I have to live on and as soul trading I may not earn one week to next so this is a buffer for me.
Recently the debt wolves have been gathering leading to enforcement of CCJ and attempted collection of my car. I paid an amount to the company and they will leave me alone for a month but they will be back and soon enough most of the others will too so I don't think I have any choice but to go bankrupt as the debt is simply too large.
I don't own any assets, no house and the car is probably £1k if that so it's not really a huge issue but what about my current LTD status company - my only source of income. I had thought perhaps standing down as director and handing control to some one else. I am 100% the company, there are no shareholders or partners just me.
My thoughts were to split the company in two and appointing a new MD at 50% and me as just a shareholder at 50% or even handing over the entire company and simply working for them until out of any bankruptcy I will have.
Question is really how can I continue to earn a living while in bankruptcy? Does any one have an advice they could offer prior to my appointment with CAB?
I have thought about many other routes out but the sums are too large to enter any IVA and really the only way out is to hit reset.
Thanks

deemjay68

Sub note: Both companies are totally different types of company...

TheGardener

Hi - sounds like things have been tough. I am not an expert but there are plenty on these boards and I am sure one will be along soon. However, my suggestion is that you talk to the business debt line as soon as you can. Its free and confidential http://www.bdl.org.uk/

Flyright

As you said, you 'are' the company..so you will not be able to operate through it if you are bankrupt..even if you get someone else in it won't alter the fact that you are effectively still the person running the company, which is forbidden in bankruptcy.

deemjay68

Understood. Another idea would be to cease the LTD company and set up as soul trader. Would that be an option? I do still need to earn a living.

OutofDebt-NOT-OutofDanger

deemjay68 wrote: »

Understood. Another idea would be to cease the LTD company and set up as soul trader. Would that be an option? I do still need to earn a living.

This is the best option for BR - you can always reform it into a LTD company once discharged if you need/want to.

There are no restrictions to being a sole trader except that you have to trade under the name in which you became BR so deemjay68 t/a whatever and of course the restriction on the amount of credit you can apply for with suppliers.

deemjay68

OK I think I am going to start removing LTD status until the day I am declared. I will trade ME T/A COMPANY at that point. Open a basic account and allow payment into that after bankrupt. Any advance on that?

Action_Jackson

deemjay68 wrote: »

OK I think I am going to start removing LTD status until the day I am declared. I will trade ME T/A COMPANY at that point. Open a basic account and allow payment into that after bankrupt. Any advance on that?

No advance on that - it's your only course of action aside from being employed by someone else. I left a PAYE job to become a sole trader just before BR to have better control of things during my BR year.

The OR is wise to the 'employee' actually running a Ltd. Co. behind the scenes, best not to even bother with the hassle of the extra scrutiny, keep your head below the parapet and just drift through to discharge in 12 months.

You'll get a letter from HRMC telling you that you have to fill in your tax return for your year bankruptcy via a paper return. You'll get a new tax reference number for your post bankruptcy years.

You can apply for credit with suppliers, but anything over £500 and you will need to be clear with them that your are currently BR.

If you haven't done so already, I'd advise you read about Income Payment Agreements (IPAs) while you're here - the ramifications of a three year IPA can be of more significance than the 12 month restrictions of BR itself.

Good luck!