As a sole trader, business debts are your debts. Every bank loan, invoice and tax bill sits with you personally, and personal debt solutions (IVA, bankruptcy, DRO in some cases) apply directly.
As a limited company director, the company owes the debts — not you — unless you've signed a personal guarantee. If you have, that guarantee is a personal debt and follows you if the company folds.
Directors also have specific duties when a company is insolvent. Continuing to trade or paying some creditors over others (particularly HMRC) can lead to personal liability. Early support from an authorised insolvency practitioner is essential.
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