What’s an overdrawn director’s loan account?

An overdrawn directors loan account is a director’s loan that hasn’t been paid back to the company.

If you are still taking dividends from your company and you have not made a profit this last year and your thinking that you may need to liquidate, stop now.

If you have to liquidate you may end up with an overdrawn director’s loan and an insolvency practitioner is going to ask you to pay it back. This is putting you at serious risk of personal liability.

The DLA is seen as an asset of the company and will be pursued once you are in liquidation.

Most people don’t even know that they have one!!!

And most likely insolvency firms won’t tell you about it until you have appointed them, and in most cases that is too late.

So what’s my advice?

If you think that your ltd company may have to close this year you must check your director’s loan position before you agree to anything.

1st Business Rescue can help you understand if you have one and what you can do about it if you sadly have to go into liquidation.

This is important stuff because this is were you can become personally liable, this is were people may have to sell their house, this is where you could end up in the bankruptcy court.

If you would like some confidential advice around this then contact me and we can help you uncover if there is a problem and what you can do about it.

All the best,


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