Mini Debt Relief Order whilst self employed

TwoUpTwoDown

Hi all

Need a bit of advice on behalf of a friend.
They are self employed and running a growing business that has been operating since the beginning of the year.

Some previous clients are threatening to sue based on some prior business activity that my friend was doing with colleagues that got thrown off course by COVID. My friend doesn't think they owe the money but due to lack of evidence from the previous undertaking, fears they may be liable.

The sum of money is more than they can afford to pay. I suggested that they may accept a payment plan as if they were to go down a debt relief order, then the clients wouldn't get anything and they are keen to resolve and be clear of any animosity.

My question is if my friend went down the debt relief route, are they still able to trade. I've read that you need to demonstrate that you don't have much in the way of disposable income and the relief would ruin credit and last for 12 months.

They have a really good chance at making their current business a success and i feel that if a payment plan were agreed, it would save ruining their very good credit rating and the clients would get more money that it being written off. 

As they are self employed, I'm guessing that if they do get sued, then their own personal assets are also at risk of being taken? They do have a daughter but no partner and rent their property. There aren't that many assets to speak of that hold much value. 

I'd like to support them anyway i can.

Thank you

fatbelly

They're probably better pointing out that a ccj could not be enforced as the debtor has no assets or savings, is not employed  and lives in rented accommodation.

Then offer a payment plan, which is what the court should order anyway, provided the debt can be repaid in a reasonable time.

We could discuss Debt Relief orders but I think that would be missing the point.

sourcrates

I think your mis-understanding how a DRO works here, as fatbelly has pointed out, there are easier ways to deal with legal action.

Any court order can be paid by an instalment plan, if the debtor does not possess sufficient disposable income to comply with the CCJ, then the court would likely not approve or seek to enforce such an order.

The debtors income and expenditure are always assessed by the court.

Do remember the court process is a two way street, if he can prove he doesn't owe the money, by submitting a suitable defence, then he will win the case, and not have to pay anything anyway, lots of creditors threaten legal action, not that many actually do it. 

fatbelly

TwoUpTwoDown said:

Some previous clients are threatening to sue based on some prior business activity that my friend was doing with colleagues that got thrown off course by COVID. My friend doesn't think they owe the money but due to lack of evidence from the previous undertaking, fears they may be liable.

It's up to the other side to prove liability.