If a client is still trading
The status of a limited company as a separate entity should usually allow you to give advice to directors on their personal debts. However, because personal and business finances often become merged for these clients, there are some common issues that you need to consider.
Personal debt issues for a director of a limited company often indicate problems with the limited company. For example, it may indicate that the client is using personal credit to prop up the business. Explore the reasons for the client’s personal indebtedness. If the client’s debts are caused by the limited company’s performance, signpost the client to a specialist adviser.
Ensure the client has checked whether they have given any personal guarantees for the limited company. If they have, they need to consider how certain strategies may affect the limited company. This can be particularly important if a guarantee exists but has not been called in. Signpost the client to specialist business advice if that is the case.
Suggest to the client that they also get specialist business debt advice before deciding how to proceed with their personal debts. The client must consider whether any action they take to deal with their personal debts could affect their ability to continue acting as a director.
Insolvency practitioners are usually a good source for help. Get to know a few of them and ask them for advice.