Contractor Debt Problems

09/10/2015 - 10:53

A large proportion of UK individuals will at some point experience debt problems. 

Levels of debt can easily get out of hand or changes in circumstances, such as an unexpected drop in income, can make previously affordable debts unmanageable. 
Some people try to borrow their way out of debt but this doesn’t help unless refinancing can reduce monthly payments and eventually the point will come when access to further credit will not be possible. It is a lot more difficult to borrow these days even with equity in your own property.
These scenarios can often be more applicable to contractors, freelancers and the self-employed as income is not guaranteed, projects can end and access to lending can often be restricted, with lenders reluctant to lend to people not to in full time employment. This is true of contractors working through an umbrella company or acting as a director of their own limited company. The majority of lenders will still treat you as if you are self-employed and may not understand the difference between your contract rate and your payslip. 
Solutions available include as a debt management plan, IVA (Individual Voluntary Arrangement) or even Bankruptcy.
These solutions allow you to reduce your debt repayments to an affordable level, freeze or reduce the interest and charges you are incurring and in some cases write-off a large part of your debt.
We have therefore asked Sharon Witley from Knightsbridge Insolvency for advice and below is some information on the debt options if the above applies to you. 
The good news is there is a solution to debt.
Most people have a point in their life where debt can become a problem. The reasons are wide and varied and as individual as each of us.  
Should the level of debt become unmanageable, there are numerous solutions to address this which enable you to move on with your life and concentrate on the things that really matter. 
But when this happens it can be difficult to know where to turn.
There are a number of common factors which change a debt level from manageable to unbearable, some of which can include:
  • Life accidents (e.g. loss of work, divorce, illness, bereavement)
  • Bad debts / problem contract
  • Catastrophic Event
  • Partnership/previous business dissolution
  • Directors with personal guarantee liabilities
  • HMRC tax liabilities
  • Where is the problem, business or personal debt pressure?
Never under-estimate the effect of personal debt on any individual or business, including limited companies.  Struggling with debt can cause severe worry and stress, impact on other aspects of your life or business, and divert your attention away from where it deserves to be.
If you’ve built up debt which you are struggling to pay as well as trying to meet living expenses, or maintain a business, there are options available to ease or solve the problem:
  • Manage as you are
  • Informal arrangements
  • Equity release
  • Debt Consolidation loan
  • Debt Management Plan
  • Individual Voluntary Arrangement (IVA)
  • Bankruptcy or Debt Relief Order
  • Company Voluntary Arrangement (CVA)
  • Administration
  • Liquidation
The various solutions available, which may or may not suit your individual circumstances, can be fully explained with reliable, independent advice, which can help you to identify the correct option for you.
With over 25 years’ experience, I am well placed to listen and advise you should you need it.  I have assisted thousands of people to resolve their debt issues in innumerable circumstances, including:
  • Individuals
  • Partnerships
  • Directors of limited companies
  • Previous business liabilities
  • Professionals (Solicitors, Accountants, GP’s)
  • Trading businesses
  • Licensed premises and businesses
  • Buy to Let Property portfolio operators
The main considerations are usually maintaining trading and earnings ability, impact upon your home and family finances, effect on job/work, safeguarding your assets, and protection from legal action.
The main advantages may be to write off unaffordable debt, agree affordable repayment terms, protect your home, safeguard your business and income, and get a fresh start.
For independent and impartial advice and for a free initial discussion Sharon Witley can be contacted on 0161 776 6687 or email