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Desperate Times

Desperate Times

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I am a Chartered Accountant who is in a steaming heap of debt. I live in a tiny house and haven't taken the micheal but due to family issues and economic pressures I have debts in excess of £120k with my spouse. My practice is a small limited company (just me) of which I am director and shareholder.

I have checked with my institute, and aside from making them aware, declaring myself bankrupt would have no bearing on my ability to practice as a chartered accountant.

I understand that I would not be able to act as a director (I could appoint a familiy member) but I understand that I would be able to continue to be a shareholder? This would satisfy the condition that more than 50% of the shares are held by a chartered accountant.

I know bankruptcy should only be considered as a last resort, but the chances of us repaying this debt are virtually nil. We strugggle to survive day to day and we have no equity in our house.

Has anyone else been in this situation, or can advise if there is anything else that would affect my ability to continue with my small practice (which has no assets except a 3 year old laptop and a very cheap printer)! Also, would I need to make my clients aware? Or would they be able to obtain the information (short of doing a credit check - which if they did anyway would raise concerns).

Thank you!

Replies (17)

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David Winch
By David Winch
18th Feb 2012 23:51

"Chartered Accountants"

Under ICAEW regulations the description 'Chartered Accountants' can be used by a limited company in which (i) 50 per cent or more of the directors are Chartered Accountants or another member firm(s); and (ii) more than 50 per cent of the nominal value of the voting shares is held by Chartered Accountants or by another member firm(s); and (iii) more than 50 per cent of the aggregate in nominal value of the voting and non-voting shares is held by Chartered Accountants or by another member firm(s).

There are also issues with your role in the management of a company (even if not a director) whilst an undischarged bankrupt.

I would suggest you consider practising as a sole proprietor rather than a limited company.


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By dbowleracca
19th Feb 2012 07:00

Sorry to hear this
I'm sorry to hear about this, it's a difficult situation.

Not been there myself, bit have had clients in the same position over the last few years and just watching them go through it was painful enough.

How is your practice performing? Does it provide you with a good income?

One option could be to sell the practice and then either take employment or start again - or sell a portion of it and keep a few clients to enable you to earn enough to survive.

Not certain about the rules on bankruptcy, but I would imagine they might want you to realise the value of your business to reduce your liability?

I hope it all works itself out for you.

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By yourobedientservant
19th Feb 2012 07:37

I am sorry to hear of your plight.

I am not an insolvency practitioner but there is the possibility of obtaining an IVA rather than full bankruptcy. You should speak to an IP if you can. I can recommend one if you like.

I agree with dbowler. I suspect Keeping you existing comoany in a bankruptcy is difficult, under an IVA it may be different.

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Chris M
By mr. mischief
19th Feb 2012 10:41


Bad news.  For clients in this position, I ask them to speak to an IP I trust, they've done good work for several clients.

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By Albert Camus
19th Feb 2012 21:31

Been there, done that, got the T-shirt

Dear Inthepoop,

Sorry to hear of your situation. I watched my mlillion pound business taken from me and given to others for free by the ICAEW because I became ill with a mental health problem. In doing this, I was left with the debt (about £300k all in) I had taken to finance the practice but no job, no income, no qualifications and no credit! The ICAEW told me to go bankcrupt and loose my home. They then told me to find a job as a purchase ledger clerk and "work my way back up". I hate them with more passion than I can express here.

Instead I took a job with a national retailer unloading the lorries and 3 years later ended up as the store manager of a flagship branch.

I was then approached by an American consultancy firm who wanted me to use my new retail knowledge with my business knowledge and my accountancy skills to start up a new branch office for them.

A year later, I have the office up and running. I am making decent cash and I am enjoying my professional life for the first time in years.

I itch to have "my own thing" again and may be one day I will, but from where you are now, there is life afterwards. Things will get better.

From being down the line of this, I would probably go the IVA route, but I wold suggest that you contact the Consumer Credit Council ( Its a charity. They will take you through all of your options properly and are aware of the implications of each of the options and the affect it may have on memebership of professional bodies. (eg: ICAEW members cannot be bankcrupt, they will cessate your membership)

My personal experiance has been that managing the situation you are in is much easier as an employee than it would have been self employed. Self employment - mine anyway - depended on reputation and credit and both evaporated quickly when I fell into the pit I did. The regular wage helped me know where I stood each week and when I did get a bit of extra cash - from ebay, or doing the odd set of accounts for the small traders I used to look after - it was a little brucey bonus that gave my wife and I a night out or a new pair of jeans or some steaks at the weekend.

Employment also gave me the chance to have a break. Yes I did (and do) 50 hours a week, but not everything is my problem anymore and I can go home and forget about everthing which never happened in the previous 10 years when I often did 100 hour weeks, cancelled holidays and failed to turn up to family funerals due to client demands.

I would also encourage you to do everything you can to look after yourself at this time. Get exercise (eg: go for regular walks, or runs or swims or whatever you enjoy). Eat well. (Lots of fresh food, home cooked, simple.) Ebay the crap in your life. Free up some space and clear the baggage. Get a prepaid card. ( Put the money from the ebay into the card. Don't tell anyone about this card. Its not on your credit file. It's practically untraceable and if you do end up bankcrupt it will give you a few extra quid at xmas and birthdays. Add what you can to it, when you can. I put £10 a week on it for three years and bought my wife and holidays when we needed them most.

You will realise who your real friends are and what your real values are. Me, I had lost both in the rush to become "an emperor" in my own universe.

I won't lie, you have a painful few years in front of you and you will need to find reserves of strength that you don't yet know you have, learning to accept things that you probably wouldn''t accept now, but keep going and  plodding and you will, one day, wake up, and it will be over.

PM me if you would like someone to talk with.

Best regards


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Replying to lionofludesch:
By pippa
22nd Feb 2012 11:35

thank you Albert

for sharing your experience - mental health issues are so misunderstood and can lead to stuff even worse than bankruptcy (my nephew committed suicide a couple of years ago at the age of 27) It is so good to hear that you have come out the otherside and are able to share your experience - it is really inspirational.


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By paulb
20th Feb 2012 09:00

I think that the help Albert Camus has given is invaluable I would like to add a few things and like Albert PM me I am happy to talk with you.

The CCCS may not be your best option as they are funded (supported) by the major banks - so I believe. Take a look at the CAG (Consumer Action Group) website look under debt section. I often help people in the various forums regarding bailiffs and some legal issues.

I know of many many cases in which creditors accept a very small payment as "full & final settlement of a debt" One case a court case was stopped by an agreed settlement offer of £1500 on a £20k debt (Alliance & Leicester) You need to be aware of all the facts for example court action taken against you on the back of an invalid default notice could be a lever to settle a debt (they could issue a new one but it will help to argue costs v settlement "Brandon V Amex" & others) The above case was paid at £100 per month as a full & final! Does not need to be a lump sum.

I think stepping back a trying to look at this is hard and it will take you time to come to terms with the situation but as you do you will see light at the end of the tunnel.

I don’t personally think that bankruptcy is the best option for you (just my opinion) I am not an IP however you will find that many of the banks to which you owe money will sell the debt very quickly and many will NOT chase the debt at all! By chase I mean take court action. Obviously there are horror stories and each situation is different.

If you want to talk in detail PM me and I will send you my number so we can talk.

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By wilcoskip
20th Feb 2012 09:18

Check your inbox

Have sent you a PM.



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By tonyturner
20th Feb 2012 13:33

Yes, got the T shirt also!!!

As a result of a failed business venture 8 years ago (nothing to do with my practice) I took the decision to go into bankruptcy - discharged one year later. ICAEW membership ceased according to their regulations - and the difference that made was ****!!!!????

I am normally strongly against IVA's (unless your Chartered status is really that precious to you!) - my view was to bite the bullet and start to build again - which I have done and more succesful, happier and IN CONTROL. IVA's I've seen benefit no-one to any great degree, but you need an IP to deal with the arrangement and they don't work for free either - nor should they.

But you need to look after yourself - businesses DO fail - that's life - but a short sharp shock proved right for me rather than work under a cloud for say 5 years in an IVA.

8 years down the line and I have still not applied for readmission to ICAEW.

It was not straightforward to open a bank account - Co-op currently seem to be most helpful but others "under orders" to get in to the market - and I obtained a credit card to get the footprint and credit history resuscitated.

You WILL need to deal with hassle for a few years - BUT for me I compartmentalised it and got on with life with a clean break.


hope this helps - but if you think you're on your own - YOU'RE NOT!!

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By brianheg
22nd Feb 2012 11:02

Shares will go into your estate

There are many helpful comments on here.

In relation to the original specific question, your shares in the practice are a personal asset which will be part of your bankruptcy estate. My understanding is that a trustee in bankruptcy will effectively take ownership of these shares and attempt to realise their value for the benefit of the creditors in the bankruptcy.

In practice, this may mean that you would negotiate with the trustee to agree a value at which to buy back the shares in your own business. If the business is completely reliant on you to continue to trade, this should be reflected in a reduced value.

Good luck.

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By Ermintrude
22nd Feb 2012 12:31

Mental Health

We all have it, same as physical health.  Some enjoy good, some suffer from poor.  We all of us have fluctuations in our  health throughout our lives - some more serious, some less so.  Some so as you can't miss it, some so as you'd never have guessed.  Some needing treatment, some not.  Some getting better, some worse, some chronic.  Some prolonged, some brief.  Some with an identifiable cause, some with absolutely none.  All the same as physical health. Its amazing that there can be any stigma attached, really.  Thanks for sharing your story Albert - glad you're sorted, and note no thanks to ICAEW, the b*stards.

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By MartinLevin
22nd Feb 2012 13:00

A positive contact, perhaps?

Over the years I have been in contact with 2 private firms who deal with those suffering with financial difficulties.  John McQueen of the Bankruptcy  Association: and Gill Hankey of the Bankruptcy Advisory  Service have had phenomenal write-offs of debts. 

These are two genuine people who are not mercenary

Please don’t despair – live in hope.



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By Crassus
22nd Feb 2012 14:00

But are they your shares anyway?

Don't forget the obvious - if you declare bankruptcy, your shares in 'your' company will no longer belong to you but to your trustee in bankruptcy.

I agree with Martin Levin - your best move by far would be to contact John McQueen at the Bankruptcy Association or Gill Hankey at the BAS - they are honest people who genuinely want to help and they focus on keeping people out of both bankruptcy and onerous IVAs, by negotiating informal agreements with creditors.

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By peterhool
22nd Feb 2012 14:09

Decide your priorities

If you want to continue to practice with a high degree of autonomy and a reasonable income you may be able to agree an arrangement with another firm which would resolve a number of practical issues.

Beware the asset/profit strippers of which there are many. Look for someone who will give you a genuine chance to recover from whatever route you take to resolve the debt situation. I know at least one other person in your position who has successfully achieved exactly the right sort of arrangement. In fact by sharing resources he can now focus on what he likes best.

Focus on what you have that no-one can take away ie your ability and experience, clear away the problems and help your clients and another firm to prosper by doing what you enjoy most in professional life.

PM me if you want more detail.

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By 41115BARRI
22nd Feb 2012 16:19

Only take advice from a qualified professional

My deepest sympathy to you and I hope that you do eventually find a way to work through your problem, believe me there are ways. I am also a Chartered Accountant and a licensed insolvency practitioner, and some of the comments above do give cause for concern. If you do choose to go down the bankruptcy route, your shares will definitely form part of your assets and it is likely that a trustee would want to realise these, probably by way of a sale of the practice either to another practitioner or, post discharge, to you (if you were able to raise the finance). In addition do not, under any circumstances, get a "prepaid" card which you might use for "brucey bonuses" and which you fail to disclose to a trustee in bankruptcy - you are after all swearing a statement of affairs and don't want to commit perjury.

Take proper professional advice. Gill Hankey has been mentioned above at the Bankruptcy Advisory Service (tel 01482 633035). She is not an insolvency practitioner but does know an awful lot about the process and is an excellent place to start, she is also VERY reasonable.

Another option would be for you to talk to your local District Society liaison officer - have you tried that?

Finally how about selling your practice and doing a deal with your creditors, either through an informal arrangement if there are not many and they will do it or through a formal IVA - possibly to a practice who will then employ you.

Fell free to give me a call if it would help

Phil Wood

[email protected]


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By Albert Camus
22nd Feb 2012 17:40

@ 41115BARRI

I have replied to your post through a PM.  


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B&W portrait
By MikeLee
22nd Feb 2012 20:32

Been there, done that got the T-shirt

Dear Inthepoop

I went into business with a Chartered Accountant back in 1995, he died and left in effect a worthless pile of clients, none of whom I now still have.

Nevertheless with a failing marriage I bit the bullet, got divorced and declared myself bankrupt.

So, I lost £200k in debt, lost ACA status, my wife and felt about 1mm high. But you gotta live, so you gird your loins and do the best you can.

Never forget:

1. You qualified, and no-one can take that away from you. I am told that the Institute will confirm the fact of your qualification.

2. No-one can take away the experience, the knowledge, the reputation, the relationships you have with your clients.

3. You can of course continue to trade, probably as a sole trader given the circumstances, but you cannot call yourself 'Chartered'. You may have issues with PII.

4. My clients has all been very supportive, even when we have faced difficult situations such as when references were requested of a qualified accountant for my clients, which I have dealt with by stating that I qualified in 19xx, but wasn't currently a member, which lenders have so far accepted on many occasions without a murmur.

5. I re-invented myself as an accountant working as agency staff in the public sector whilst re-building my practice, and believe that have suffered some rejections for permanent jobs because  of lack of membership, but to be frank no-one really cares too much about me as an agent because I'm very good at what I do. OK, so you may lose out on regulated work such as audits, but there's plenty of other work out there.

Finally, you don't necessarily need to re-join as a Chartered Accountant, though you would lose the legal privileges of a member, which could put you in a difficutl spot with MLR/ conflict of interest with your client. I got so mad with ICAEW that I swore I would never re-join, which I haven't.

The relief when I ditched the debt was enormous, and well worth it. I took my own petition to court, said a handful of words to the judge, and walked out ten feet tall. Go do.

Mike Lee

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