guarantee on business loan

dnalsrammaj

Hi, i am a new poster but have been viewing the site for years! This morning i went back to my old address (my parents house) to find this letter waiting for me.

________________________________________________________

Dear Mr *******

Re Customer ***********

We regret to advise that the bank now needs to reply on the guarantee(s)/legal charge(s) securing the obligations of the above which are not being repaid in accordance with agreed arrangements.

This letter constitutes formal demand for repayment of your liability as detailed below:

Item of security: Guarantee
Date Given: 06/07/2010
Amount Outstanding: £4,457.66

The above balance includes interest which, under the terms of your guarantee/legal charge continues to accrue at the relevant rate until your liability is cleared in full.

You should now immediately repay the full amount outstanding under the guarantee/legal charge.

________________________________________________________

I signed 50% of this guarantee (my partner signed the other 50) for a business which i used to be involved with, it was a £10,000 loan.

Shortly after this i stopped working with my partner and we agreed that he would receive all of the business assets and all of the business debts which was an agreement which worked more in his favor that in mine but due to circumstances it was what i wanted to do.

I currently rent my accomodation, have my vehicle (worth approx 5k) on finance and have no other formal assets.

Because the bank involved have tried to contact me at an address which i no longer live at how does this affect this case?
This letter was also sent standard post.

Can anyone tell me what they mean when they say "the guarantee/legal charge" i don't understand the 'legal charge' side of this!

I cannot afford to pay this and it certainly doesn't seem fair that i should have to pay this however i am not sure there is a way out of it.

I have read up on bankruptcy and in my line of work and my financial circumstances it wouldn't really affect me negatively atall.

Thanks for your help

CLAPTON

unfortunately you seem to have acted a guarantor and they are calling the loan in.
the fact that it went to an old address makes no material difference

'guarantee/legal charge ' means either or so this makes no material difference to the situation either

whether or no bankruptcy is relevant depends upon your overall situation; you may be able to come to an arrangement with them but that depends upon what you can afford

Apples2

You can't seriously be considering bankruptcy for a meagre £4.5k (is this a sign of how run of the mill, almost trendy, going BR is thesedays?)

It does indeed sound like you have guaranteed, unfortunately, you don't sign with only a 50% liability. Both signatories sign for all 100% of the debt.
All it means is that they can go after either one of you to repay the whole amount (gives them double the chances of getting their money back).

If you had this agreement with your business partner, have you spoke to him about it and requested he pay it off?

dnalsrammaj

Thanks for your help.

I havn't spoken to my ex business partner in the last 3 months but i know that he is still trading in the same business.

Do you think i have had a demand for 4.5k because my ex business partner decided to close the bank account and then also received a demand for £4.5k or do you think he has paid them £4.5k then thought 'screw this he can pay the rest' so it has gone to the guarantor.

Thankyou

Apples2

We can only guess until you have spoken to him.

As a guess, if he stopped repaying the loan they would have gone for him right away via the business account.
If they are getting no success, they would shift target onto the second guarantor

You may find his business is not doing so well.

lawrie28

Sounds like he has shifted banks, kept trading and tried to aovid paying the loan. As such, his bank are trying to get the money back. Alas you signed the guarantee, so the bank can pursue you.

I would cal them and explain the situation you are in.

Do you bank with them personally also?

I would call you ex bus partner and ask him what the hell is going on.

dnalsrammaj

hi everyone, thanks for the replies.

i have contacted Natwest this morning and explained my situation. They have confirmed to me that it was a loan of £5000 that they are calling the guarantors for. I have 100% liability as does the other party who has signed the guarantee.

I know that he is still making profit with the money borrowed from Natwest so i want to do my best not to pay them!

They said over the phone that they have extended the period before they take legal action to 14 days because i got in touch.

Would it be wise to wait 13 days to see if my ex-colleague decides to make payments on the debt because he will have received the same letter that i did on the same day? I know he will be scared to receive the letter therefore i'm pretty sure he will act on it quite quickly.

Also something that was brought up by a solicitor i know is that maybe it is below the limit that Natwest would go to court over, obviously this figure wouldn't be public but if anyone has any idea about this with banks it would be useful!

Thanks again

Tixy

I've seen natwest go to court for as little as a few hundred quid (around £400 from memory).

Just because your ex business partner is making a profit (if he even is as I'm not sure how you would know this) it doesn't mean he actually has any cash in a bank account and that he is in a position to make payments to this loan or to make up the arrears.

Your personal guarantee is for the £5k and if you don't succeed in stopping repayments then you might well end up with a CCJ on your credit file.

I would suggest you either speak to your ex business partner and agree a strategy together or you write to natwest to offer repayments at a rate you can afford.

Emmzi

if you have to pay the guarentee you can then take former business partner to small claims court (if he has enough assets to be worth going after)

lawrie28

Emmzi wrote: »

if you have to pay the guarentee you can then take former business partner to small claims court (if he has enough assets to be worth going after)

How?

He offered the guarantee, then left the business trusting that his partner would take car of the loan, which he hasn't. He should have asked to have the guarantee removed, which whilst unlikely, is not impossible.

His best course of action is to get hold of his bus partner and find out why he is not paying up and getting him too. Natwest will go after the easiest target to get the money, and as the OP has already spoken to them, he could be the easiest route from Natwests POV.

Emmzi

lawrie28 wrote: »

How?

because of this

"Shortly after this i stopped working with my partner and we agreed that he would receive all of the business assets and all of the business debts which was an agreement which worked more in his favor that in mine but due to circumstances it was what i wanted to do."


which hopefully he has in writing.