Debt: Is It Too Easy To Avoid Paying?

For most of my life I've moved in circles where people honour their debts. My Dad didn't even have a credit card until recently, he insisted on paying everyone with cash or cheque, and this rubbed off on me.

Whittam International pays everyone to the agreed payment terms, and I fully expect my clients to do the same. But just recently I've noticed one or two companies playing silly buggers and trying to extend their terms without so much as a phone call to me.

Anyway, the worst of the lot was a car dealership in Manchester who owe me £17k for work we did for them a few months ago. The guy has been promising me the payment for weeks but I got tired of waiting. I took him to Court, he didnt even contest it, and when he failed to pay again I took it to the High Court and got a writ out against him.

I have just been informed by the sheriffs (like bailiffs but with more powers) that when they arrived at the dealership the guy tried to play hardball but when he realised the sheriffs were going to remove some of his cars he handed over £17k on the spot.

He clearly had the cash all the time, he just thought he could do nothing and it would go away. And I suspect it works a lot of the time, I shouldn't think many people want to take people to Court, particularly for smaller debts.

Since these problems I've looked deeper into people avoiding debts and the law makes it quite easy for people to run up huge debts and then not pay. They can make themselves bankrupt, they can change their company name, they can move assets into someone elses name to avoid goods being removed.

It really is a joke. People should be made to honour their debts, people shouldn't be able to hide behind limited companies or bankruptcy. The debt should follow them for life until it is paid.

Do you agree? Do you have any experience of people owing you money?

It pisses me off too. My ethos has always been "if you can't afford it, make do without."

Unfortunately, one of my sons has the ethos "if it's cash, spend it then worry about the bills later". He is a twat and I'm fed up repeatedly telling him so.

Writing off debt just encourages people to get more, instead of taking responsibility for their own finances.

Damn right it's too easy to avoid paying.

I run a small business, about 3 years ago my biggest customer stopped paying me. He said it was a temporary measure and promised me payment in full within 6 weeks - he begged me to keep supplying him which I foolishly did. I kept ringing and ringing him and every day he'd say the payment was coming.

Finally he said he'd sent the payment by BACS and it would be in my account within 3 days. Two days later I received a letter saying he'd gone bust and I would be lucky to get anything.

Less than a week later he's started up the same company less the 'Limited', with the same staff, in the same building and has the cheek to ask me to supply him and would I give him 21 days credit!

In truth that debt nearly sent me under, but I still paid my suppliers. The law needs to be changed to make individuals liable for company debt.

summercummings wrote:Damn right it's too easy to avoid paying.

I run a small business, about 3 years ago my biggest customer stopped paying me. He said it was a temporary measure and promised me payment in full within 6 weeks - he begged me to keep supplying him which I foolishly did. I kept ringing and ringing him and every day he'd say the payment was coming.

Finally he said he'd sent the payment by BACS and it would be in my account within 3 days. Two days later I received a letter saying he'd gone bust and I would be lucky to get anything.

Less than a week later he's started up the same company less the 'Limited', with the same staff, in the same building and has the cheek to ask me to supply him and would I give him 21 days credit!

In truth that debt nearly sent me under, but I still paid my suppliers. The law needs to be changed to make individuals liable for company debt.

There definitely needs to be stronger action taken against this kind of phoenixism. The crooks usually set up another limited company with the assets of the previous company and walk away leaving all the debts behind. So customers, suppliers and taxpayers (HMRC are always owed money too) are screwed.

Is this a joke thread, everyone wants to avoid paying their debts surely?

I regularly take out a Capital One or similar credit card, max it out, let them chase me for a while and then plead poverty. I then make them a low offer to clear the debt i.e. I owe them £2k but offer £300. They usually go for it.

Who's the idiot?

Bolton Hater wrote:Is this a joke thread, everyone wants to avoid paying their debts surely?

I regularly take out a Capital One or similar credit card, max it out, let them chase me for a while and then plead poverty. I then make them a low offer to clear the debt i.e. I owe them £2k but offer £300. They usually go for it.

Who's the idiot?

You.

OneFinFreedman wrote:

Bolton Hater wrote:Is this a joke thread, everyone wants to avoid paying their debts surely?

I regularly take out a Capital One or similar credit card, max it out, let them chase me for a while and then plead poverty. I then make them a low offer to clear the debt i.e. I owe them £2k but offer £300. They usually go for it.

Who's the idiot?

You.

I work for a company that advise's people who are insolvent (we deal with Bankruptcy, IVA's, DRO's, and Trust deeds etc). Everyday we deal with hundreds and hundreds of people avoiding their contractual obligations. It is amazing what some of our clients get up to and what lie's thecome up with.

If you've got debt there's a good way to get out of it.

www.quickquid.com

In the eyes of the law, at this moment in time, a "limited" company is seen as a separate entity as it could have 1 or more owners and various shareholders. The terms of any company are set out in the M&AA's (Memorandum and Articles of Association) as to how the Directors, Company Secretaries and Shareholders can conduct their business and whether they can take on credir or not!!

Therefore if a company runs up debtsm and then fails, then its the companies fault, and not the Directors/shareholders. The only compensation is that the Director of the companies could be banned for up to 10 years from owning another company - or even life in certain circumstances. But reteiving the debt would probably be never recovered.

When the companies change hands or gets handed down then, again there are certain rules, such as if the debt has arisen before the changeover date, then as such the debt still exists and the fixtures and fittings can still be used to reduce the debt.

Only one negative is if that a company folds completely, and delists from Companies House, and then a new company starts up then unfortunately the debt will never be recovered as the new company, basically, has no association with the old company, although the Directors etc are the same, due to the new company being a new entity!!!

That is the most simplistic view as, with everything else, there will be grey areas - nothing is ever black and white!

bwfc71 wrote:In the eyes of the law, at this moment in time, a "limited" company is seen as a separate entity as it could have 1 or more owners and various shareholders. The terms of any company are set out in the M&AA's (Memorandum and Articles of Association) as to how the Directors, Company Secretaries and Shareholders can conduct their business and whether they can take on credir or not!!

Therefore if a company runs up debtsm and then fails, then its the companies fault, and not the Directors/shareholders. The only compensation is that the Director of the companies could be banned for up to 10 years from owning another company - or even life in certain circumstances. But reteiving the debt would probably be never recovered.

When the companies change hands or gets handed down then, again there are certain rules, such as if the debt has arisen before the changeover date, then as such the debt still exists and the fixtures and fittings can still be used to reduce the debt.

Only one negative is if that a company folds completely, and delists from Companies House, and then a new company starts up then unfortunately the debt will never be recovered as the new company, basically, has no association with the old company, although the Directors etc are the same, due to the new company being a new entity!!!

That is the most simplistic view as, with everything else, there will be grey areas - nothing is ever black and white!

All true but the main problem is phoenixism. Directors (usually deliberately) run up a bunch of debts then wind up the company. They then ensure that a corrupt or stupid liquidator is appointed to administer the winding up process and buy up dirt cheap the former company assets and start again with a new company basically carrying on the same business but minus all the debts.

bwfc71 wrote:In the eyes of the law, at this moment in time, a "limited" company is seen as a separate entity as it could have 1 or more owners and various shareholders. The terms of any company are set out in the M&AA's (Memorandum and Articles of Association) as to how the Directors, Company Secretaries and Shareholders can conduct their business and whether they can take on credir or not!!

Therefore if a company runs up debtsm and then fails, then its the companies fault, and not the Directors/shareholders. The only compensation is that the Director of the companies could be banned for up to 10 years from owning another company - or even life in certain circumstances. But reteiving the debt would probably be never recovered.

When the companies change hands or gets handed down then, again there are certain rules, such as if the debt has arisen before the changeover date, then as such the debt still exists and the fixtures and fittings can still be used to reduce the debt.

Only one negative is if that a company folds completely, and delists from Companies House, and then a new company starts up then unfortunately the debt will never be recovered as the new company, basically, has no association with the old company, although the Directors etc are the same, due to the new company being a new entity!!!

That is the most simplistic view as, with everything else, there will be grey areas - nothing is ever black and white!

I asked you if it was too easy to avoid paying your debts, not for an indepth analysis of a limited company.

xmiles wrote:

bwfc71 wrote:In the eyes of the law, at this moment in time, a "limited" company is seen as a separate entity as it could have 1 or more owners and various shareholders. The terms of any company are set out in the M&AA's (Memorandum and Articles of Association) as to how the Directors, Company Secretaries and Shareholders can conduct their business and whether they can take on credir or not!!

Therefore if a company runs up debtsm and then fails, then its the companies fault, and not the Directors/shareholders. The only compensation is that the Director of the companies could be banned for up to 10 years from owning another company - or even life in certain circumstances. But reteiving the debt would probably be never recovered.

When the companies change hands or gets handed down then, again there are certain rules, such as if the debt has arisen before the changeover date, then as such the debt still exists and the fixtures and fittings can still be used to reduce the debt.

Only one negative is if that a company folds completely, and delists from Companies House, and then a new company starts up then unfortunately the debt will never be recovered as the new company, basically, has no association with the old company, although the Directors etc are the same, due to the new company being a new entity!!!

That is the most simplistic view as, with everything else, there will be grey areas - nothing is ever black and white!

All true but the main problem is phoenixism. Directors (usually deliberately) run up a bunch of debts then wind up the company. They then ensure that a corrupt or stupid liquidator is appointed to administer the winding up process and buy up dirt cheap the former company assets and start again with a new company basically carrying on the same business but minus all the debts.

I did say it was a simplistic view. But companies do change names all the time, so 99% of time its not a case of avoiding debts but a case of restructuring. As I said its not always black and white.

@ Natasha - debts should be paid whenever possible. But sometimes one can have too much debt, sometimes of their not own accord - should as having a mortgage and a credit or two and then suddenly losing a job and income drops to the very bare minimum. That is not teh fault of the debtor and sometimes the only road for them is to go through various companies that help with reduced payments or IVA's or sometimes teh course would be being declared bankrupt which can lat from a period of 6 months to 6 years. Again not everything is clear cut - yes the old proverb does stand that one should only spend with what they have got.

What gets me is that interest is still required on what is due, but the interest rate goes up and thus compunding the situation and making debts even bigger, rather than helping the debtors reduce/eradicate debts by reducing or even nullifying interest rates.

Amos knows all about this subject. He moved to a different country to avoid his debts.

bwfc71 wrote:In the eyes of the law, at this moment in time, a "limited" company is seen as a separate entity as it could have 1 or more owners and various shareholders. The terms of any company are set out in the M&AA's (Memorandum and Articles of Association) as to how the Directors, Company Secretaries and Shareholders can conduct their business and whether they can take on credir or not!!

Therefore if a company runs up debtsm and then fails, then its the companies fault, and not the Directors/shareholders. The only compensation is that the Director of the companies could be banned for up to 10 years from owning another company - or even life in certain circumstances. But reteiving the debt would probably be never recovered.

When the companies change hands or gets handed down then, again there are certain rules, such as if the debt has arisen before the changeover date, then as such the debt still exists and the fixtures and fittings can still be used to reduce the debt.

Only one negative is if that a company folds completely, and delists from Companies House, and then a new company starts up then unfortunately the debt will never be recovered as the new company, basically, has no association with the old company, although the Directors etc are the same, due to the new company being a new entity!!!

That is the most simplistic view as, with everything else, there will be grey areas - nothing is ever black and white!

Whats relevant here is the contents of the Insolvency Act 1986. If the dirctors of a limited liability comany (ie one registered under the Companies Acts, which must be audited and submit its annual Accounts and Report to the Registar of Companies)continue to trade whilst knowingly insolvent ( which isn't hard to test) then they become liable for the debts of the company. Although the law is not straightforward,they are liable for debt (whether trading or otherwise) set up whilst the company was insolvent. However policing this is so under resourced and ineffective,that many of the cases alluded to in this thread are allowed to continue unchecked.
The law is in existence- its simpy not applied.

bwfc71 wrote:

@ Natasha - debts should be paid whenever possible. But sometimes one can have too much debt, sometimes of their not own accord - should as having a mortgage and a credit or two and then suddenly losing a job and income drops to the very bare minimum. That is not teh fault of the debtor and sometimes the only road for them is to go through various companies that help with reduced payments or IVA's or sometimes teh course would be being declared bankrupt which can lat from a period of 6 months to 6 years. Again not everything is clear cut - yes the old proverb does stand that one should only spend with what they have got.

I have sympathy for people who lose their jobs and can't pay the mortgage - but in most cases the bank takes the house back and flogs it (often at a profit), so no one other than the debtor loses out.

No, it's Directors I hate, the ones that know they are going under but still keep spending the cash knowing full well they won't have to pay any back. They should change the law so that the assets of any Director of a folded company can be sold to pay off the company debts. It's amazing how many people I meet that have just gone bust but are still living in mansions and driving fancy cars.

Bernard Dennis Park wrote:Amos knows all about this subject. He moved to a different country to avoid his debts.

He denied ever saying this.

He's a liar.

Apologies for being a bit naive here- but I'm quite a recent poster on this site- and in lots of threads I see this mysterious person called 'Amos' being mentioned.
Can some one please tell me who he is- I haven't a clue at the minute.
Also- is he fair game for anyone to have a go at?

rammywhite wrote:Apologies for being a bit naive here- but I'm quite a recent poster on this site- and in lots of threads I see this mysterious person called 'Amos' being mentioned.
Can some one please tell me who he is- I haven't a clue at the minute.
Also- is he fair game for anyone to have a go at?

Chris Amos is BWFC71.

Thats his name, he's a "forum legend" for some of his antics in the past, including a lot of remarkable life stories.