Lease - When debt incurred?

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LincsPaul
LincsPaul Posts: 131 Forumite
in Bankruptcy & living with it
Hi everyone. New user here. I had a small import business which has suffered due to the weak currency and stopped training. Sole trader so the business debts are mine and I have decided the only option is personal bankruptcy.

Am filling in the form and wondering what happens with my business lease. It still has 2 years left to run and obviously I do not want it anymore but is the debt covered? The landlords aren't very happy that I have left - understandably - but have yet to formally take any action against me, if they even bother.
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  • National_Debtline
    National_Debtline Posts: 7,998 Organisation Representative
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    Hi

    I recommend contacting Business Debtline for specialist advice on this, and your business issues generally.

    www.businessdebtline.org

    James
    @natdebtline
    We work as money advisers for National Debtline and have specific permission from MSE to post to try to help those in debt. Read more information on National Debtline in MSE's Debt Problems: What to do and where to get help guide. If you find you're struggling with debt and need further help try our online advice tool My Money Steps
  • LincsPaul
    LincsPaul Posts: 131 Forumite
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    Thanks. I have spoken to them and at first they said they didn't think it would be included (I'm sure it is) but then they said because the lease was signed in the past it is included. Complicated!
  • debt_doctor
    debt_doctor Posts: 4,595 Forumite
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    Hi,


    My view is that any amount owing on the date of your bankruptcy order is a provable bankruptcy debt and the remainder of the lease will be a 'contingent liability' and also a provable bankruptcy debt.


    Short answer - all the lease covered by bankruptcy.


    DD
    Debt Doctor, Debt caseworker, Citizens' Advice Bureau .
    Impartial debt advice services: Citizens Advice Bureau Find your local CAB *** National Debtline - Tel: 0808 808 4000*** BSC No. 100 ***
  • LincsPaul
    LincsPaul Posts: 131 Forumite
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    Thanks DD. I had not heard of contingent liability.

    In a way the answer is obvious - it's all covered by the bankruptcy. Of course when you begin the process you start overthinking things and doubts appear.

    I suppose it's like if I had signed a contract to buy a new supercar many months before it's released. If in the meantime an unrelated issue made me declare bankruptcy, am I still liable to pay for the car when it's released. Common sense (and I guess in this case the law) says no.

    A small amount of good news!
  • LincsPaul
    LincsPaul Posts: 131 Forumite
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    There isn't a convenient space to include the lease debt on the online bankruptcy application form. Should I list the landlord as a debtor and the total amount for the remaining 2 years' rent as the debt, or what?
  • TheGardener
    TheGardener Posts: 3,303 Forumite
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    LincsPaul wrote: »
    There isn't a convenient space to include the lease debt on the online bankruptcy application form. Should I list the landlord as a debtor and the total amount for the remaining 2 years' rent as the debt, or what?

    BR forms are not always a precise science. I would do just that - list the landlord as a debtor and the total amount for the remaining 2 years' rent as the debt
  • The_Real_Cheddar_Bob
    The_Real_Cheddar_Bob Posts: 542 Forumite
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    The reason for my BR was due to a failed business. The lease was almost a new 15 year lease, full maintenance and repair. I ran a LTD company, so the lease was in the name of the business. There was no personal guarantee but there were on other things, hence the BR.

    Id recommend checking this out, but as a sole trader I would assume that any lease you have signed can be included in a BR. Payments would stop immediately. You could always contact the landlord and let them know whats happening, they might just cancel the lease, rather than wait fro the BR to kick in. Worth a shot perhaps
  • LincsPaul
    LincsPaul Posts: 131 Forumite
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    Thanks for letting me know you were in the same boat, or a similar one! The lease is in my name (no ltd company) and hasn't been paid since I vacated. The landlords have informed me they intend to take legal action. That and other debts, all due to self-employment directly or indirectly, are the reason for my bankruptcy. I have no assets and no intentions to go into business again, so saw bankruptcy as a useful tool.

    We are a nation of entrepreneurs but have to accept that some occasionally go belly up!
  • The_Real_Cheddar_Bob
    The_Real_Cheddar_Bob Posts: 542 Forumite
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    so with your post above have you now been declared bankrupt?

    The landlord is just trying to protect themselves, but the reality is they can sue all they like but if you are BR it wont make a difference
  • LincsPaul
    LincsPaul Posts: 131 Forumite
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    Not quite, am finalising the forms.

    And I agree :)
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