This is the fear underneath all the others.
And the answer is usually less severe than Directors imagine.
The liquidation of a Company is only connected to your personal estate, which usually includes equity in a property, if you owe money to the Company, say an overdrawn loan account; or to a creditor who has a personal guarantee which has crystallised because the Company cannot pay the liability. Your home, your partner's position and your credit file are all affected differently depending on the route you take. None of it is automatic, and very little of it is as immediate as it feels at three in the morning.
Get the real answer, not the worst one you've imagined.
4 THINGS EVERY DIRECTOR SHOULD UNDERSTAND
Where a property is jointly owned, only your share of the equity is in question, unless your partner is a party to a personal guarantee.
If not, your partner's share belongs to them and cannot be taken to pay your personal debts.
This is the reassurance most Directors need first.
In bankruptcy, your equitable interest in the property automatically vests in the Trustee in Bankruptcy (Trustee), so you lose control of your share of the house. There are various ways of dealing with your equity within 3 years of being made bankrupt, so you are advised to co-operate with the Trustee.
After 1 year the interest of creditors is paramount and the Trustee can apply for an Order of Possession and Sale, if you do not co-operate. In some circumstances, if the equity is too low to pursue, the property will be given back to you.
Your share, not the whole house.
Property in your personal estate, including a house, will not vest in the Supervisor. Where there is equity, you may be asked to release some of it toward the end of the Arrangement.
We encourage you to offer a reasonable lump sum in full and final settlement of your personal liabilities to avoid a lengthy term in a contributory style IVA.
Often the reason Directors choose this route.
Both an IVA and bankruptcy affect your credit, and both appear on a public register while they are running.
The Company's liquidation, by itself, does not appear on your personal credit file.
The Company's record is not your record.
YOUR FAMILY IS NOT LIABLE FOR YOUR DEBTS.
Unless they signed something themselves, your partner's position and their share of any jointly owned home are separate from yours.
You are not unusual. Most Directors carry this alone for far longer than they should.
The position is almost always less frightening once it is written down and quantified.
What matters is that decisions this significant are not made on assumptions.
Don't transfer the house into their name
Transfers made under pressure are routinely unpicked.
Don't add anyone to a new borrowing
It can pull them into a problem that isn't theirs.
Don't assume you'll lose everything
Only your share of anything is ever in question.
Don't hide it from your partner
Joint assets mean joint decisions.
Don't carry it alone
The isolation does more damage than the debt.
A confidential discussion today could help protect you tomorrow.
Tell us the basics and we'll call you back — free, confidential, no obligation.
THIS WEBSITE PROVIDES GENERAL INFORMATION AND DOES NOT CONSTITUTE LEGAL OR INSOLVENCY ADVICE. Your position depends on the individual circumstances of each Company and Director. You should obtain advice from an appropriately qualified professional, including a licensed insolvency practitioner where appropriate.
