You can go bankrupt if you are self employed. You will be able to keep any work tools that you need to carry out your job. This includes a reasonably priced vehicle. However, more valuable machinery and equipment may be at risk.

Included in this article:

• What happens to your work tools if you go bankrupt?
• Is your work vehicle at risk?
• What about other business equipment and machinery?

Want help to go Bankrupt? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts

What happens to your work tools if you go Bankrupt?

As a self employed person you are allowed to carry on working if you go bankrupt. You will be able to keep the reasonable work tools that you require to do your job. As a rule of thumb, hand tools and other small equipment you use personally are not at risk.

So for example, if you are a plumber, you will can keep the hand tools you need on a day to day to day basis. If you are a landscaper, you can keep the lawn mower and various other gardening equipment you may own.

However, if you run a larger enterprise with employees, equipment you own that they use could be at risk. If you are a building contractor and supply tools or vehicles to people who work for you, this may be more of a problem.

If you supply tools and equipment to employees or contractors, call us for more advice before going bankrupt.

Is your work vehicle at risk?

As a general rule, when you go bankrupt, you are allowed to keep your car as long as it is worth £1000 or less. However, if your vehicle is a work tool, for example a work van, you will normally be able to keep it even if it is worth more.

For example, you may own a van valued at £2,500 to £3000. The official receiver should be happy for you to keep this. If you are a taxi driver or driving instructor, your vehicle may worth more. If you can’t operate with something cheaper, again you should be able to keep it.

However, there is a limit to the value of a work’s vehicle you will be able to keep. If the official receiver believes it is of excessive value, they will require to sell it and get a cheaper alternative. This is not always an easy situation as the definition of excessive value is subjective.

Where your vehicle is on finance, whether or not you will be able to keep it will usually depend on the attitude of the finance company.

If you own a car which you happen to  use to get and from appointments or customers, this may not be considered as a work tool. Where it is worth more than £1000, you may have to sell it and getting a cheaper one.

What happens to other business equipment and machinery?

You may own more expensive equipment and machinery. Generally speaking these items will not be exempt from bankruptcy. If you want to keep them you will have to pay the official receiver the equivalent of their second hand value.

The types of items tend to be non hand tools that can’t easily be carried in the back of your works car or van. Heavy equipment and plant would likely to fall into this category. Also items found in a retail premises such as furniture, shelving, freezers etc.

It may be difficult to estimate the second hand value of these type of work tools. If so, the official receiver will employ a valuer to visit your premises.

Want to discuss whether you will be able to keep your work tools when you go bankrupt? Give us a call (0800 077 6180) or complete the form below. The advice is free and without obligation.