Bankruptcy and self employed

TheGardener

However, it is in the OR's interest for you to continue to earn a living and pay an IPA (if BR is the route taken) so it may be it's worth more to them for you to keep working and earning than it is to sell your contact list.

Lostmyway

Thanks for all the advice but there seems to be a lot of ifs and buts. Nothing seems very clear. Obviously I don't want to go down the bankruptcy route if there's a chance I'm going to lose my business but how can I be sure that's not going to happen??

TheGardener

Well you know what they say - the only certainties in life are death and taxes :eek:
When it comes to BR - if you really are insolvent then there is technically no choice - insolvent = bankruptcy unless - you can find an alternative plan either on your own or with payplan.
What does your business actually consist of? If this was happening to someone else, a competitor - would you realistically think buying their 'business' was worth it? Are your customers likely to follow you ? customers can spend their hard earned cash where they like - do you think the OR would consider your business has any sort of real value? If the answer is yes - then try and work with payplan - if realistically, you don't think the business is worth much in its current state - then chances are the OR won't either.
Is it worth going BR and then starting the same business again?

RFW

Lostmyway wrote: »

Thanks for all the advice but there seems to be a lot of ifs and buts. Nothing seems very clear. Obviously I don't want to go down the bankruptcy route if there's a chance I'm going to lose my business but how can I be sure that's not going to happen??

I knew someone in a similar position a few years ago, they were advised to put the business up for sale. This may give you some breathing space and if you put it up for sale at a slightly inflated price then it's unlikely to sell. The OR would then see this and not consider it an asset. Obviously get advice around this as it's going back a bit and I don't know how saleable your business is.
You could also consider the possibility of selling it to clear your debts and see if you could get some more to start again elsewhere.

Just some thoughts to consider and by no means my area of expertise.

Lostmyway

Ok. If I walked away from the business basically all there would be is an empty shop unit. My customers would follow me I believe. Couldn't I close the business down, file for bankruptcy then start trading again? The unit is owned by a family member so I'd have no problem doing it as far as ' the landlord' is concerned.
I'm sorry for all the questions but I just don't want to get pushed into an IVA, I say pushed because that's what it feels like. I'm not happy with the situation at all.

Flyright

A bankruptcy order has the effect of 'closing' a business anyway. If a business is allowed to continue after the order is made it effectively starts as a 'new' business, with a new tax reference number too. All money due to the business prior to the bankruptcy order becomes an asset in the bankruptcy as book debts.

Lostmyway

This is what I mean! Nobody I've asked for advice has explained any of this to me. Until now.
It's just been IVA IVA and more IVA . I thought that this was what business Debtline were all about, explaining options. I've just been passed to Payplan and they've put my tax bill into the IVA ( which I'd sorted out a repayment plan for, and I'm paying it) , and next years council tax?? According to the proposals they've just sent me I now owe 10k more than when I started !
I'm not happy with this at all. Who can I go to who can explain my options properly?

TheGardener

It could be that BDL really believe that an IVA is the right way for you. I know the process and options can be overwhelming - taking in so much new information, especially when you are stressed out is really hard. But now you have read more on here and are more familiar with the options, go back to BDL and ask more questions - sometimes its a case of just asking the 'right' questions to get the information you need.
If the business is not viable and your assets are outweighed by your liabilities then you're insolvent on a cashflow 'test'. Bankruptcy is usually considered the 'last resort' when all other options have been discounted.
It doesn't sound likely that your business has any real net worth to the OR. You can keep trading as a sole trader and the OR will exempt any tools of your trade (unless they are worth mega bucks)
Is there any chance any of your creditors will force the issue and serve a creditors petition
on you anyway?

Flyright

It is also worth being aware of the rules about informing all those you do business with of the name in which you were made bankrupt if you trade in any other name/trading style.

Any tax bill/debt would of course have to be included if you were declared bankrupt. It is also an area that the OR will look at in considering whether a BRO is appropriate .

Lostmyway

I think I'll shut the shop down for a little while and file for bankruptcy. There's no way I'm putting up with this cr*p for 5 years. IVA's just seem to be a way of making other people rich