by Nick Payne, Payplan’s Senior Insolvency Practitioner

If you’re self-employed and struggling to pay all your bills, you’re not alone.   There are a record 4.2 million workers who are self-employed and many are finding it difficult to make ends meet.

You may have been forced to become self-employed as you lost your job during the recession, or alternatively you may have chosen to start your own business.  Unfortunately, the record number of self-employed workers has resulted in more competition in some of the traditional self-employed businesses such as taxi-drivers, hair dressers, plumbers and IT Consultancy. This has resulted in generally lower incomes for self-employed workers.

You may have had to take out loans and credit cards to start and grow your business, and now be unable to maintain these payments as well as your normal business expenses, and of course any tax and National Insurance payments.  As banks are lending less, you may have been unable to obtain further loans or credit cards to help you out of a temporary hole and are now not sure where to turn to seek advice.

It’s very important to seek advice as soon as you think you’re going to be in difficulties.  If you wait until you miss payments, then it’ll lead to more interest and charges being added which will increase the amount you owe.  Worse still, if you wait until legal action is taken against you, then it could reduce the number of debt resolution options available.  If you seek professional help, then it’s possible you could enter a plan to avoid interest and charges being applied, and allow you to continue to trading.

It’s naturally difficult to admit you are having difficulties and to seek advice, however by doing this, it could avoid you being forced into a debt solution option that you wish to avoid.  For example, they may force you into bankruptcy which could mean your home is sold.

Don’t worry, if you seek help early, you will have the greatest range of options available.  By seeking help early, it’s very unlikely you’ll be forced into bankruptcy.  Instead other options such as a self-employed IVA or Debt Management Plan(DMP)  will allow you to reduce your debt payments to a level you can afford while protecting your home, your business assets and allow you to continue running your business.

In an IVA, interest and charges would no longer be added to your debts and you would be allowed to pay what you can afford, normally over a 5 year period.  After this time, the remainder of your debts will be written off.

If you feel you’re struggling, I’d recommend seeking free, confidential no-obligations debt advice at the earliest opportunity. You don’t have to proceed with any of the options discussed; however by seeking advice, you will be better informed of the solutions available in case you do need to miss your debt payments.