Bankruptcy and self employed

Lostmyway

Hi, Business Debtline put me onto Payplan and they are in the process of setting up an IVA for me. I'd rather go bankrupt but Payplan have told me this would make it difficult for me to continue trading ( I'm self employed and run a small shop offering beauty treatments) . I'm not too sure about the IVA, I don't want to be having my bank accounts and spending scrutinised for the next five years.
So my question is, Is the information Payplan is giving me correct? Would bankruptcy mean I couldn't carry on in business? It doesn't seem quite right to me, I'm not a director , I'm not Ltd.
Any advice would be appreciated.

banksshouldworry

I wouldn't listen that much to PayPlan as they have a vested interest in you continuing to pay them via an IVA.

Going bankrupt should not stop you from continuing in your current line of business. There are only certain professions like lawyers etc where going BR is a no-no if they intend to continue trading.

I'm self-employed and bit the bullet and went BR last year (it was one of the best things I done!). It didn't interfere that much with my ability to continue trading (I even got to keep my PayPal account).

The way I saw it, it was better to go BR and then know that I'd be discharged in a year and the BR would be off my credit report in six years rather than having an IVA and continuing to have a bad credit file for many more years to come.

That said, get some impartial advice from Business Debtline again or maybe try StepChange on (0800) 138 1111.

Good luck.

-banksshouldworry

skintandfat

I agree with the last post
I procrastinated for 2 years hoping things would turn and get better before I bit the bullet and went BR

I am self employed (sole trader) and it was no problem to go BR and I kept trading with permission of the OR as keeping trading meant I could make contributions.

I am a tradesperson and I had NO business debt included in the BR (only personal overdrafts and card debt).
I had a legal duty to tell people I was going to ask for over £500 credit that I was BR and the answer-
We have known you for 15 years, you ALWAYS pay your bills and we trust you, dont worry
Also another wholesaler opened up in the next town and they asked me to open an account- I said I would not get credit as I was an ex BR. The branch manager said - I will personally make sure your account is opened and will give you a decent limit, it's not a problem.

Flyright

The OR may not neccessarily allow a business to continue to trade. If your business is in a shop premises there may be a lease which would pass to the OR to deal with. Any goodwill in tbe business would also be an asset which the OR must look to realise. The OR will likely need to see your accounts to know whether the business is profitable. The OR has to deal with items such as any stock/equipment which is owned by third parties. So it is not certain that the OR would allow a self-employed business based in a premises to continue to trade. The appointment of an Insolvency Practitioner trustee may be sought by the OR.

TheGardener

Payplan have a job to do but, as previously stated - there is profit in it for them so don't take their view as 'impartial' There is nothing to stop you trading but there may be some things around your lease or held stock you need to discuss. It is in the OR's interest for you to be able to continue to earn a living so get advice first and keep all your options open for now.

Lostmyway

Thanks for the replies.
I don't have a lease on my shop, it's just a verbal agreement. I doubt my stock would seem very attractive ( maybe 500 quids worth). I don't really understand how the OR could class goodwill as an asset as it's me offering the services. Without me there wouldn't be a business. I don't mind showing the OR my accounts but as it's a new business they don't show much. I know things are going to get better as the business becomes more established but it'll struggle if I'm paying a tidy chunk to an IVA for 5 years. Plus if they are going to scrutinise my accounts every year I feel that this will stop the business from growing as it should as I won't be able to plough any profit back into the business. If I enter into the IVA and it fails can I go bankrupt after that?
I really need to take more advice but from who? It was business Debtline who passed me over to Payplan so my faith in them has been diminished somewhat.

alastairq

If I enter into the IVA and it fails can I go bankrupt after that?

That is usually the default procedure.

For a bit of self-help, try

http://debtcamel.co.uk/

Another alternative is to book an appt. with CAB?

debt_doctor

Hi,


The vested interest argument is very valid for lots of 'free' agencies - not that I can say too much as the CAB will be providing DMP's and IVA's nationally within the next year (pilots already running).
The value of the business as an asset is well worth thinking about. Had a client a couple of years ago who was sole trader of a sandwich shop.
All of the stock was destroyed (appreciate yours is not a food business) and the on going business (no lease) was valued at £5k. This was the customer delivery list, goodwill etc.


DD

Lostmyway

Are you saying that they could sell my business?

debt_doctor

Lostmyway wrote: »

Are you saying that they could sell my business?

If you have customer lists and other things that are saleable to another Beautician, then the business may well have a value.
The normal method is to ask a family member or friend to 'buy out' the ORs interest in the business, but ultimately, if the OR could find another Beautician to buy the business then yes, this could happen.
it tends to be the types of business with a recognised customer base that attract the attention of the OR and especially through a shop.
For instance, a self employed taxi driver will rarely have their business stated as an asset because it is 'the office' they run from that holds the customer base - not the individual drivers.


DD

Lostmyway

Brilliant
Why has nobody told me this before Man thats just messed my evening up