If your tradesperson goes out of business
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If you’re halfway through a big home improvement project, you expect the tradesperson you hired to see it through to the end. While this is usually the case, in rare instances the person or company you hired can go bust during your job, potentially leaving you high and dry.
This guide breaks down what you can do if your tradesperson goes out of business before your project is finished.
If the tradesperson goes bust mid-project
When you discover that your tradesperson is no longer operating and work on your job has stopped, it is important to take stock of where your job is at and what the financial implications are.
If you have just paid your deposit and work has not yet started or only just begun, you will want to take steps to reclaim your money.
Similarly, if you paid money to the tradesperson for them to purchase materials which were never delivered, you will want to get either the materials you paid for or a refund.
If you are midway through a project and have been making staged payments, then you may have received a fair level of work for what you have paid so far - in which case, you may just want to find another tradesperson to continue the work.
If the tradesperson is a sole trader
Many tradespeople are sole traders, meaning they are the sole owner of their business and bear its liabilities.
It is useful to establish if the tradesperson has actually gone bust - in some rare situations, an unscrupulous tradesperson could use this as an excuse to try and avoid their obligations.
You can check whether or not a sole trader or partnership has ceased trading by checking the insolvency register.
If they have, and you have been left out of pocket, then you can contact the receivers that are dealing with the bankruptcy, and ask to be made a creditor - making a claim for money paid, less the work and materials provided.
However, it is unlikely that you will be high up the list of those owed money, and there is no guarantee that you will get your money back through this process.
If the tradesperson has a limited company
Some tradespeople operate limited companies, a structure that makes the business its own legal entity, separate to its owners (shareholders) and managers (directors) - even if the tradesperson is the only shareholder and director involved in the business.
If the tradesperson you hired operates through a limited company, then you can check to see if the company has gone into administration or not, via Companies House.
If they are in administration, then as with sole traders, you can apply to the administrators to be made a creditor and hope that the money will be returned to you in this way.
Other ways to reclaim money
If you paid via credit card for any of the work you may be able make a claim under Section 75 of the Consumer Credit Act, which can get your money refunded to you.
If you paid by debit card you could also try to make use of the Chargeback scheme, a consumer protection operated by card providers. You generally have 120 days to make a claim, which can be for any amount.
Avoiding the risk
Your tradesperson going bust during a project is thankfully very rare, but can be hugely damaging if it does happen.
That’s why we created MyBuilder Plus, which covers you in exactly that situation.
MyBuilder Plus is a unique insurance policy designed from the ground up to guarantee the success of your project, meaning you get the work you wanted, at the price you agreed - no matter what.
The policy has been designed to cover you if the tradesperson you hired goes into administration, and in many other circumstances - for example if the work doesn’t meet regulations, or is left unfinished.