Business Loan

Janscott

I have a business loan and wrote to the bank that with the collapse of the business and serious injury making it impossible to work that I am now unable to repay the loan at its agreed monthly repayment and offered an amount that I can based upon my reduced income which consists of benefits.

After seven weeks I have their first letter saying no.

I want to repay the loan but will suffer serious hardship as the repayments represents 25% of my total income.

Is there anything I can do and should I still pay the agreed amount or my proposed lower amount?

Any advice will be appreciated. Jan

Tixy

Hi Jan

Was the loan in your name or the business name? was the business a sole trader / partnership or Limited company? Was the loan personally guaranteed or secured on any of your personal assets?

Janscott

The loan was is my name and the business was sole trader there is no personal or assets security on it except I have to repay it. I think?

Tixy

Yes if you are a sole trader then you would still have to pay. It sounds like you just can't afford to make payments at the current rate.

When you made your reduced offer did you include an income & expenditure to demonstrate the offer was all you can afford?

It would think you would be best just to pay the reduced amount you offered. They will probably default you after 3months or so but if you can't afford the full payments I don't see what else you can do (I assume you don't have any PPI on the loan or just generally that will pay out in view of the serious injury?)

As its a business debt you might want to get some free advice from business debtline (which is the business related side of national debtline).

Sorry I can't think of more to advise.

Janscott

I do have a PPI on the loan and it has paid out for 12 months but will not pay again for the same illness. The repayments come from the old business account which I have been topping up with money from family and friends. BUT if there is not suffient funds in the account I am worried that I get hit for interest charges on what was the current account at the higher no overdraft rate as well as the original interest I agreed on the loan. Can they make me bankrupt if I default as I have a house?

Tixy

What sort of amounts are we talking for the loan?
In theory they could apply to make you bankrupt, they may be more likely to go for a CCJ and/or a charging order (where the debt is secured on your house until such time you sell).

Janscott

The current balance is about £ 11,000 and it has to be repaid at £ 200 per month I have offered £ 50 as I am on retirement benefits of aprox £ 400 per month.My daughter was a guarantor of the loan and has to pay half due to my income. She is also on Incapacity and Disability Living Allowance benefits so the original repayments are effecting her as well.