Bankruptcy advice

[november90]

Before I go into this, I am going to say firstly this situation is not my own. I'm posting on behalf of someone for some advice.

The person, let's call him jack, has had his business for 30 years and he is in his 60s. It's in the building trade and times have been difficult over the past couple of years but he has been able to keep his and his families head above water. Jacks wife took early retirement after suffering breast cancer so she only gets a private pension which isn't much. Due to the coronaviris jack is now without paying, and being in the holding trade this will likely be for some time. His business is a LTD business so he gets no gouverment support unlike self employed/employed. He cannot pay his bills, he cannot get a business loan (he tried but it did not benifit him) and he's heartbroken thinking his only option is to declare bankruptcy.
Does anyone have any advice? Would doing so make him loose his home? His daughter and grandchild also live there.
Would a DMP be suitable despite the fact currently he has no income at the moment? He is desperately applying for another/any job).
Are there relied schemes?
I've told him to ring step change tomorrow but I know just reaching out for some advice so poor jack might get some sleep tonight :(

What does bankruptcy mean. Does is mean loosing absolutely everything?! Are there things you can do before this?

It seems so cruel that he cannot get any finical support due to his business being Ltd.

Some strong advice from his accountant would be in order.

If Jack's company is LTD, then he has limited liability for the company debts - unless he has personal guarantees.

Bankruptcy is very final. I think Jack really needs to examine the business situation with his accountant. Perhaps he is feeling all is lost at the moment, but sometimes, there is a way through.

Bankruptcy is very rare these days. what does his accountant advise?

As others have said what bills has he got that he can’t pay and he is personally liable for?

Stepchange won't be able to help a company director, unless the company has stopped trading. He should speak to Business Debtline instead.

Bankruptcy writes off your personal liability for debts. It won't help him pay any personal bills. He needs to write a list of debts, income and expenditure and contact BDL.

If bankruptcy is appropriate for him, it is not an easy option and any assets he has will be taken into account. He may well lose his house if there is equity.

I don't know exactly but he has just said he's exhausted every route.
He hasn't spoke to a debt advice company yet though so I was hoping that there may be other options prior to bankruptcy they may be able to advise.
He has accumulated personal debt to support his business so I think that is adding a lot of pressure!

Really appreciate your replies ❤️

He also won't be able to do a DMP with no income. Has he looked into whether he's entitled to any benefits? An advice agency like BDL or CAB will be able to look at a variety of debt solutions to see which is the best for him.

Yes he did a benefit checker with citizens advice last week and doesn't appear to be entitled to anything substantial :(

Can step change not assist with his personal debt and his business debt dealt with separately?

Also his wife is jointly named on the mortgage. Can they really take the whole house?
I can't believe a man who has worked so hard and in his 60s could be homeless and without anything :( it just seems so unfair.

No StepChange won't be able to do that. He needs to call Business Debt Line. They can also advise on personal debt as well as business debt.

Oh really. I did write their number down for him!

Does a business bankruptcy effect personal credit? For example if his business went bankrupt would that impact his personal assists?

My heart has broken for him.

If he owns half of the house, then only that half is his asset. If he has assets, bankruptcy may not be the best option for him. There are options out there that he may not be aware of and he really needs to take advice from a professional.

Because he has a limited company, he has limited liability for the debts of the business (unless he has provided personal guarantees). However, from what you've said, he has a mixture of business and personal debts and he would remain liable for personal debts even if his company was dissolved.

try money saving expert where there is a dedicated board- better than mumsnet for advice.

The financial setup sounds like he's been needing financial help for a while, I'm not talking about how to get out if the current situation but if he's only just been earning enough to keep his head above water, but he's been getting into personal debt to bail out the company, it probably would have been better to dissolve the company as insolvent a long time ago! It sounds stressful and like he's just not got a grip of how to manage the finances so that the company profit and loss / liability is firewalled from his family finances.

He needs to get proper accounting advice from an accountant versed in dissolving small ltd companies neatly, but he'd be better speaking to the business debt line asap - have his accounts information to hand. If he ends up losing his home or declaring personal bankruptcy (which is a bit of a nuclear option if he has assets, usually!!) it really will be and situation made worse, but the right (business!) Advice should be able to show him a way forward.

Alongside that, he needs to be looking for stable employed work (delivery driver if he has a licence, supermarket, fruit picking, anything depending on his health and location) and figuring out a way to start bringing in consistent low-risk income. Unfortunately that might also meanhis wife needs to come back out of early retirement too.