Thank you. As I am sure you are aware, a limited company has its own distinct legal personality - in other words it is a separate legal person to you. therefore, the debts owed by your company are not the same as debts owed by you and similarly, debts owed by you are not the same as debts owed by your company. Therefore, if your company has more debts than it can sustain, it is possible to wind up the company potentially without any impact on your own finances personally and similarly, it is possible for you to enter insolvency personally without it affecting your company except that you would no longer be able to be a director of your company during any bankruptcy period and if the shares you have in your company derive income will have value, they could potentially be claimed by the official receiver for your bankruptcy for payment of debts you owe.
if you are considering insolvency personally, there are two principal options: first is an IVA which is an agreement you enter into with your creditors agreed payment terms for a set period and providing you stick to the terms of that agreement, after the agreed period, which is typically around five years, those debts are written off.
The alternative is bankruptcy which can last typically up to 3 years providing there is no evidence of bad practice on your part - e.g. hiding assets etc - but you would be typically discharged after one year in many cases. In bankruptcy, all of your assets except some very limited exceptions where you can show they are necessary for you to earn an income are transferred to the official receiver for your bankruptcy it will use them to pay off your various creditors. Once you are discharged, all your debts are written off and you effectively can start again. during bankruptcy, you are required to make payments that you can afford from your income and means assessment will be carried out. the official receiver cannot claim money from your income which you can show that you reasonably need for normal domesitc expenditure taking into account your dependents. a determination is made on a case-by-case basis but as a guide, the official receiver will have regard to the below figures which will give you an idea of the standard of living you could reasonably expect during bankruptcy:
Both approaches have their advantages and disadvantages depending upon your circumstances and you can obtain some free advice by contacting the following organisation:
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