Personal Guarantee Repayment

billybraggtastic

I posted the gist of this on another part of the forum some time ago but still need some advice how to handle the situation.

I was a director of a Ltd co (based in Scotland) which went into liquidation Dec 08. I, along with fellow director, was guarantor for overdraft which was to be secured against both our homes. At the time of liquidation OD was circa 38k and has probably risen to about 40k now.

Bank agreed last year to await realisation of assets from business (they had a Floating Charge setting them above ordinary creditors) which would hopefully see them recover monies without calling in PG.

It then came to light that the security I had given was not (or never) registered. If I interpret this correctly then the PG is only secured against my fellow director though it is a matter of record that I agreed to the same. I have done a title search on my home and there is no recorded interest from the bank.

A year on, liquidator has recovered around half of what's due and may recover more. Bank however are threatening to call in PG as liquidator has not paid anything out and there is currently a shortfall.

My situation is that I have substantial debts due to the business failure over and above this PG. I started a DAS arrangement at the beginning of the year for around 80k over 8yrs.

Can anyone offer advice/opinions on this?

ILW

The PG will still stand, they will just not have the security of the property. If they are minded they could go for a bankrupsy order.

billybraggtastic

I agree with what you have said there however they have written confirmation from the Liquidator that they will receive some payment. If they seek sequestration could I defend on the basis that they cannot currently determine how much I owe?

Also, would it be possible (advantageous) for me to outline my present financial constraints and offer them token payments in the interim?

Aud1

Unsecured loans/overdraft puts the creditor at greater risk than you hence banks are more keen on making only secured overdrafts. I am not a solicitor nor at all familiar with the nuances of Scottish law, I only speak from experience. Legally you will have to abide by the terms and agreements of the original Overdraft but due to the Bank's error your house is under no threat of foreclosure. Firstly I would make contact with Citizens Advice and/or Credit Consumer Counselling Services and set up a meeting with them, bringing along all your financial/debt related papers. They will tell you exactly what to do. I would disregard the suggestion by ILW of them making you personally bankrupt. You have enough stress right now and being positive and proactive is what you have to be. As long as you offer them something, based on your current situation of income and liabilities they will have to accept it. Also if your home is in joint names they would have less of a case, especially after failing to record their interest. At no time from here on in, offer that a charge be put upon your home. Get advice, act now and make sure all communications are in writing. Good luck. All will be well, at least once this is over it is a road you never need to travel again.

billybraggtastic

Aud1 - thanks for your reply above.

I got in touch with the appointed liquidator agian for an update. Currently they have recovered sufficient monies to pay off about £30k of the Bank's £40k. This process is ongoing and timescales for paying bank are sketchy - end of May at the earliest before this can be granted.

I've written to the bank outlining the position ie monies will be forthcoming and that they should allow the liquidator to complete his process.

Surely it makes sense that they allow the liquidation to run its course? Only once this line has been exhausted can my liability be determined.

No doubt the terms of my agreement will have some clause for 'on-demand payment' which the bank are looking to exercise but when there is evidence to confirm that a dividend will be forthcoming from elsewhere can they not back-off a bit!