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When Your Builder Goes Bankrupt Before Job is Complete

By: Sarah Clark (ILEX) - Updated: 1 Dec 2017 | comments*Discuss
Bankrupt Builder Building Company

It's the stuff of your nightmares. You've decided to have some building work done, perhaps that new conservatory or extension you've been wanting for ages. You find your builder, agree on the price and the work starts. Until one day when nobody turns up. They won't answer the phones. Then you realise they have 'gone bankrupt'. What can you do?

Insurance Backed Guarantees

Firstly, if your construction firm or builder is a member of a professional trade association, you may be able to breathe a sigh of relief. Most associations supply lists of registered builders who can offer an insurance backed guarantee of the quality of the work, and some schemes, such as the guarantee provided by the Guild of Master Craftsmen also have an optional insurance that covers the builder should they go out of business before they complete your project. This gives you peace of mind knowing that the cost of getting a builder in to complete the job is covered and you won't be out of pocket. Always check if the construction firm or builder has an insurance backed guarantee before employing them - it can be more expensive but could save money in the long run.

Was the Builder a Sole Trader?

Your options when faced with a bankrupt (or insolvent) builder will depend on their legal status. If you are employing a sole trader to do the work and he files for personal bankruptcy, all you can do is apply to the official receiver handling the bankruptcy petition to be added to the list of creditors. Details will be published in the local press if any individual files for bankruptcy...and contact details will also be published. As insolvency is considered public information, you can call the county court where the order was/is to be made, or the official receiver, and they will be able to tell you if a petition has been filed and a bankruptcy order made.

You can only claim for any deposit you've paid minus any work/materials paid from that deposit. The official receiver will be able to give you advice on how to be added to the creditor's list. This means that the debt owed to you will be taken into consideration when the official receiver administers the builder's financial affairs but doesn't guarantee that you will see any payment. Unfortunately, all you can do is ask another builder to quote to complete the work and start over.

Was the Builder a Limited Company?

Even if the company is just one person, it can still be a limited company rather than a sole trader. Check the company status online for free at Companies House. If they are limited, there is a possibility that they may not be bankrupt, but they may have gone into administration, which is when a company calls in accountants or 'administrators' to attempt to salvage the business. If this has happened, there's no reason why your job shouldn't be completed - the aim of administration is to keep the company going if possible. Keep in touch with them and make a note of the administrator's contact details. It's possible that the company is in such bad financial shape that they will become insolvent, in which case you will have to apply to be added to the list of creditors as for a sole trader.

Again, all you can do is get in another builder and start again.

Did You Pay the Deposit by Credit Card?

If you paid a deposit of between £100 and £30,000 on a credit card (not a debit card) you could try calling on the Section 75 of the Consumer Credit Act which gives the credit provider equal liability in law for a breach of contract. If the builder goes out of business - you can claim the deposit and any out of pocket expenses back from the finance company.

You may also be covered if you have a linked finance agreement - credit supplied for a conservatory that was arranged by the building company for example. You wouldn't be covered if you took out a separate loan from your bank though, it has to be specifically linked to the contract for the building work, not a separate credit agreement.

You need to contact the finance company directly and say you are claiming under section 75 of the Consumer Credit Act 1974. If the finance company tries to tell you that they will put a claim in to the administrators, point out that you know your rights, and you are entitled to compensation for the deposit and any out of pocket expenses from them, without waiting for any insolvency administrator's decision.

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Beware Austin Scott Baines.Trades under various limited companies names.Will take your money and then disappear!
Nigel - 1-Dec-17 @ 9:58 AM
Beware of Michie of Dundee,trade under various names,more recently Ultrabuild,Ultra group. Seems to be a family trait to set up business,take money and then be liquidated, and repeat. Father having done this several times now has handed the family expertise on to Calum Michie and Hayleigh Jane Michie.Any work they do undertake is substandard and uninsured. Cowboy builders doesn't come close to describing this despicable family. Avoid at all costs.
Dan - 14-Apr-17 @ 9:47 PM
M & A Joinery and Builders, Rosemount Walk, Leeds.Poor work ethic. Liar and a cheat. Contracted to do a loft conversion and side extension. Left my property, garden and driveway in a mess. Never completed the work after working on the property Sept 15 - April 16. Took £24000 off me. Has cost me £2000 to make my roof safe and has cost me another £24 just to complete the loft. Also went bankrupt whilst on the job but failed to inform us.Has set up again in the name of MA Joinery (new address too).BEWARE.
Conman - 8-Dec-16 @ 3:20 PM
Beware of Tim Green from stallinsbrough Lincolnshire We trusted him as he is a brother of a work colleague. We wanted and an extension and loft conversion. He requested all his money for building and materials in advance. He had been working in he house for one year. Te expensive kitchen and bathroom materials that we bought, he fitted them in a rubbish way. Even the cold and hot water in bathroom signs are opposite ways. the rest of the house is in a mess. The first floor rooms that he had done are not even complete with low standard finishing. He installed very cheap materials. The wires of electricity are coming down from the ceiling everywhere, even in of the bathrooms. We had to move to the house this week and live with the consequences. we are in a lot of stress because of this inexperienced builder who claimed that he knows his job. He never promised anything and was done. He is even asking for extra money. Please advice what to do. We feel that we have been fraud.
semsem - 24-Mar-16 @ 9:49 PM
My house has been left upside down by cowboy builder days before christmas my autistic son has started self harming has a result- got me to pay for skip and brought his own rubbish to fill it up with leaves job at 1pm-please please please response to my message there is so much to say and i can't put it all down on here he has hire equipment charged to my card and being used elsewhere.
wasteoftime - 20-Dec-15 @ 11:22 PM
Beware against Darren Hill, Thomas Street, Loughborough, Darren Hill Lofts and D Hill Construction this builder seemed plausible, we got a written quote, agreed a written payment schedule, he pulled apart a perfectly good house which was architect designed and built in 1998. Just to do a loft conversion and an extension. When we came back from holiday we learned he had not been to site. He hadn't paid the traders, he had stolen money from an envelope addressed to my window installers. (£15,000) Our house is still not watertight and we were supposed to be moved in in two weeks. He has been paid 90% of the quote and in two weeks we will be homeless with two children.
Immi - 9-Aug-15 @ 1:14 PM
The builder (recommended by the Architect) has not completed the work.He collected his tools and left an unfinished extension having been paid a significant sum. I have found out that his limited company was dissolved on 17.03.15. What has happened to the Consumer White Paper written by the Department for Business, Innovation and Skills (July 2009)?It was titled A Better Deal for Consumers. The Government has done nothing to protect consumers from rogue dishonest builders who appear to be able to dissolve their companies, leave their clients out of pocket with unfinished works and then set up a new company and start again. BE WARNED AGAINST BUILDER BARTOSZ MENDRALA (Bartek). His company was Best Place4U of 15 Queen Street Croydon CR0 1SY
Lottie - 9-Apr-15 @ 10:44 AM
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