Pre-insolvency advice Director’s Loan Account Issues

At Bell & Company, our team help businesses who are facing financial difficulties across the United Kingdom, Northern Ireland, and the Republic of Ireland. We particularly specialise helping those who face financial issues due to their Directors Loan Account (DLA) becoming overdrawn.

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Director’s Loan Account Issues

A director’s loan account can be a particularly complex issue for company directors to understand. The complexities arise once a director’s loan account – often referred to as a DLA – becomes overdrawn.

The director will face no issues if the money from the DLA is repaid within nine months of the company’s year-end.

However, if it is not paid within this time and/or if the loan is £10,000 or more, this will cause a problem with the company’s shareholders and potential creditors as the account is overdrawn.

Why may a director take a loan out from a company?

  1. The director may borrow money to deal with personal finances
  2. The director may be partially paid through payroll and partially by a way of dividends

It is important for your company’s DLA to contain evidence of all transactions to avoid scrutiny by HMRC as they will keep your DLA under review through to ensure guidelines and rules are followed.

Something we often deal with at Bell & Company is directors in an overdrawn Direct Loan Account where the company has gone into liquidation.

In this case, the liquidator can demand the director repays the amount owed to pay the company’s creditors and can take legal action or make the director bankrupt.

The overdrawn DLA will also be considered an asset which can be pursued by the liquidator and even if the company has ‘written off’ the loan the liquidator can reverse this for the creditor’s benefit.

How can we help?

Bell & Company work on behalf of the director to reduce exposure risks and negotiate a settlement for outstanding debt on the DLA. Watch Terry Bell discuss Director’s Loan Accounts and the complexities surrounding DLAs once they become overdrawn over on our YouTube channel: https://youtu.be/iiQEO0R5Px4

For more information on Directors liabilities, check out our guide to a Directors Personal Guarantee.

A Guide to a Directors Personal Guarantee

 
 
 
 

Get In Touch Today!

Our team are here to give expert advice and a tailored solution to your Direct Loan Account problem, taking into consideration the value of the loan, the amount the company owes to creditors and the actions of the liquidator.

If you have an overdrawn director’s loan account and/or your business is struggling financially, please do not hesitate to get in touch with us on 0330 159 5820.

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1. We will see every case through until the end,
2. We are experienced in negotiating with creditors,
3. We have helped hundreds of clients,
4. We are transparent from the start with our costs, all initial consultations are free.

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From the outset, we establish clear bottom lines with our clients, so we understand what their priorities are and what must be protected. We then create a strategy to navigate the way out of corporate and personal debt with impartial advice and rigorous action.

Specialist, Impartial Advice

There are some very sharp minds at Bell & Company, so we’re extremely adept at finding unconventional strategies and solutions to resolve our clients’ debt dilemmas. This means that when you’re with us, you can be assured that we’re working for your best possible outcome.

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