Bankruptcy?

[Rich2484]

I was talking to an old school friend yesterday and he is looking at going bankrupt.. Owes too much money that he thinks he will never be able to pay off. Comes from a lone a long time ago and he is now in arrears and has been given a letter to attend court to answer questions. I tried to help in out as much as I could but didn't really know many ins and outs of it all.

 

I know they can take almost everything you own, but in his position without his car he is stuffed for working.

 

I told him to make them an offer to pay back each month but this was done a while ago and they have still sent the letter. Does is mean they have rejected the offer. Told him to increase it depending on how the attendance thing works out.

 

So what would be the best course of action? Is bankruptcy a huge no no or can it be a blessing in disguise?

 

And what actually happens? Has anyone been there and done it?

 

I'm sure he said he owes 5 grand or somewhere around that figure.

[Paul Cleaver]

If a Ltd company should be fine - other than that I dont know

[Rich2484]

If a Ltd company should be fine - other than that I dont know

 

So what's the ltd company about. Please explain. He is not by the way, sole trader and freelancer.

[s.varty]

So what's the ltd company about. Please explain. He is not by the way, sole trader and freelancer.

 

I think if your a ltd company you are only liable for say £2000, irrelevant to how much you owe. i,m probably completely wrong

[treequip]

LTD means limited liability, the company is a legal entity and is liable for its debts with the company assets

 

As a director of a limited company you are responsible for its conduct and under certain circumstances can be chased for liability so its not the get out of jail free card that some think.

 

You can also be barred from directorship if you have been bankrupt

 

If the letter your friend has is called a statutory declaration its time to get some help higher than asking mates, an insolvency practitioner would be a good place to start.

 

5K is nothing in financial terms, having proceedings trash your credit history for the rest of your life will cost you more than that.

[Steve Bullman]

is 5 grand a typo??? If no, then going bankrupt over such a small amount is a total cop out iMO. 5k is nothing, and certainly not worth having a bankrupcy on your record over.

[Paul Cleaver]

So what's the ltd company about. Please explain. He is not by the way, sole trader and freelancer.

 

If a ltd company its the company that is bankrupt not the individual/s

 

Your friend would be a director of the company and his personal assets and money would not be accounted for. He would pay himself a wage out of the business and could also get dividend bonus payments.

 

It would be like working for someone else.

 

being a ltd company also allows you to set up business again with a clean sheet. Im going to stop there coz I certainly no expert on the matter - but I think thats some of the basic principals of a Ltd co

[Rich2484]

Nah he didn't say declaration just said order to attend court to answer questions. Did ask if it had the court stamp on it and it did. And a long list of things he needs to take. Like statements and previouse tax returns etc.

 

That was my opinion Steve. He seems to think its the best way out of it. But being a freelancer means his car could go. What impression I got from reading through the Internet last night.

 

Always thought that if you made a good offer of repayment they are more or less obliged to accept it.

Edited March 22, 2013 by Rich2484

[alex_m]

is 5 grand a typo??? If no, then going bankrupt over such a small amount is a total cop out iMO. 5k is nothing, and certainly not worth having a bankrupcy on your record over.

 

I was going to say the same, but if was going to go bankrupt, i'd go out in style £40k+ of loans, finance, payday loans, the lot!

£5k can be paid off in 2/3 years easy.

[Lyncombe-climber]

If he needs his car. Buy it of him, for £1. Then let him use it. They can't take It once its in YOUR name.