If you are a company director you have the option of starting an IVA to resolve a personal debt problem.
Jump to article contents:
- Can you do an IVA if you are a company director?
- What happens to company debts?
- How will your company be affected?
- Alternative debt solutions for company directors
Want help to start an IVA? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts
Can you do an IVA if you are a Company Director?
As a company director if find yourself struggling with personal debt an IVA might be an ideal solution. It is possible to use the Arrangement and continue in you director’s role.
One of the most important things to consider is whether or not the business you work for is viable. Can you generate sufficient monthly income to cover both your household expenses and a reasonable IVA payment?
If your business is new you might have to wait until you have 6 months trading history before applying for an IVA. This is to prove your company can sustain your income.
If you cannot maintain a monthly payment an IVA might still be an option if you can offer a cash lump sum.
What happens to Company Debts?
Only debts in your personal name can be included in an IVA. Debts in the name of your limited company cannot be added and still have to be paid.
If your business is also struggling you may need to combine your IVA with a company debt solution. If the business is viable you might be able to restructure its debt with a CVA (Company Voluntary Arrangement).
Alternatively you might consider closing your original company and starting another using a pre pack solution.
Where you have personally guaranteed any of your company’s debts you must make your IVA Company aware of this.
Struggling with Company Debt? Give us a call (0800 077 6180) or complete the form below to speak to one of our experts
How will your Company be Affected?
On the face of it a company is not affected if one of its directors starts an IVA. The business is a separate legal entity. However there could be implications particularly for smaller director owned companies.
If your company bank account is with the same bank as your personal account the bank will find out. They are not able to close the company account. However if the company has credit facilities these could be withdrawn.
When an owner director starts an IVA the bank will automatically assume that the company is also on an unsteady financial footing. They may therefore withdraw an overdraft or credit card facility which in turn will have business implications.
You will normally be able to retain ownership of your company shares if you start an IVA unless they are particularly valuable.
Alternative Debt Solutions for Company Directors
An IVA is not the only way you can deal with personal debts as a company director. Depending on the amount you owe it might be possible to use a simple Debt Management Plan.
However this solution is not normally suitable if you owe significant amounts to HMRC.
In these circumstances (although not immediately obviously) bankruptcy could be an option. This solution would mean that you would have to resign as a director. However you could continue to work for your company as an employee.
Bankruptcy will normally only be a useful solution for dealing with personal debt if you are not a home owner or have little or no equity in your property.
Arrange a call with an IVA Expert
Your information will be held in strictest confidence and used to contact you by our internal team only. We will never share your details with any third party without your permission.