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Creditor Pressure
24 March 2023

For companies struggling to balance repayments to creditors and the usual expenses of running a business, it can be quite stressful indeed. Operational costs must be covered to keep the company going, but obligations to creditors must also be upheld. Balancing these two factors can become even more stressful when creditors lose their patience and begin to demand repayments from an already struggling company. For directors in such a position, it’s understandable to want to give in and sacrifice the needs of the company in order to appease outstanding creditors. However, this is not the only option.

In this article, Clarke Bell will discuss how you can stop creditor pressure, gain some breathing room, and create a solid plan to solve your company’s financial problems.

What rights do I have as a debtor?

As creditors have loaned out capital to you, they are naturally entitled to contact you with queries about repayment. To chase your company for repayment, your creditors can contact you directly, through email, telephone, or written letters. In some circumstances, they can also decide to escalate the situation, sending debt collectors or bailiffs to give a warning in person, or take the matter to the courts. Although your creditors are entitled to use the means that are legally at their disposal to apply pressure on you and your company, they are not entitled to harass you.

Despite you owing your creditors money, they must follow specific rules if they decide to apply pressure. Creditors cannot use illegal methods to enter your property, and must instead go through legal channels if they intend to use more forceful methods. They must notify you of their intention to use debt collectors or bailiffs, and must go through the appropriate process to send them. Furthermore, creditors cannot threaten to take more than you owe, nor can they harass you at all hours of the day; they must make payment reminders through the proper channels, such as an official written letter. Creditors also cannot target your personal finances, unless you have signed a personal guarantee as part of your loan agreement. As a debtor, you are protected from your creditors acting in the above ways, and have legal grounds to make a complaint should your creditors harass you for repayment.

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What rights do creditors have?

While you have certain rights and protections as a debtor, your creditors also have certain rights that allow them to recover their money through appropriate means. For example, creditors are entitled to seize assets if physical assets secure the loan, or the debtor has signed a personal guarantee. They cannot decide to do this at random, however, and must go through legal channels to begin asset seizure. Creditors can bring in bailiffs to carry out the asset seizure process, who must also abide by certain rules. Creditors will usually only resort to these kinds of forceful methods after exhausting their other, more diplomatic, tools. They will usually contact you directly first, through email, written letter, or telephone, as they are entitled to do so. If no progress is made, they may decide to use other means.

How can I stop creditor pressure?

If you have fallen behind with your repayments to creditors, they are likely to begin applying pressure against you and your company, in accordance with their above rights. If this has happened to you, consider the following methods of alleviating this pressure.


While it may sound obvious, communicating with your creditors is the most important thing you can do. Your creditors don’t want to punish you; they are simply attempting to recover their money using methods that suit both them and you. However, many company directors neglect communication with creditors, either because they are overwhelmed by holding a financially struggling company together, or because they think ignoring it will lead to a good outcome. It will not, as creditors are not likely to view ignoring them as a sign of cooperation.

Instead, you should make communication with your creditors your top priority. Explaining your circumstances is a good idea, and can be a good way to bring your creditors to the negotiation table. From there, you can discuss a new payment plan, or adjust the terms of the current one. No matter the outcome, it will be much better for your company than ignoring your creditors’ attempts at communication.

Pursue insolvency procedures

If your company is insolvent, and unable to pay outstanding creditors and liabilities within 12 months, it might be wise to consider insolvency procedures. The best insolvency procedure for companies with insurmountable debt problems is a Creditors’ Voluntary Liquidation (CVL). With this procedure, you can voluntarily wind up your company, appointing an insolvency procedure of your choosing to conduct the procedure. They will communicate with your creditors, liquidate your company’s assets and accounts, and distribute the proceeds amongst your creditors. The CVL process also grants significant legal protections to companies; outstanding creditors will not be able to pursue legal action against your company once the process begins, and any debt that remains unpaid at the end of the procedure will be written off. As such, this is an excellent procedure for insolvent companies.

For companies that are struggling with debt problems, but still have a sound business model, they may benefit more from a Company Voluntary Arrangement (CVA). Under this procedure, you will appoint an insolvency practitioner to essentially negotiate a new repayment plan with your creditors. Your insolvency practitioner will aim to draft new repayment terms, ones that your company can afford to pay. This new set of terms can last up to five years, and, of course, you must have the consent of your creditors before taking effect.

Let Clarke Bell help

If your company is insolvent, struggling to pay its outstanding creditors and other obligations, let Clarke Bell help you. We have more than 28 years of experience in helping companies find the best solution to their financial problems, and we can do the same for you. Contact us today for a free, no-obligation consultation and find out exactly what we can do for you.

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If you are worried about your business or just want a (free) no obligation chat, contact Clarke Bell on 0161 907 4044 or [email protected] today. Our Licensed Insolvency Practitioners will provide you with the best professional advice for your situation.

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