When business debt becomes personal debt

When a business has got into serious trouble, it can have real implications for the personal finances of company directors. Some company directors use personal assets to get access to loans. If the loans cannot be paid then the consequences for the individual can be severe. Self-employed people can also get into financial difficulties as a result of their business activities.

At Cooper Matthews we empathise with people who have put everything into their business. However, ultimately empathy is not enough. We can provide helpful advice to those who have acquired a personal debt problem through their business.

There are debt services out there, but many of them are ill-equipped to deal with personal debts that have evolved from being in business. Using high quality business debt services makes sense. The way in which debts arose has implications for the complexity of the problem. In addition, the rules for self-employed individuals and directors in relation to the consequences of bankruptcy are different.

It is important to recall that bankruptcy is not to be undertaken lightly. It has an appeal because it seems like it will wipe the slate clean. However, going bankrupt can prevent someone from doing things they might like to do in the future. Furthermore, to go bankrupt costs money and, unfairly, it does have a stigma attached to it. Other options may be better for an individual who is struggling to clear their debts.

An insolvency expert from business debt services can talk someone through their options to make sure they make a prudent choice going forward. Some people will fare well with a debt management plan, while others will do better with an Individual Voluntary Arrangement. In some cases, a consolidation loan might be the best choice. Which option should be picked does depend to a great extent on the precise personal financial circumstances of the individual; an arbitrary selection will not work well.

 

 

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