If you are self employed you can go Bankrupt and keep working. However as a self employed person you will probably own certain tools and perhaps a vehicle which you need to do your job. You may be concerned that if you go bankrupt these items will be at risk. We explain whether they could be taken from you.
You can keep the tools of your trade if you go Bankrupt
As a self employed person if you go bankrupt you are allowed to keep any tools you own which you require to do your job. For example, if you are a plumber you will be able to keep your plumbing equipment. If you are a driving instructor you will be able to keep the car you need to earn your living.
The rationale behind this is that the court wants to ensure that you can still earn a living. If you can do this you may even be able to earn enough to make payments towards your debt. If you were unable to do this, you would become increasingly reliant on the state which is definitely not the objective of the court.
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Work vehicles and bankruptcy
One area that does cause particular worry is personal vehicles. Generally speaking as a bankrupt person you can keep your car if you need one as long as its value is £1000 or less. However many self employed people may have vehicles which they required for their job which are worth more than this.
If your vehicle forms a specific part of the tools of your trade, for example a work van, then you will normally be able to keep this.
BMD Tip: If you own a car which you happen to use to get and from appointments or customers, this may not be considered as a specific tool of your trade. You may have to consider selling it and getting a cheaper one.
Bankruptcy is a sensible solution for the self employed
If you are self employed and have debts which you are unable to pay, bankruptcy may well be a sensible solution to consider.
Your status as a self employed person is not affected if you are bankrupt and you may well have tax or VAT debts which can be included in the bankruptcy agreement.
Of key importance is the fact that you can keep the tools of your trade. This includes items which you own that you must have to perform the work that you do and would include a work vehicle that may be valued at more than £1500.
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