Scenario: Child has own business (in name only really) which is partially paid off. Due to bad debts from people owing money said child has been unable to pay back bank loan for past 4-5 months. Child does not live at home but lives with girlfriend. Child has no assets except said business. At this stage there was someone wanting to “write up” assets who came to parents home. Child is in deep depression and mind state of not doing anything.
Would it be better just to declare bankcrupcy versus Debt counselling? The business does not generate income and has not for some time and interest is accumulating. Should one go to the expense of a lawyer in this case? I have heard of people who are paying off debt AND expensive lawyer fees for years to come. Parents are not in a position to help financially as they are both retired. (child was a laat lammetjie) Thanks for this free service.
I can see from your email address that you are in South Africa. In South Africa there are several options but none of them will magically appear if the child is buried under the burden of depression and is unable to take action.
If you, or someone you know, could take the child by the hand and help push them through this process it will end sooner and the child will recover sooner from their depression and malaise.
The situation you described is really about how to best deal with the end stages of a failed business. Unless the child personally guaranteed the debts the company would need to enter into a voluntary final liquidation. It does not sound like an offer of compromise, amalgamation or arrangement would work since no funds remain to distribute.
I would urge you to have the child speak with a local insolvency practitioner in South Africa and/or meet with a local debt counsellor to discuss the options and possible route of action. Click here for listing of registered debt counsellors that can help.
Please update me on your progress by posting updates here in the comments section of your question. I’m very interested in how this works out for you.
You are not alone. I'm here to help. There is no need to suffer in silence. We can get through this. Tomorrow can be better than today. Don't give up.
P.S. Be sure to read ‘The Secret of Surviving Through Difficult Economic Times. What I Learned On My Journey‘.