Offsetting personal debts to a Limited Company account

[flowerchild]

Hi guys,

 

I hope I'm posting in the right place, if not would the site team kindly move the thread to its rightful place...

 

Is it possible for a bank to offset a personal debt against a business account in the name of a ltd company in which I am a director and signatory, bearing in mind there's 2 directors in the ltd co and 2 signatories on the account?

 

Thanks in advance!

[MARTIN3030]

Good question.

Can you give some details of the personal debt that you are talking of-and does the debt in any way involve debts in whole or in part that were/are for agreements made under the Consumer Credit act ?

 

I will move to the business bank forums and re title.

[flowerchild]

Good question.

Can you give some details of the personal debt that you are talking of-and does the debt in any way involve debts in whole or in part that were/are for agreements made under the Consumer Credit act ?

 

I will move to the business bank forums and re title.

 

The debt is an old Egg card so definitely under the CCA. I last used this card in 2004 & it expired in 2005 when I was living in Spain for a year so I never got a new one, however, the card was being paid by DD. Egg was paperless from the start & they never had my address after I sold my place in 2004. I really really thought that, after 5 years of paying and not using the card (I didn't even have one!), the balance (2-3k at the most) would have been paid off but that wasn't the case. When I cancelled the DD in Jan 2010 it was still around £100/mth! I was never contacted by Egg as they didn't have my address or phone number, they sent a couple of emails asking me to log in & look at some 'important messages' but I didn't have my login details so I never did. Back then Egg was owned by Citi, I have an account with Citi with just about £100 which I re-activated by giving them up-to-date details, yet I never heard from Egg...

 

A few months ago I got an email saying Egg had been sold to Barclaycard, it was a very generic, database-generated email as it didn't mention defaults or threats or any of your usual 'you should contact us' stuff. In fact, it said I 'should continue making payments as usual' (which I haven't done in nearly 2 years!).

 

I have a ltd co account with Barclays since 2008, unfortunately my crystal ball wasn't working so I didn't know a) that there would be a credit crunch screwing the whole world in a few month's time; b) I was going to spend a year on the dole and default; or c) that after default Barclays would purchase Egg! I also have a basic account in my name with a few hundred quid which I intend to withdraw just in case. So far there has been no mention of the Egg debt from Barclays (or anyone else). I am currently invoicing my employers as a ltd co and the cheques go into the Barclays business account. A friend of mine is also a Director and signatory on the account. I have my main personal account with Santander who have offered me free business banking, however, they mentioned something about credit checks on the directors so you can see why I didn't open it. My friend and co-director doesn't know about my debt issues either (not something you go round shouting about, is it?)

 

Hope this is his enough detail...

 

Thanks!

[MARTIN3030]

Ok thanks for further info.

I think that changes things.

Will take a more detailed look over weekend as snowed under atm.

Meantime if any one else has thoughts-feel free to post them.

 

Can you just confirm that it is Barclays who have assigned the egg account arrears to the Ltd Co account ?

[flowerchild]

Ok thanks for further info.

I think that changes things.

Will take a more detailed look over weekend as snowed under atm.

Meantime if any one else has thoughts-feel free to post them.

 

Can you just confirm that it is Barclays who have assigned the egg account arrears to the Ltd Co account ?

 

No, nothing like that has happened... YET! Apologies if I didn't explain things very clearly, I was just asking a hypothetical question as, naturally, it's something that concerns me as currently all my income is going into the ltd co account in the first place. No, Barclays don't seem to be aware of my debt to Egg, they may not have got around to looking into the many accounts and for all I know my Egg debt may even have been sold on as it's been nearly two years, I was just asking if there was any possibility of a set-off against a ltd co account...

 

Thanks again for your prompt reply!

[MARTIN3030]

Ah ok.

Well if they do try with any accounts that have CCA associated then it can be challenged.

I seem to recall the OFT putting something out not long ago-I am not sure if its in consultation stages.

There is lots of info here in regards to egg.

There was a key clause which was potentially flawed in their terms and cons.

I assume there were charges and fees added ?

We have quite a few reports about Barclay's in house DCA chasing arrears from egg accounts.

Guess if there have been no demands from you so far-then you dont need to anything for the moment.

Did you check your credit files to see whats there ?

[dx100uk]

yep my thoughts

check your CRA file

 

dx

[ims21]

Hi

 

I think you'll find that personal debts cannot be set off against a limited company, even of you are a director.

 

A limited company is a legal body in its own right but because it doesn't have arms, legs, brain etc. the directors "look after it" if you will.

 

Think of it as being a person in its own right...it can make contracts in its own name, bank in its own name and so on.

 

A bank cannot automatically set off debt that you may have personally and use company money to clear that debt. Nor can they use your money to set against a company debt under normal circumstances. It is a different matter if there are contraventions under the Companies Acts or other legislation/guarantees where the directors become liable for company debts.

 

Regards

 

ims

[MARTIN3030]

There was some new stuff introduced not long ago as regards liabilities for directors.

Aside from that though,agreements under CCA give protection and scope as a consumer and therefore they cannot be making any decisions or take actions in trying to treat you as a business or corporate against those rights afforded to you as a consumer.

[ims21]

Hi

 

Unless I've read this incorrectly, this is to do with a credit card debt of an individual who happens to be a director of a limited company. The question posed is whether the bank can take money from the company account to pay that debt. The answer I think you'll find is no it can't.

 

Think of the possible implications.

 

The money so taken would be deemed as the director's personal expenses and could put his/her directors loan account with the company in debit. That is a no no under the Companies Acts.

 

The other way it could be treated is as directors remuneration and then become subject to tax and NIC. Director's remuneration is a decision taken by the board of directors.

 

The board would have to agree any appropriation of funds in this manner.

 

In an extreme case, the bank taking money form the company account in this manner could put the company into a trading position which contravenes the Companies Acts and this could have serious consequences for the company and all of the directors.

 

Regards

 

ims

Edited October 15, 2011 by ims21

[flowerchild]

There was some new stuff introduced not long ago as regards liabilities for directors.

Aside from that though,agreements under CCA give protection and scope as a consumer and therefore they cannot be making any decisions or take actions in trying to treat you as a business or corporate against those rights afforded to you as a consumer.

 

I understand about liabilities for directors but that would be the other way round, i.e. taking on debt as a company; my boss had a problem like that precisely with Barclays as they had to liquidate a company in July and she had her personal account frozen by Barclays for a while till they made arrangements regarding the business O/D which was 100k and apparently secured on both partners homes so it couldn't just be passed on to the liquidators.

 

The Egg card had nothing to do with the company, I don't remember when I took out the card but I'm sure it was before 2001 and the company was set up in 2008. I'm glad to hear they can't offset, :whoo:I thought that may be the case but life is full of surprises, especially when it comes to the financial sector! I do have a company Barclaycard with a very low credit limit but payments have always been up-to-date and Barclays were quite good when some fraudulent transactions were made on that card last year, they were the first ones to spot them and ring me to check the transactions, they were never applied to my card & they cancelled it & sent new one with different number.

 

Thanks guys...

[MARTIN3030]

Hmn you are very fortunate that Barclaycard were there first to act and they prob only did this out of obligation.

Of all the Banks in the UK there has been few reported on CAG that have shown more contempt for its customers than Barclays,and I have had first hand experience of it.

[flowerchild]

Hi

 

Unless I've read this incorrectly, this is to do with a credit card debt of an individual who happens to be a director of a limited company.

Yes, you have read it correctly, it's an old card I got long before I had the company.

 

The question posed is whether the bank can take money from the company account to pay that debt. The answer I think you'll find is no it can't.

I thought so but wanted to be sure, PHEW!

 

Think of the possible implications.

The money so taken would be deemed as the director's personal expenses and could put his/her directors loan account with the company in debit. That is a no no under the Companies Acts.

The other way it could be treated is as directors remuneration and then become subject to tax and NIC. Director's remuneration is a decision taken by the board of directors.

The board would have to agree any appropriation of funds in this manner.

In an extreme case, the bank taking money form the company account in this manner could put the company into a trading position which contravenes the Companies Acts and this could have serious consequences for the company and all of the directors.

Very good points! Not to mention the fact that there will have to be some money in the account to pay corporation tax... in 2013! I have no wish to mess around with HMRC!

 

Regards

 

ims

 

Thanks ims

[flowerchild]

Hmn you are very fortunate that Barclaycard were there first to act and they prob only did this out of obligation.

Of all the Banks in the UK there has been few reported on CAG that have shown more contempt for its customers than Barclays,and I have had first hand experience of it.

 

So has my boss! She couldn't even pay her mortgage when BarCraps froze her PERSONAL account after finding out her COMPANY was going into liquidation!

 

I also had accounts with Sharklays which I closed in early 90s due to their exce$$ive charges (I think they used to charge £25 since the 80s!) and other sharky practices... I only opened the company account there because my friends (director & company sec) have been with them since the 80s and that made it easier, banks can make even opening an account quite an ordeal, I already had a cheque for over £3k in the name of the company and nowhere to put it!

[elsinore]

Just to cement ims and Martin's views, here's what the FOS says about 'set-off':

 

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/40/40_setoff.htm

 

Els

[MARTIN3030]

Ah yes was looking for this thanks els.

[flowerchild]

Just to cement ims and Martin's views, here's what the FOS says about 'set-off':

 

http://www.financial-ombudsman.org.uk/publications/ombudsman-news/40/40_setoff.htm

 

Els

EXCELLENT NEWS! I guess the 'Mrs. C' example applies to my situation so no dice for Sharklays!

 

Many thanks to all of u guys!

[flowerchild]

yep my thoughts

check your CRA file

 

dx

 

What's the consensus on this? I've seen other threads but can't locate them now (using mobile version on iPhone) do creditors get alerted when you look at your own file? I wouldn't want to awaken anyone…

 

Thanks in advance…

[MARTIN3030]

Creditors can be alerted when there is a change.For example when an account is settled or drops off the file.

There are many stories here of people being contacted by creditors and DCAs who were silent after their financial circumstances changed.

Checking your credit file regularly is a good way to see whats been going on...its a little bit like a road map.