Personal liability need not mean personal bankruptcy

30 January 2024

Accepting that the business you have invested so much time, effort, and passion into is failing can be hard to do. But for those directors who are personally liable for their company’s debts, it can be terrifying.

After all, when your personal finances are intricately woven with those of your company, it is not only your business on the line, but your family’s financial future too.

For many, this is because their creditors have made them sign personal guarantees. Others have taken out personal loans and credit cards to keep their companies afloat. Such debts do not just go away when a business collapses, they can follow a person into the next stage of their life.

Over the years, I have seen hundreds of clients go through this. It is common to feel trapped. Afraid that closing their business will leave them knee deep in debt and without the means to repay it, many choose to stay the course. They keep trading, even when it is obvious that their business model is not working for them. The result is often more debt and mounting pressure.

The stress of trying to keep the business afloat can easily morph into even darker emotions – self-blame, depression and anxiety. It can affect their moods, relationships, and their ability to run their businesses. For some, the pressure can become unbearable, risking mental breakdowns, or even suicide. Research shows that half of all people with problem debt will suffer from mental health issues.

What worries me most is the huge number of directors who are going through this alone. In my experience, there is nearly always a solution to a company’s financial problems, but without expert advice, it can be close to impossible to find.

I have seen clients break down crying when I explain to them that they have options, and there may still be a way to pull their business back from the brink. Many of my clients were unaware this was even a service offered by insolvency firms. But on those occasions where a business cannot be rescued, there is still much that can be done to help ease the suffering. .

Personal liability does not have to equal personal bankruptcy, or worse – there is still hope of a secure future.

A good insolvency practitioner can help with this, as well as offering a shoulder to lean on. Three decades in this profession have taught me that insolvency isn’t just about the numbers – it’s about the people. I work with them during some of the hardest, most stressful, periods of their lives, and I have the privilege of being there to help as they gradually emerge from it.

The best advice I can give to anyone worried about their personal liability is this – don’t worry alone. Reach out, share your problems with someone with the expertise to steer you in the right direction. With the right help you could pull your business out of the red, and start your new life with fewer personal debts. You might even discover that things are nowhere near as dire as you believed them to be.

If you are finding it hard to cope or are worried about the mental wellness of someone else, visit