BUSINESS DEBT
Dealing With Your Business Debts
How you deal with business debt depends largely on the legal structure of your business. You might run your business as a Sole Trader, in Partnership with your spouse or someone else or you may have a Company and maybe even a Trust.
Quite often there will also be personal debt (Credit Cards/Personal Loans) which have been incurred when the business wasn’t able to meet all business and costs.
There are lots of reasons why you might get to a stage where debt levels become unmanageable. Business activity downturn, accident or illness, loss of contracts, unexpected tax or relationship breakdown to name a few.
Whatever the reason there are many ways to deal with this debt.
Sole Trader or Business Partnerships
For Tradies or Professionals who operate alone the situation is relatively clear. The debts are all in your name so you are solely liable to pay them back.
What is not always clear is if your assets (Houses, Cars etc.) are in joint names then your spouse or joint owner may be involved if creditors try to enforce sale of these assets. Most small business partnerships are between husband & wife and therefore the debts are usually incurred jointly.
Assets are more at risk when creditors have no other party to consider when trying to enforce sale of assets.
Company Businesses
Company debts are owed by the company not individuals. However in most small businesses the Directors of the Company are required to give Directors Guarantees to main suppliers & landlords, so each Director who signs becomes personally liable for the company debts as well. The Directors are also liable for some company taxes and superannuation.
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Phone Consultation
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FAQ's Sole Trader Business Difficulties
If your business is operated through a partnership, there are key considerations that must be taken into account if the business becomes insolvent or even if any one of the partners become insolvent.
In a partnership, you and your partners own all of the assets of the partnership jointly and you also share liability for all of the partnerships debts. This liability is shared jointly and severally between the partners so each of the partners is liable for their own share and also is liable for all of the partnership debts.
Under legislation, when a partner becomes bankrupt, the partnership is dissolved, which can create real difficulties for the remaining partners, even when they themselves have the financial resources to satisfy any outstanding debts.
If you have concerns about any of your partners’ current financial stability or are aware of the vulnerability of the partnership due to any financial instability you are encouraged to call us to find out more about your rights and obligations. Being aware of the potential repercussions of the insolvency of any one of the parties can influence the impact on your own assets. Please call us if you have concerns.
Business Partnerships and Insolvency
Company Debts
Companies become insolvent for many reasons including business activity downturns, slow payment by debtors, inadequate provisions for taxation or more personal issues including distraction from usual business operations during relationship breakdowns or periods of serious illness.
If your company has reached the stage where it can no longer pay its debts as and when they are due, you as a Director, have a legal obligation to work quickly to address the situation. Recovery can be very difficult, it is imperative that Directors take the steps required to address insolvency when it arises.
The business may need to cease trading, be sold, liquidated or placed into voluntary administration to obtain breathing space to sort out the cash flow difficulties. Directors need to get advice as to their potential liabilities from personal guarantees and other issues.
Where the company debts and operational difficulties require closure of the company, the Active Debt consultant works with the Directors to ensure they meet their obligations and understand the formal processes involved.
The Administrator or Liquidator when appointed commences working for the creditors (not you) to ensure the best possible return is realised. The process can become bewildering to Directors and our consultants stand beside the Directors throughout offering guidance and support to ensure the best outcome for all parties.
Over the past eighteen years, our consultants have had experience working to find solutions for people who are Directors of companies that have become insolvent. We work with selected Insolvency and Accounting firms that provide expert advice in the following insolvency areas.
Your enquiry is confidential
You can be confident that your enquiry regarding the possible insolvency of your company will be treated with the utmost confidentiality. Before you lose your business or your house, talk to us to discover the debt options that are available to you.
Negotiation
Debt Consolidation
Bankruptcy Help
Debt Agreement
Mortgage Refinance
Credit Card Payments
Business Debt
Motor Vehicle Repossession
Meet with us @
Suite 2, 31 Moreau Mews
Applecross, WA, 6153
Email: info@activedebt.com.au
Phone: +08 9220 9031
Fax: +08 9316 4837
Active Debt Specialists Pty Ltd
Debt Agreement Administrator Registration No. 1508 with AFSA
ABN 64 008 955 413
Active Debt Specialists is Member No. 71186 of the Australian Financial Complaints Authority.