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Business Debt and Bankruptcy Guide

Despite proper planning and management, all businesses can suffer cash flow problems at times. So, the risk of facing business debt and bankruptcy is as realistic as being successful.

There are many different types of business debt. Owing money means choosing the best option for dealing with company debt.

Dealing with Creditors in United Kingdom

It helps when you understand more about the legal role and enforcement powers of creditors.

In fact, they have several different methods of getting money back from anyone that owes them money (their debtors).

Information in this section lists the most common types of debts. The help guide covers topics including business debt and bankruptcy issues.

Does a person or organisation owe you money? If so, check the topics below which cover court claims for getting your money back. The guidance also explains business insolvency and company liquidation processes.

Business Insolvency

The best option to choose during business insolvency varies. The company and its creditors will need to consider them all. Even so, the assets of the business (if any) and the business status will dictate the proper path to take.

Personal Bankruptcy

If a sole trader goes bankrupt they are no longer liable for any personal or business debts. Even so, going broke means your personal and business assets could be sold off. Hence, suffering personal bankruptcy would make it very difficult to continue in self-employment.

Insolvent Trading

Trading ‘insolvently’ often leads to closing down a business altogether. As a rule, you become insolvent if either:

  • The business cannot pay its debts as, and when, the payments become due.
  • The company does not have enough assets to sell off to pay the full amount of a debt.

Note: It may be an offence for a limited company director to continue trading when the company is insolvent.

Debt Management for Small Businesses

Applying for Bankruptcy

If you are unable to pay your debts, the current cost of filing for bankruptcy in England is £680 (and Wales).

You should have certain information prepared before you apply for bankruptcy online (e.g. debts, income, and outgoings). You may also need to provide further details about:

  • Benefits (or pension statements)
  • Correspondence from a bailiff (or enforcement agent)
  • Payslips
  • Utility bills (e.g. council tax, credit cards, electricity)

Even though you must use the online service to apply for bankruptcy, you need to have paid the full fee before submitting the application.

You should wait until the court makes a decision if you have if you applied for a person at risk of violence (PARV) order.

The Insolvency Service Helpline

You can get guidance about bankruptcy petitions and misconduct of trading. Extra details cover company insolvency in England and Wales.

Insolvency Service Contact Number
Email: [email protected]
Telephone:0300 678 0015
Monday to Thursday: 9am to 5pm
Friday: 9am to 3pm
Learn about phone call charges.

Scotland and Northern Ireland

The Accountant in Bankruptcy handles cases of bankruptcy and insolvency in Scotland. But, you should contact the Insolvency Service in Northern Ireland.

Note: Search the government website to find a licensed insolvency practitioner near you. You can also complain about an insolvency practitioner for unprofessional case handling or unethical conduct.

Bad Investment Advice Compensation

The Financial Services Compensation Scheme (FSCS) can help victims recoup money lost through the mis-selling of their investment (e.g. give misleading advice to a customer).

This section explains how to make a claim for poor investment advice compensation if you lost money after receiving poor advice.

Claiming Money or Property

Bona Vacantia

There are several ways of recovering assets from a company in dissolution. Find out how to claim money or property from a dissolved company.

County Court Judgments

The page explains the complete process of county court judgments for debt collection. Find out what to do if you get a CCJ and how to get it set aside or change the amount you pay.

Late Commercial Payments

Receiving late commercial payments interrupts company management. Check how much a business can charge in interest and debt recovery for a late payment.

Possession Claims

There is a specific process for taking court action to repossess a property or to evict a tenant. You should use the possession claim online if a tenant or mortgage holder refuses to pay.

Note: There are several ways to complain about a claims management company. It depends on whether you contact the claims company or make a complaint to the Claims Management Regulator.

Company Liquidation

Canceling a Winding Up Order

Serving a winding up petition symbolizes serious legal action initiated by a creditor. Find out how to stop a winding up petition and avoid a chain of events that follow.

Checking Liquidation

You can check if a company is in financial trouble on the GOV.UK site. The online tool lets you find out if a company is being liquidated or in provisional liquidation. You can also search the details of companies with frozen assets or insolvency proceedings.

Company Information

Use the government site to get information about a company. The details include its directors, registered address, and previous company names. You can also check the accounts, reports, annual returns, and whether it got dissolved.

Co-operation with Official Receiver

A director has several overriding responsibilities if a company gets liquidated. One of the most important is cooperating with the official receiver (OR).

Disqualified Directors

There is an automatic ban from working as the director of a company after going bankrupt. Thus, you can report a disqualified director for breaching the restrictions of a ban.

Restoring a Dissolved Company

Information in the page explains the process of administrative restoration or ‘company restoration’. Check how to restore a dissolved company to the Company Register.

Court Claims and Insolvency

Small Claims Court

Find out how to take someone to small claims court in the United Kingdom. This help guide explains the process of legal action to make a court claim for money owed to you.

Making Money Claims

Money Claim Online is a secure Internet based service for claimants and defendants to use. MCOL is the convenient way to make a money claim online or respond to one via the Internet.

Loan Sharks

Information in the section explains most of the issues of dealing with loan sharks. The best advice is to avoid them and learn how to report an illegal loan shark if you spot one.

Dealing with Business Debt: Bankruptcy and Insolvency Management in United Kingdom