Understand your company's position and learn more about the options available
Can my company's debt problems affect my personal finances and credit rating?
- Close Company With Debts
- No.1 For Liquidations
- Stop HMRC / Creditor Pressure
- 25,000+ Directors Helped
- Immediate Advice Available
- Insolvency Practitioners
Will company debts affect my personal credit score?
The financial track record of your company will not affect your personal finances or credit score if you operate a limited company as liability is restricted to the business. If you are a sole trader, your personal and business finances are interlinked, therefore, both are affected.
Can business troubles affect my personal finances and credit rating?
The answer is sometimes yes, they can. Sole traders and individual members of a partnership are personally responsible for any business debts, but if you own a limited company then the limited liability status of your company means that any business debts are limited to the company and not the directors. This means that as a director your personal finances should not be affected. However, although this sounds quite straightforward there are exceptions.
Get an instant understanding of your: Plus much more ...
Take Our Free 60 Second Test
Get an instant understanding of your:
Plus much more ...Start The 60 Second Test
If you have any personal guarantees on anything obtained for the company, for example on a business loan or property lease, and the business is unable to meet the agreed payment terms, then as a director you will be personally responsible. If you don’t meet the payment schedule, then the creditor, whether it’s the landlord or the bank, will pursue you personally for the debt. Make sure you look at all your agreements to see exactly what your situation is.
Solutions Based Funding Options
- UK's Leading Business Funders
- Free Brokerage Service
- Full Market Access
A company is classed as insolvent if it’s unable to pay its debts when they’re due or when its liabilities are greater than its assets. If you know that your company is insolvent and you continue trading and adding to the company debt, then as a director, you can become personally liable for that debt. In these circumstances, if the director racks up more debt whilst knowing that the company has no chance of recovering and paying that debt back then this may be classed as fraudulent trading. If a company director is found guilty of fraudulent trading, even though they have been acting through the company, they may become personally liable for any losses suffered as a result and they may have to pay damages too. This is the case whether the business can meet the debts or not. Likewise, if a misfeasance claim is brought against the company, where the directors have knowingly acted in an inappropriate way and another party suffers as a result, then again directors may become personally liable.
UK’s number one for director advice
We handle more corporate insolvency appointments than any other UK firm; demonstrating our commitment to helping directors and business owners in financial distress.
The team are available now - 0800 644 6080
Having an overdrawn directors’ loan account when a company goes into liquidation also means that the directors will be personally liable for repaying that loan. The insolvency practitioner handling the liquidation can demand repayment of the loan as it is their duty to act in the interest of company creditors. They can even take legal action against directors to force them to pay, which could even lead to bankruptcy if they are not able to. Make sure you seek professional advice from an accountant or licensed insolvency practitioner if you’re concerned about the financial position of your company.
Further Reading on Can my company's debt problems affect my personal finances and credit rating?
Real Business Rescue are here to help
Still unsure whether liquidation is right for your company? Don't worry, the experts at Real Business Rescue are here to help. Our licensed insolvency practitioners will take the time to understand the problems your company is facing before recommending the best course of action going forward based on your own unique circumstances.
- UK’s Largest Liquidators
- 100+ Offices Nationwide
- 100% Confidential Advice
- Supported 25,000+ Directors
Looking for immediate support?
Complete the below to get in touch
We provide free confidential advice with absolutely no obligation.
Our expert and non-judgemental team are ready to assist directors and stakeholders today.