Are company directors liable for their business debt?

By Mr Bankruptcy

29th September 2021

When company directors set up a limited company, in part this decision is driven by the desire to limit personal liabilities if the business gets into financial difficulty, but are they fully protected from all liability?

What is a financial liability?

Liabilities are monies or debts owed by a company and when a business is incorporated as a limited company it becomes its own legal entity. This means that if the business runs into financial difficulty, the company directors aren’t usually held personally responsible for the company’s debts. However, there may be occasions when company directors are held liable for debts.

When are company directors liable?

There are specific instances when a company director could find themselves being held responsible for paying company debts. These include:

These reasons for liability illustrate the importance of understanding the responsibilities of being a company director because any suspicion of mismanagement can change your situation in terms of your liability and, subsequently, your personal financial position.

How to avoid unnecessary financial liability

When dealing with business debt, it’s vital for company directors to acts responsibly and, if a company has become insolvent, to fulfil their statutory duty to act in the best interests of the company’s creditors to ensure repayment of debts from company resources.

If continuing to trade worsens the company’s finances or directors fail to meet their duty to act in the interest of their creditors, they could be accused of wrongful trading and be made personally liable for company debts, risking disqualification from acting as a company director in the future.

To avoid the risk of personal liability, it’s important to seek advice if your company enters financial difficulty. Depending upon the scale of the debt and the director’s personal financial situation, various debt management options are available. Seeking advice early on ensures that you’re not just diligently fulfilling a director’s statutory duties, but also minimising the wider potential impact on your personal situation because of the company’s problems.

James Rosa Associates

James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive and friendly approach, we offer a full range of advice and professional services to individuals and business owners/directors who face unmanageable debt or who are involved in civil or commercial disputes. Our services include:

We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.

Find out if you qualify for a free consultation

If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.

Lessons to be learned from “Buy Now Pay Later” debt

By Mr Bankruptcy

21st September 2021

Buy Now Pay Later (BNPL) schemes have come under scrutiny recently due to the huge increase in demand for these services but are there lessons to be learnt about a borrowing option that seems too good not to take?

What is BNPL?

BNPL offers a convenient way to pay for low-cost items. At the checkout stage of many online retailers, BNPL is offered as a choice of payment method, which can be very enticing when there’s no interest charge for the duration of the short repayment term. Subsequently, it has seen a surge in popularity, with Which? reporting a third of UK adults having used a BNPL scheme and for millennials, this rises to 67% having using this payment method at least once. In fact, the industry more than trebled in 2020.

The popularity of BNPL schemes and the lack of current regulation around them has led charities to raise concerns about their impact, with one in 10 shoppers reporting being pursued by debt collectors. Last year alone, shoppers were charged £39 million in late fees.

Four lessons from BNPL debts:

The BBC, reporting on findings from Citizen’s Advice, suggests that almost two in five people who have used BNPL in the last year didn’t think it was “proper borrowing”, and six million didn’t fully understand what they were signing up for. These findings highlight the universal lessons that apply to any kind of borrowing and subsequent debt:

Before using any credit arrangement, consider these general lessons to help you decide whether a BNPL scheme is for you or whether it could lead to problems down the line.

James Rosa Associates

James Rosa associates is a firm of debt advisors and debt adjustors. With a supportive and friendly approach, we offer a full range of advice and professional services to individuals and business owners/directors who face unmanageable debt or who are involved in civil or commercial disputes. Our services include:

We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.

Find out if you qualify for a free consultation

If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.

How to deal with personal bankruptcy

By Mr Bankruptcy

2nd September 2021

In our previous post Could personal bankruptcy be the right option for you? I discussed when it might be time to consider bankruptcy. But I also appreciate that’s easier said than done. How do you come to terms with taking such a step?

The first step is the hardest

During the first quarter of 2021, 290 people every day were declared insolvent or made bankrupt in England and Wales; that amounts to one person every five minutes, according to the UK Debt Service. Despite its serious impact on your financial, mental and physical wellbeing, being in debt can still be very personal and difficult to talk about.

People feel a stigma associated with debt, which is why We need to talk about debt raises the issue to illustrate why seeking advice or getting support from those around you is an essential first step to dealing with debt. For many people, it’s also the first step in accepting that they have a problem that needs dealing with.

Understanding the up-side of bankruptcy

Key to dealing with your bankruptcy situation is being clear on why it’s the right step forward for you. Personal bankruptcy will change your circumstance and these outcomes can improve your situation:

Seek professional advice

Being able to deal with personal bankruptcy is about having the confidence that you’re taking the right path for yourself. Equip yourself with the right information on debt management by asking questions and receiving clear and comprehensive advice from debt advice experts who can provide the answers.  

When you understand what bankruptcy is, you have the support for friends and family and specialist bankruptcy advice, you can be clearer about the reasons why it’s the right path for you. You will deal with your bankruptcy by regaining control of your debts.

James Rosa Associates

We are a firm of debt advisors and debt adjustors. With a supportive and non-judgemental approach, we offer a full range of advice and professional services to individuals and business owners/directors who face unmanageable debt or who are involved in civil or commercial disputes. Our services include:

We are authorised and regulated by the Financial Conduct Authority (FRN665061) to work with clients to produce bespoke solutions to fit their specific circumstances.

Find out if you qualify for a free consultation

If you want to deal with an unmanageable debt, or bring a dispute to a swift and cost-effective resolution, contact James Rosa Associates, ring 0845 6807217 or email enquiries@jamesrosa.co.uk to find out whether you qualify for a free consultation.

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