fbpx

Saving Money

Sometimes things just don’t go as planned when it comes to money.

Often you fight your way through, but sometimes it’s a losing battle and the only way out is bankruptcy.

Before you go down this path, it’s important to consider some of the consequences that this can have on you as a tradie.

We can’t provide you with bankruptcy advice, but we can tell you about how it can affect your ability to run a business and get insured.

Impact on business operations

Once you’ve declared bankruptcy, you can no longer be the director of a company.

This means you won’t be able to run any business as a Pty Ltd company.

There is nothing to stop you from operating as a sole trader, which is how most tradies (especially subcontractors) operate anyway.

The only requirement when operating as a sole trader during your bankruptcy is that you only trade under your own name, or the trading name you used when you first declared bankruptcy.

You may be able to get an exemption if you want to use a different trading name, but only if you let all of your clients known about the bankruptcy.

Insurance impact

Whilst you can still operate as a sole trader during your bankruptcy, you will run into problems when it comes to insurance.

No insurance company (that we know of) will offer business insurance coverage to a tradie whilst they are still bankrupt.

This can be a major issue, since a lot of builders and construction companies require that all subbies on site have their own public liability insurance.

So although you can legally operate as a sole trader, without insurance you may be severely restricted in terms of what work you can take on.

After you’ve been discharged

In most circumstances you’ll be discharged from your bankruptcy after a period of three years, or earlier if you’ve managed to repay all of your debts.

Now you can choose to run your business however you like, either as a company or a sole trader.

Building Project

You might still have some issues when it comes to insurance though.

All business insurance policies will include a question about bankruptcy, and if you’re operating as a company, the question must be answered by all directors of the company.

When you answer yes to the question, you will find that some insurers are not willing to offer cover for a number of years after you have been discharged.

Thankfully not all insurers are the same, and generally we will be able to find someone to provide you with public liability insurance even if you’ve only recently been discharged.

Are there any ways around it?
If you get really creative there are ways to keep working and remain insured throughout and after your bankruptcy period.

It’s not our place to suggest how this would be done, or even if it’s 100% legitimate.

The best advice may be to simply stick with a job on wages until the issues are behind you.

As a tradie working on wages for someone else, your bankruptcy (either current or discharged) will have no impact on your ability to work.

Insurance won’t be an issue since you’ll be covered by your employer’s insurance, and thankfully your bankruptcy has no impact whatsoever on your employer’s insurance.

More information

For more information on bankruptcy in generally we recommend that you speak with your accountant first.

If you have insurance specific questions then we will be more than happy to assist.  You can contact us via the website or call the team on 1800 808 800.

Tradies Love Trade Risk

In 2017 Trade Risk was awarded a Gold Trusted Service Award for the amazing service we offer to thousands of tradies from around Australia.

  • "Communication and contact support."
    | Tradesman Insurance |
  • "Great service and communication on all of my dealings with them"
    Super Inspect Pty Ltd | Tradesman Insurance |
  • "Simple and easy process to go through and would highly recommend this service to anyone"
    Tony | Tradesman Insurance | Sydney
  • "Exceeded expectations, great service"
    Cewe Pty Ltd | Tradesman Insurance |
  • "Cheap price, never had to claim so not sure how well it will hold up as a policy with loopholes etc"
    | Tradesman Insurance |
  • "Quick process exelent treatment to the client."
    | Tradesman Insurance |
  • "Excellent service"
    | Tradesman Insurance |
  • "Timely reminders and quick response emails."
    The Trustee For The Stephen & Yvonne Henry Family Trust T/As SYS Creative Pty Ltd | Tradesman Insurance |
  • "Great communication, customer service."
    | Tradesman Insurance |
  • "There is plenty of warning that renewal time is coming up. Because of the diversity of our work, they ensured that all aspects of our work was covered and noted on the paperwork. A comparison quote was arranged for, given the extra wording and cover needed and, to our surprise, they were able to save us some $200 in premiums. Thank you Trade Risk."
    Mark Stanley Hawkins T/As Picture Perfect Art Hanging | Tradesman Insurance |
  • "Easy to renew"
    Jeremy Bishop | Tradesman Insurance |
  • "answering my phone call so quickly"
    | Tradesman Insurance |
  • "quickly, sample, good vale I LOVE IT"
    | Tradesman Insurance |
  • "The policy and premiums were ideal for my small business. The support staff were great to deal with."
    | Tradesman Insurance |
  • "prompt service"
    | Tradesman Insurance |
  • "Happy with the purchase However the only feedback that is important is how you perform when I have a claim, buying something is easy, ask me for my feedback then! Cheers Brian"
    | Tradesman Insurance |
  • "Like the prompt service received."
    B2B Marketing Group Pty Ltd | Tradesman Insurance |
  • "good offer. very helpful"
    Navcom Communications Pty Ltd | Tradesman Insurance |
Share via
Copy link
Powered by Social Snap