Self employed + bankruptcy

radarjay

I am seriously considering going personally bankrupt and have looked thoroughly into all the options and believe it is the best option for me.

My personal debts are too much for me to pay now that I am a single parent again. I rent my home and the only asset I have is my car - worth around £1500

I am self employed as a sole trader and the business has no debts except a business loan. The business is turning over enough to pay all the business expenses but as it is making a loss in the year to date I am not able to take any drawings and therefore have no income.

I have a business account with HSBC and a business loan with them. I also have a personal current account with HSBC and a Natwest Step account. I am unable to close the Natwest Step account because this is the account that my ex husband pays the child maintenance into and we've had no contact since 2003. A letter to his old divorce solicitor with my new bank account details was returned as the fee earner no longer works there and my ex husband has moved and they have no record of his new address.

What will happen to my business and my business account if I go bankrupt? I really want to keep on trading.

Will I automatically loose the Natwest account that my ex husband pays the maintenance into? What will happen then as my child maintenance is Court Ordered as part of our divorce settlement.

madoldbat

Welcome Radarjay,you have made a wise choice coming to this site people are helpful ,regret I do not have enough knowledge to supply you with an answer.However someone who is will be along shortly.
I can only tell you that when we went BR my OH closed his account with Lloyd this is were he had his self employed bussiness funds and opend a new account with COOP.He used cash in Lloyds a/c to go BR and placed remainder in COOP.He explained to OR that cash in there was future wages (hes a gardner/repair man'.My OH not the OR:rotfl: )this seemed to work and we have had no problems as we were ready and able to show OR account books and statements,but were never asked to.
Sorry Hope that makes some sence.

catw75

radar jay,

you can change your bank account, get a basic one (Nationwide, Co-op or Barclays), tell the bank that you have a bad credit rating and just need an account for the Child Benefit.

fermi

Hi radarjay.

First of all, the business.

I'm certainly not overly familiar with this area, but I have always been under impression that as a 'sole trader' you are personally liable for your yours business debts in exactly the same way as your personal debts. If my understanding is correct, this would mean that any business loans/accounts would have to be included in your bankruptcy petition and estate (their is legally no choice). That's not the outcome you might want if you wish to continue trading, since you would lose the business account with HSBC and the loan would be written off (can't imagine they would be too chuffed).

However this is simply my understanding. It would be very much worth your while getting in touch with Business Debtline, who are run by the 'money advice trust' (a charitable advice organisation), for free and impartial advice on your options and the effect regarding the business.

[SIZE=-1]Business Debtline Tel: 0800 197 6026[/SIZE]

Unfortunately, the Natwest account would probably be closed following bankruptcy. Natwest do not normally allow undischarged bankrupts to hold any accounts. A few people here have been told by Natwest branch staff that their account will be OK, only to find that it is closed nonetheless.
An example is here: http://forums.moneysavingexpert.com/showthread.html?t=503628

I'm not sure what you can really do regards the maintenance payments by your ex, but you might be able to get some free legal advice from Community Legal Services Direct (although I think to get detailed advice you would have to have qualified for legal aid under the old system).

I hope you can get some good advice to sort this all out.

rog2

I agree with fermi, radarjay, it is not as clear cut as it would seem. There is nothing to stop you from continuing your self-employment after bankruptcy, and the OR would normally allow you to keep any tools or vehicle that are essential to your trade, but, in my opinion (as a sole trader when declared bankrupt) the OR will take any disposable assetts (stock) and will probably not allow you to keep the business bank account.

As fermi says, as a 'sole trader' you have overall personal financial responsibility and liability.
Certainly worth a chat with business debtline, though.
By the way - what line of business are you in?
Is your 'stock' high value and easily sold?

Conor_3

Just remember that if you continue trading after being declared, you need to alter signage and stationary to show Mr.Myname T/A Company Name. The "Mr. Myname T/A" bit doesn't need to be prominent but it needs to be there somewhere.

radarjay

Thanks for all the replies and apologies for the delay in replying but I've been away.

I will call the Business Debtline for advice on Monday, it's very frustrating because there is no problem with the business, its turning over nicely and growing every month and get meet all its expenses including the business loan.

My line of business is online retail and the stock is all high end so whilst it sells nicely, if the OR was to take the stock then they'd have problems selling it particularly as several of the suppliers would have issues with the stock being sold elsewhere.

The only problem with the maintenance payments with my ex is knowing where he lives to advise him of the change of bank account details if I do go bankrupt. As it's Court ordered maintenance he legally cannot stop paying it which I guess leaves me in a position where I would have to pay a private investigator to find him which obviously costs money. I know that legally there is nothing the Courts/solicitors can do to find him as family law was my speciality before I started my own business. That's why I had hoped I would be able to just keep that account.

tigerfeet2006

RJ surely if you ask your new bank to take on the DD/SO of the old bank they can do that. Your old bank surely must have your ex's bank details to take the payment.

radarjay

I was delighted to find that the Business Debtline was open today and spoke to a lovely lady there who was very helpful. It seems that effectively apart from loosing the business bank account and the business loan and business credit cards being included in the bankruptcy, the business will be "safe". She advised me to call the local Insolvency office and ask anon about what the OR's in the area usually do about stock. She mentioned that often they allow you to keep it and sell it to enable you to carry on trading.

She also said that with the Natwest account for my maintenance payments the best bet is to explain to Natwest why I need to keep it and insist they refer it to the highest possible manager to use their discretion. Then if they still refuse and close the account to pay to have my ex husband traced as obviously that child maintenance is vital income for my son and I.

The banks would be unable to pass on any details of his bank account because of DPA.

fermi

Hmmm. That is a bit of a problem with the maintenance payments then.

I would hope that Natwest would be sympathetic if you push it high enough, but their past track record with Bankrupts doesn't exactly cover them in any glory.:rolleyes:

A threat of adverse publicity (even if you didn't intend to do it) might make them more sympathetic. (probably wouldn't, but might be worth a shot).
Most people would be far from impressed at them closing the account of someone in your position.

I hope you get it sorted out, and if you go for BR it would be interesting to see what Natwest do.

Good luck.

debt_doctor

Hi, I suggest you ring the financial services ombudsman on 0845 080 1800 and ask for the technical helpline. They will inform you of your options with the nat west account and if they feel you are been treat unfairly they have considerable powers to instruct the bank to co operate.

Hope it helps

Best wishes