What to do if your builder goes bust mid-project

A builder going bust is rarely instant. There are usually two or three weeks of unanswered calls and missed site visits before the legal status changes on Companies House. By the time you can confirm the company is in administration, in liquidation, or dissolved, you may already be exposed.

The order of operations below assumes the worst is confirmed. Move through the steps in sequence; out of order, you can prejudice your own position.

Step 1: Confirm the legal status#

Two registers carry the truth.

For limited companies, search the company name at find-and-update.company-information.service.gov.uk. The status field will show In Administration, In Liquidation, Active, Proposal to Strike Off, or Dissolved. Dissolved is the most serious for a homeowner: the company has legally ceased to exist and can no longer be sued in its own name.

For sole traders or partnerships, search the Individual Insolvency Register directly. This catches individuals who have entered bankruptcy, an Individual Voluntary Arrangement (IVA), or a Debt Relief Order.

If you cannot find the builder on either register but they have stopped responding, do not assume insolvency. They may be ill, on holiday, or choosing to ignore you. Different action applies; see our deposit-and-disappeared guide.

Step 2: Stop paying. Preserve evidence.#

The instant a builder's status looks insolvent, stop transferring further money, including invoices that look routine. In administration, money paid to the company becomes part of the insolvent estate; you join the queue with other creditors and may not see it again.

Save copies of:

• The original quote and any revisions
• Every invoice, paid and unpaid
• All bank transfers and card payments, with reference fields visible
• All emails and text messages
• Photographs of the work as it stands today, with timestamps

Photographs matter most for partially-completed work. The next builder will need to see exactly what was done, what was left undone, and to what standard. Photographs also feed any insurance claim or court action.

Step 3: Identify whom your contract is with#

Read your quote and any signed contract. Was the contract with:

• A limited company (name ending in Ltd, Limited, LLP, or PLC)
• A sole trader (a person trading under their own or a trading name)
• A partnership (typically two or more named individuals)

This determines who is liable for the unfinished work. With a limited company, the contract is with the company. Once that company is liquidated or dissolved, the contract is effectively unenforceable against the people who ran it. With a sole trader, the contract is with the individual personally; they remain liable even after a bankruptcy, although recovery may not be realistic.

If the quote is unsigned, exchanged emails confirming the price and scope still constitute a contract under UK law.

Step 4: Register as a creditor#

If the company is in administration or liquidation, an insolvency practitioner has been appointed. Their name and contact details are filed on Companies House under Filing history: look for the Notice of Appointment or Statement of Affairs.

Write to the practitioner. State:

• Your name and address
• The amount you are owed
• Whether the work was paid for in advance, partially completed, or both
• A copy of the original quote
• A copy of every payment receipt

Most homeowner deposits sit as unsecured claims. Unsecured creditors are paid only after secured creditors (typically banks holding charges) and preferential creditors (employees, HMRC). Realistically, recovery is often pennies in the pound, sometimes nothing.

Register anyway. You cannot recover anything without being a registered creditor.

Step 5: Section 75 and chargeback#

If you paid the deposit by credit card and it was between £100 and £30,000, Section 75 of the Consumer Credit Act 1974 makes the credit-card issuer jointly liable with the builder. You can claim the full amount back from the card issuer, regardless of whether the builder is recoverable.

Section 75 applies even if you paid part of the price by card and the rest by transfer; the card issuer is liable for the entire transaction value, not just the card-paid portion.

Debit card and bank transfer payments are not covered by Section 75. They may be eligible for chargeback, a non-statutory bank scheme. Time limits are tighter (typically 120 days from payment), and the bank can refuse without giving a reason.

Contact the card issuer within 30 days of confirming the builder cannot complete the work. Provide the same evidence assembled in Step 2.

Step 6: Insurance-backed warranty and trade-body schemes#

Some trade bodies operate deposit-protection schemes for member builders. Check whether your builder was a verified member at the time the contract was signed of:

• FMB Insurance Services (Federation of Master Builders): provides insurance-backed member warranties
• TrustMark: government-endorsed quality scheme with some deposit protection routes
• HIES (Home Insulation and Energy Systems): covers specific energy retrofit work
• NHBC, LABC Warranty, or similar: applies if the work was new construction with a registered warranty

If the builder was a verified member when the contract was signed, the scheme may pay you out independently of the insolvent company. Check the scheme's terms. Some require the contract to have been logged at signing, which is rare for retrofit but standard for new build.

Step 7: Consider replacement#

Once the legal recovery routes are in motion, the practical question is finishing the work.

Get fresh quotes from at least two builders for the remaining scope. Do not assume the original price stands. The new builder will charge a premium because they are inheriting risk, unsure of the quality of the work underneath and what else might fail.

Do not let the new builder demolish or replace the previous builder's work without a written reason. Some unfinished work is genuinely unsafe and must be redone. Some is fine and can be built on. The temptation after a bad experience is to scorch the earth, but it doubles the cost and is often unnecessary.

What you usually cannot recover#

• Lost time, stress, or "inconvenience"; UK courts rarely award general damages in domestic-build disputes
• Cost overruns above what the original builder would have charged
• Holiday or hotel expenses incurred during disruption

You can recover, in principle:

• The deposit and progress payments for work not done
• The cost of remedial work to fix defects in the original builder's work
• Statutory interest on the recovered amount

"In principle" is doing a lot of work in that sentence; actual recovery depends on whether there are assets in the insolvent estate.

How to protect yourself next time#

• Pay deposits by credit card, even if a discount is offered for transfer. The discount is rarely worth more than Section 75 cover.
• Stage payments to follow work, not precede it. Never pay more than 10–15% upfront.
• Run a Companies House check before signing.
• Where the contract value is over £15,000 and a scheme exists for the trade, choose a member of an insurance-backed warranty programme.