Self defeating curved ball - business loan

PHILHW

Stewart_78 wrote: »

What I'm going to say may not be the right thing and it may be unhelpfull be I've been where you are and here's my bit.

You are concerened about your credit score but you have little or no income. So you want to be able to borrow money for what? If you can get a personal loan to repay this business loan in one go then do that. If you fail on the repayments you will default (as you have no income). If you don't do that you will probably default.

At the end of the day you told the bank that if the company went bust you would cover the loan, so now they are looking at you, not the company, you. If you can't cover it then you have to face up to that.

I also held my AAAAAA+++ credit rating as gold for far too long until I relised it was a mechanism for the banks to syphon money out of my pocket into theirs.

Apologies if I have got this wrong but I'm a company director too and the banks have taken me for a ride over the last 3 years. I think, at the age of 40, I have finally learnt my lesson. These people are not the sort of people you want to be in business with. My company is still going and is OK but personally, I've defaulted on everything. I care not. I don't want to borrow another penny as long as I live.

Whilst I appreciate your comments, and of course your opening honest point about me unlikley to like it, I do see your point.

However, you are taking the no income in slightly the wrong way. We have downsized our business, rearranged things, and at the moment we are able to take very little from the business. This in the next few months is likely to change. Hence why it is only a temporary problem.

It is important if I am to keep the business going, AND REPAY this money, that I have a good credit record. For reasons I do not need to go into (to keep this brief) I would be unable to continue in my line of business without lines of credit (other than banks).

I am not sure why you are pushing the point about "At the end of the day you told the bank that if the company went bust you would cover the loan, so now they are looking at you, not the company, you. If you can't cover it then you have to face up to that. " as I have stated quite clearly I want to repay it, and I believe my actions are facing up to it. So not sure where you are going with that one. If I am willing to pay the amount over a period of time, then that is constructive. By ruining my personal credit file, it will be self defeating for them, and almost certainly end up with me going bankrupt, hence they lose out. Seems somewhat of a curved ball and self defeating. Hence the subject.

IainMacca_2

Please don't take this as advice - just my personal experience...

I was a director in a company and signed a personal guarantee (HSBC £7000), I left the company and a few year later they called-in the guarantee when the company failed.

However because the account/debt resided within the limited company, and was not a personal account, they could not record anything on my personal credit file even though they could chase me for the debt.

I disputed it in any case and it was passed to a collection agency (it eventually went to 2 or 3) – and at no point did it appear on my credit file.

Can’t say for definite but I am lead to believe that if the account resides with a limited company then it should not appear on your file but on that company’s file – maybe worth checking.

Stewart_78

Philhw, sorry, I mis-read the first post. I thought the company had failed. If you are still going then I very much understand the need to maintain credit facilities with suppliers etc. Apologies there. It would seem sensible in your case for the bank to keep things moving, even at a reduced rate if the prospect of closing the business would mean that they would lose all their money anyway.

Iain, that's very interesting.

PHILHW

To IainMacca
Thanks just what I wanted to hear. I appreciate its just your experience. My situation is with LLoydsTSB, so I hope they do the same thing. It was really a shame because the call to setup a payment plan was very amicable and they were very accommodating and practical. If it did appear as a personal default then in todays financial climate it would be game over. Lets hope your experience is not a one off!

I hope there might be others on here, like yourself who have been through this, and can confirm it.

To Steward_78
It might have been my fault, it is always difficult to explain a situation, in as few words as possible so as not to turn things into a Harry Potter Novel (modern day war and peace!!!). You are then spot on, credit facilities for suppliers and even things like hiring cars or vans, they ask to do a directors check, its becoming more tricky these days.!!

Memory_Girl

IainMacca wrote: »

Please don't take this as advice - just my personal experience...

I was a director in a company and signed a personal guarantee (HSBC £7000), I left the company and a few year later they called-in the guarantee when the company failed.

However because the account/debt resided within the limited company, and was not a personal account, they could not record anything on my personal credit file even though they could chase me for the debt.

I disputed it in any case and it was passed to a collection agency (it eventually went to 2 or 3) – and at no point did it appear on my credit file.

Can’t say for definite but I am lead to believe that if the account resides with a limited company then it should not appear on your file but on that company’s file – maybe worth checking.

Me too - a personal guarantee for 10K. Took me two years to pay back but not a blip on my credit file - was told that as long as I stuck to the agreed payments then I wouldn't be in default so they couldn't default me IYSWIM?

Might be worth double checking?

MG

PHILHW

This is starting to look promising!!

IainMacca_2

Meant to say, if you are negotiating payment arrangements with the bank, watch out for them 'repackage' the debt into a different (personal) account, hsbc tried to do that with me but as I was disputing it didn’t happen.

Good luck

PHILHW

IainMacca wrote: »

Meant to say, if you are negotiating payment arrangements with the bank, watch out for them 'repackage' the debt into a different (personal) account, hsbc tried to do that with me but as I was disputing it didn’t happen.

Good luck

I think I get what your saying but could you explain. I guess your saying they get my agreement to take it from my personal account?

IainMacca_2

PHILHW wrote: »

I think I get what your saying but could you explain. I guess your saying they get my agreement to take it from my personal account?

For example (again in my case so may not be relevant):

The account where the debt resides belongs to the limited company, so (irrespective of the personal guarantee) the actual account is in the company’s name and not mine.

What the bank tried to do was create a new ‘loan’ account under MY name and then place the debt from the limited company into it.

If they had done this (if I had allowed them to) then presumably it would then have appeared on my credit file.

DVardysShadow

PHILHW wrote: »

I think I get what your saying but could you explain. I guess your saying they get my agreement to take it from my personal account?

Not quite. If I am understanding this correctly, in your role as guarantor, you do not have a loan account with the bank. That resides with the company. While that arrangement stands, you are obliged as guarantor to make good the shortfall on the company account. But while it is the company loan is in default, they cannot touch your credit record.

So what the bank will attempt to do is to get you to take out a loan with them to repay the company loan. Once you fall for this, if you do not meet the payments for your loan, they will default you personally.

If you don't take out a loan, I am sure that it is entirely possible that they may sue you for failing to meet your obligations as guarantor. I am speculating here, but I would guess that it would be generally defensible if you did not actually meet the requirements of the original loan repayment schedule if you could convince a Judge that you would repay the loan within a 'reasonable' time. Equally, if you play this game, the bank could probably prevent the business from handing you money in one way or another, by some sort of administration order, thus throwing one of these self defeating curved balls.

Against the possibilities of being sued as guarantor or the consequences of your company being placed in administration, you could play the bankruptcy card.

On the whole, I think the bank would want to avoid you going bankrupt, but might use the threat of doing to you as a lever to make you comply in taking out a loan. I think that they are being cordial with you because firstly they have at least as good a grasp of the possibilities as I have expressed above and secondly, they realise that you are beginning to cotton on to how the game can be played - in that for the majority of people they deal with, a threat of bankruptcy is enough to make them comply and fulfil their guarantor obligations by taking out a loan.

If my take on this helps, I hope you can make some good decisions which keep you ahead of them. But please be aware that if you are too good at outwitting them, you may find that they will be reluctant to lend to you again.

edit: IainMacca got there with the short version while I was typing away.