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HMRC | Homeowners | Bankruptcy Avoidance

Homeowners Bankruptcy Avoidance

Avoiding bankruptcy when you have assets such as a home with equity or other assets that you don’t want to lose is essential.

Generally its HMRC or council tax that makes most individuals bankrupt in the UK.

We often find that people just simply don’t understand the implications of being made bankrupt.

If you are reading this and have received a statutory demand and have tried to get help but for whatever reason find that the outfit that you have been to just isn’t really speaking your language then its imperative that you don’t stop and give up looking for help. Its critical that you get it.

When you are made bankrupt and you are a homeowner or even receive an inheritance. Then you will be fooled to think that for example a £3000.00 debt will only be a £3000.00 debt after you have been made bankrupt it wont!

Look at this: 

Mr F is made bankrupt in march 2015. He is a homeowner with sufficient equity to clear all his debts.

He was made bankrupt by HMRC for £10,841.39

in 22 months the costs relating to the trustees fees are broken down as follows:

Statutory interest:-                                   £ 1639.00

Trustees costs:-                                         £19,128.30

Estimated Additional costs:-                  £ 5000.00 

Trustees Disbursements:-                       £   886.99

Estimated additional disbursements:-£    250.00

Legal Fees:-                                                £ 4781.85

Estimated additional legal fees             £ 1000.00

Agents fees:-                                              £  722.00

VAT                                                             £ 6353.87

Insolvency Service:-                               £ 1224.84

Petitioning Creditor costs:-                   £ 2297.00

Secretary of State Fees:-                        £11,957.53

Total amount required to pay off all bankruptcy debts and achieve annulment £66,083.55      


So now you can see how a debt for £10,841.39 can escalate in 22 months to £66,083.55  

If you are that homeowner facing bankruptcy but hesitating in drawing the money out of a property to pay the debt then now you can see why its worth doing whatever it takes to get a debt paid when you are a potential bankrupt homeowner seeking assistance.


Director Protection When A Company is Facing Liquidation or Insolvency Proceedings

Director Protection When A Company is Facing Liquidation or Insolvency Proceedings: T: 01425 600129 (local rate)

“That will never happen to me. My business and my team are far to strong and organised for that to ever happen“.

Theres no company director out there who is exempt from a business failure. People built their businesses with the best intentions in mind at the time and more often than not will have signed personal guarantees with banks, taken advice from accountants that they thought they could trust and believed that these specialist would prove invaluable in saving money, retaining incomes and no matter what happened in the future would be able to steer the business through anything it was to ever encounter. During down times may have accrued an overdrawn directors loan. There’s also a very good chance that a business partner who you thought would be a perfect fit turns out to be the total opposite of what you had hoped for.

The facts are that 80% of new businesses fail in the first 2 years. Entrepreneurs that start up businesses and companies do so on the basis that they believe that they can make a success of a product or service they believe in and have decided to ‘set up shop’.

If you are a director who is heading for the rocks or who has hit the rocks and all kinds of new administration and litigation processes are visiting you? Then you really need to take action. This is what we say a majority of the time. See if you recognise any familiarities with yourself.

We are in late March 2017.  Things have changed.

Not so long ago you had a fully equipped team and could reach out and get what you need at any given moment.

Not so long ago you lead your business from the front. But since certain staff and team members proved themselves you have taken a bit of a step back and let the manger/s lead. You may have given or offered your book keeper or accountant a share in the business.  Theres been a sudden change in your personal life and you have spoken about it in confidence to certain members of your most trusted circles. But now are aware that perhaps you should have kept your personal business to yourself because in speaking about it has made that sore subject matter a talking point which makes you feel as though the attention has moved onto your problems instead of knuckling down on a professional basis and keeping the business and the team strong. Forcing the team to provide solutions to problems instead of coming to you with the problems.

Remember that people are selfish. You may have thought naively that your team were 100% committed to you. But the only reason they are committed to you is because you are paying them to be. Would they walk with you if you couldn’t pay them? Definitely not is the answer. So if you are under any illusions of anything different then you must without hesitation remove the rose tinted spectacles that you are viewing the world with!

Observationally the important times for making the right decisions in is between your 40’s and 50’s generally. The reason is that theres a very good chance that you have significant years of business experience behind you and have now been able to prove that concepts work or don’t work. The years of experience are important because you can apply your wisdom to present and future situations.

Providing you are blessed with good physical and mental health during your 20’s and 30’s then theres time for rebuilding and moving on from a situation that went or goes wrong. (Providing you have the right attitude of course)

40’s and 50’s are a different matter. The pressure is on to get it right! Theres not many chances left and if you are in this position and have every intention of continuing the future years as an entrepreneur then you’ve got to get it right.

So making the right choices and creating the right moves is pretty important. Theres no time to hide behind people that you have engaged and paid for who have already proved themselves to be the problem.

This is the hard bit.

Your instincts are there for a reason. If you feel that they are and have been the problem or contributed in any way to the decision making process that has placed you in your current position. But you feel that they owe you. Or you feel if only that they could just finish this that and the other. Then take control yourself and do whats needed to navigate your way out of this predicament.

We know why some accountants do this. we see it time and time again.

Your company and business if it has any life in it at all and is a worthwhile concept that needs reform then administration is a good way of handing the wheel over to generally an Insolvency Practitioner. (make sure you find a dynamic one, and one who can share your vision and who can demonstrate what the strategy is going to be). An administration is a great way of recovering the companies position.

The alternatives are:

CVA-Company Voluntary Arrangement-Providing 75% of the total amount of debt owed can agree to the proposal then this can be liberating for the company or business.

Company Liquidation- When the business is over and theres no recovery position then a Directors liquidation should be more advantageous. The reason is that you will go through the process of shutting the company down properly. All difficult areas will be covered. This is where Director Protection is critical and will make the absolute difference between a good result with no or marginal complications or you have chosen the wrong liquidator and your world and life as you know it is going to significantly change.

Don’t be afraid of alienating people if its those very people that have contributed to the current position.  I would say that it is critical to make your own decisions. You are the one thats responsible for your company director obligations despite how much you had thought that it was sorted and under control via a 3rd party. Its you!!!


Here’s the important bit:

If your company is facing liquidation and you believe that you have left yourself open and exposed and may need director protection. Then delaying isn’t going to help.

The process with both involuntary and voluntary company liquidation is that reports need to be prepared and submitted to the Secretary of State.

If you lined up 10 Insolvency Practitioners and gave them the same liquidation to manage you would find that they would all have a varying way of dealing with it. Often is the case that they are afraid to speak openly.

They could help and assist you by explaining to you varying options that will help you personally but are unlikely to suggest things that will really help you because they are looking at what is in it for them most of the time.

If you are feeling browbeaten by the process then its critical that you pick yourself up, brush yourself down, figure out a plan and go through the problem areas and speak to someone that can afford the time to give you to ensure you understand everything and the implications of certain actions.

In a nutshell you need a pro active accountancy firm or Insolvency Practitioners. A face to face meeting, a contact telephone number where you can speak to them when you need to.

23rd March 2017







Bankruptcy Questions and Answers

To access the complete list of bankruptcy questions and answers on this website (210+), simply click on ‘bankruptcy questions’ at the top of the Home Page and scroll through the ten available pages. Everything, from ‘do I need to take my ID to court’ to ‘how do I go bankrupt from Ireland’ is covered and there is also a facility to ask your own questions. If you would prefer a quick chat, call us on 01425 600129 or 07894 481175.

Can I have a bank account when bankrupt?

Yes, but certain banks are more approachable than others. Barclays has a basic ‘cash’ bank account which offers a chip and pin card so you can at least pay for things in a shop, while the Cooperative offers a ‘Cashminder’ current account which again has a chip and pin card, though there is a monthly charge associated with this account. It would be a good idea to get one of the ‘credit repair’ credit cards as soon as possible (Lumus / Capital One), as regular small purchases and payments will help restore your credit rating over a period of time.

Bankruptcy UK offers bankruptcy help across the board, including dealing with creditors like HMRC, completing the all-important Income and Expenditure and professional submission of the application online. Call us on 01425 600129 or 0800 5977 977 for a chat about your circumstances.

Do I still pay tax when bankrupt?

Your tax code will change to NT (No Tax) for the year you are bankrupt and the money you would have paid is redirected to cover the Insolvency Service’s administrative costs. The only exception is if the bankruptcy takes place around late February / March, as these arrangements have to complete by the end of the tax year.

You will be told how and where to pay the money. Don’t be concerned about your company knowing about the bankruptcy, as there are many reasons why a tax code might change and they will not be given a reason.

If you are considering bankruptcy, we will help you throughout the process and submit your application online. Court appearances for bankruptcy are no longer required. Feel free to call us for a chat or for bankruptcy help on 01425 600129.

Two questions about bankruptcy ….

1. If my limited company closes will it affect my personal credit rating. 2. I only own 50% of the business, could I buy myself out of 50% of debt?

A limited company is a separate legal entity to an individual and debts registered against the company do not reflect on the Directors’ credit ratings, nor are they personally responsible for the debts. The exception to this is where Personal Guarantees are signed with a bank – if the debts are defaulted on, the individual is personally liable and it will definitely affect their credit rating. Regarding the second question, this depends on whether you signed Personal Guarantees or not. If not, you do not personally owe anything to anyone.

Call us for a informal chat about your circumstances or for bankruptcy help on 0800 5977 977 or 01425 600129.

Will an informal arrangement help me avoid bankruptcy?

As a business owner is there an informal business debt management plan that I can enter into in order to contain my business debt so that I can continue to trade? I have a positive business but have been subject to staff theft and I now have debts that I need to clear up. I need some type of arrangement for 3-6 months so that I can get my affairs in order. Can you help?

Ordinarily Debt Management Companies do not offer such plans. They will suggest an IVA or a CVA (company voluntary Arrangement). The latter might sound attractive, but it’s a long term plan and we don’t think it’s suitable. All considered, it might be best if you approached your bank for some type of credit facility. The upfront cash would settle the outstanding debts and a bank will be flexible re repayment.

We would be pleased to speak to you to establish the facts and see if we can mediate an informal arrangement, but it is often the case that companies want a formal arrangement in place.

Bankruptcy UK offers bankruptcy help across the board and will submit your application online. Court appearances for bankruptcy are no longer required. Feel free to call us on 01425 600129 for a chat about your circumstances.

Will Business Bankruptcy affect my credit?

Not if the debts are associated with a limited company, as this is a separate legal entity and a Director is not personally responsible for those debts. However, it is often the case that banks ask Directors to sign personal guarantees in which case the Director would be personally liable in the event of default, and this would definitely affect his / her credit rating.
Business debts associated with a sole trader / Self employed are directly accountable for the individual concerned and would directly affect personal credit ratings. Call us for a chat if you need help – we have plenty of experience in this field.

Bankruptcy UK offers bankruptcy help across the board and will submit your application online. Court appearances for bankruptcy are no longer required. Feel free to call us on 01425 600129 for a chat about your circumstances.

Can I start a business when bankrupt?

How long is it when you can open your own business when made bankrupt?

If you are referring to a Directorship, it will be possible once you have completed the 12 month bankruptcy period. However, there are no restrictions about being self employed or acting as a sole trader. There are a few provisions to note, especially about how much you can borrow, but it is otherwise commonplace.

Bankruptcy UK offers bankruptcy help across the board and will submit your application online. Court appearances for bankruptcy are no longer required. Feel free to call us on 01425 600129 for a chat about your circumstances.

Bankruptcy and personal guarantees – how will this affect us?

Our home is in joint names and personal guarantees were given to support the bank o/draft. How will this affect us?

This will come down to whether or not there is any equity in the home. When you enter into bankruptcy, the Official Receiver looks at property holdings to see if it is worth selling these to release funds for the creditors. If there is little or no equity, any decision is usually deferred for 27 months at which point another assessment is made.

The courts are not in the business of making people homeless and provided you have continued to make mortgage payments, in most cases no further action is taken. However, this can be a tricky area and you might want to call us to run through the details.

Feel free to call us with any further questions or for bankruptcy help on 01425 600129 or 07479 739139 / 07894 481175.




Bankruptcy UK

Bankruptcy UK