Forum menu
I see - you added 'no mortgage' to help your argument. Nice one.
I see - you added 'no mortgage' to help your argument. Nice one.
Jeez, stop being so obtuse.
Clearly, if you have a 100% mortgage then you have no assets worth chasing, so you'll just be declared bankrupt and never get so much as a mobile phone contract again.
OK, let's take a more realistic situation for your benefit.
John Smith has a house currently worth £350k with a £200k mortgage.
John Smith has a court order against him for £250k.
Lawyers acting for the supplier (and the court) are well aware that there is £150k of equity in John's house. John is unable to pay his debts and has a whopping order against him.
What do you think is going to happen?..................
At least John Smith is not producing that crappy "ale" any more so it's not all bad.
They are going to be shafted because they didn't secure the order against John's equity...
A creditor that has a secured loan on asset can't stop it been liquidated to pay off another creditor but only ensure that their loan is repaid in full first before the remainder is split between the unsecured creditors.
They are going to be shafted because they didn't secure the order against John's equity...
Really?
So you are of the opinion that there is absolutely no way of enforcing an order made by the court? Doesn't that sound a bit odd to you?
Orders aren't secured against anything. In this case, it's a declaration by the court that you owe someone else money and that you have to pay up.
If you don't pay up, the order can be enforced in a number of ways (warrant of execution, attachment of earnings, charge over your property etc).
Seriously, just think about it, if the court makes an order to the effect that you owe someone money, and you have the means to pay it, why shouldn't the creditor be able to enforce the order? It defeats the point of getting an order in the first place.
If I was acting for the creditor and it already had an order for payment of the debt, and the only way it was ever going to see it's cash was by the sale of the debtor's house, I'd apply to the court for a charge over the property and then wait until the house was sold, or if the creditor was in a hurry for payment, apply for an order for sale once it had secured the charge over the property. You're going to be next in line behind the mortgagor though.
*mortgagee
If you're mostly selling your time [contract/freelance] then liability issues are kind of a moot point.
The biggest advantage of going Ltd is the tax benefits - especially if you'd ordinarily be in the higher tax bracket.
Having been self employed and now being Ltd, I wouldn't entertain doing Ltd without an accountant.
If you're mostly selling your time [contract/freelance] then liability issues are kind of a moot point.
Not entirely (although it's certainly less than someone entering into lots of credit agreements with suppliers, for example setting up in retail).
What if, for example, you work in IT and are contracted by a company to set up a firewall and you make a really crap job of it and the company suffers a loss as a result of its network being down for 2 days (sorry for the rubbish example IT bods, not my field!).
As a sole trader, you personally are liable for that loss.
If the work was carried out by a limited company then you are only personally liable to the value of your paid up shareholding if things go up the swanny.
In addition, even if you are just selling time, surely there are still some circumstances where you enter into agreements for the supply/hire of good or services? What about equipment for work, or a car, or buying parts needed for a particular contract? All of these expose you (or your company) financially.
lawyers/accountants only ever sell time, but are exposed to eyewatering levels of potential liability. So you need to make sure you have robust PI cover in place, since if it doesn't pay out, you can say bye bye to your career and potentially your firm.
Probably worth chipping in to mention professional liability insurance at this point.
Hiscox are a good place to try. Surprisingly affordable for us.
True enough.Not entirely (although it's certainly less than someone entering into lots of credit agreements with suppliers, for example setting up in retail).
I use Hiscox for insurance too.
this is interesting and I was about to ask about liability insurance.
Craig - still getting things together and your posts on here are saving me asking questions at the moment but will be in touch 🙂
Am also thinking about going Limited as I will have to in order to apply for grants such as the Technology Strategy Board ones. Am currently a sole trader working as a subcontractor under another company (limited) so covered by their insurance (we extended it) and then will branch out my business.
No problems Andy, I hope it's all coming together for you. If you need further info have a look around our website too.