Bankruptcy

[Cooperinliverp00l]

Is it better to go bankrupt as a LTD co or Sole Trader...

What is at stack with the two options...eg if LTD would your personal assets be at stack or just company assets

?

p.s i'm not filing for it just wanted to know ?

[Gonzo]

Is it better to go bankrupt as a LTD co or Sole Trader...

What is at stack with the two options...eg if LTD would your personal assets be at stack or just company assets

?

p.s i'm not filing for it just wanted to know ?

The whole idea of a Limited Company is that the liabilities are limited - the most the shareholders will lose is the capital that they have invested. So if the company goes under the shareholders will lose some/most/all of the amount that they have invested but that is the end of it, personal assets would not be involved (unless a director has been negligent of course).

Personal bunkruptcy puts all the person's assets including their house at risk of being confiscated to settle the debts.

Obviously for the individual, the LTD route is better in the event of failure. In fact, it is better all round unless turnover is so small that the accountancy fees could not comfortably be absorbed.

[Cooperinliverp00l]

The whole idea of a Limited Company is that the liabilities are limited - the most the shareholders will lose is the capital that they have invested. So if the company goes under the shareholders will lose some/most/all of the amount that they have invested but that is the end of it, personal assets would not be involved (unless a director has been negligent of course).

Personal bunkruptcy puts all the person's assets including their house at risk of being confiscated to settle the debts.

Obviously for the individual, the LTD route is better in the event of failure. In fact, it is better all round unless turnover is so small that the accountancy fees could not comfortably be absorbed.

Thought as much...what about if you act as a guarantee ...? I'm looking itno plan B which i might set up as a LTD co but i'm being asked that if i trade as LTD then i would need to director guarantee's...does this then bring personal assets into the frame...

[Alan @ BroomeAffinity]

Thought as much...what about if you act as a guarantee ...? I'm looking itno plan B which i might set up as a LTD co but i'm being asked that if i trade as LTD then i would need to director guarantee's...does this then bring personal assets into the frame...

Of course it does. If you act as guarantor for the company, then of the company fails to pay the guaranteed debt or obligation then the creditor will seek to be paid by the guarantor (you). If you don't pay it then they will sue for payment and ultimately bankruptcy.

[Cooperinliverp00l]

Then how does it become a benefit to be LTD then if you are the guaruntee for it ?...i thought that if you were ltd and it all went wrong the ltd co would absorb the debt and close down....Simple view i know but that is why i'm investigating and can't see anything clear on the net YET !

[Alan @ BroomeAffinity]

A guarantee only relates to the debt secured, not the full debts of the company, so there is a benefit there. Ane look it from the view of the bank (I presume): Would you expect them to lend to someone without taking the necessary steps to ensure that they'd be repaid?