Personal Guarantee & Loan

roxin

Hi all,

My business has recently become insolvent due to no fault of my own. I notified the bank and they've said that I need to take out a loan to cover the Personal guarantee (Natwest overdraft).

I'm currently attempting to clarify how much this was. The last time I checked I was told it was capped at £12,500, but I suspect the business credit card may be included with £5,000.

If I take out a loan, I will end up paying interest, but they have said if I don't, I will default.

I'm 21 years old, living at home with my parents, with no income (having just lost my business). I'm looking for work, and also attempting to get some web design / programming jobs for income.

Can I send the bank a £1 token payment for the guarantee, which in turn will force it to go to a debt collection agency without default. Then, without affecting my credit score, can I try to negotiate a lower settlement, or monthly repayment.

Tixy

I wouldn't agree to take out a loan from them - especially as you have no way to repay it.

Once you have established the extent of the guarantee I would write to them to offer a token payment at the current time.
But that certainly won't force it to go to a debt collection agency without a default. It very likely will impact on your credit file.

You really need to find out all the paperwork you signed in relation to the guarantee.

roxin

Tixy wrote: »

I wouldn't agree to take out a loan from them - especially as you have no way to repay it.

Once you have established the extent of the guarantee I would write to them to offer a token payment at the current time.
But that certainly won't force it to go to a debt collection agency without a default. It very likely will impact on your credit file.

You really need to find out all the paperwork you signed in relation to the guarantee.

I sent a SAR to them yesterday, for everything in regards to credit lines and personal guarantees just so they can't force me to pay more than I have to.

They've said I can wait until I find a job before signing up for the loan, not entirely sure how long they're giving me.

My credit score is perfect, and I'd like to think I can buy a house once things get resolved.

Tixy

Whilst its always preferable to keep your credit file clean if possible I wouldn't rule out options that could impact on it.

Even if you did end up with a default, by the time the £12k/£17k was repaid and you'd saved up enough for a house deposit that could well be a few years down the line anyway, by which time your credit file could be free from a potential default and not impact on your ability to get a mortgage.

Depending on how the personal guarantee is worded, and whether you were in business as a Limited company or a sole trader, it may be that they won't be able to register a default against your name anyway on your credit files - and so if that is the case the only other ways they could impact your credit file would be if they obtained a CCJ or petitioned to make you bankrupt. So definitely read it all carefully through once you have the paperwork.

roxin

Tixy wrote: »

Whilst its always preferable to keep your credit file clean if possible I wouldn't rule out options that could impact on it.

Even if you did end up with a default, by the time the £12k/£17k was repaid and you'd saved up enough for a house deposit that could well be a few years down the line anyway, by which time your credit file could be free from a potential default and not impact on your ability to get a mortgage.

Depending on how the personal guarantee is worded, and whether you were in business as a Limited company or a sole trader, it may be that they won't be able to register a default against your name anyway on your credit files - and so if that is the case the only other ways they could impact your credit file would be if they obtained a CCJ or petitioned to make you bankrupt. So definitely read it all carefully through once you have the paperwork.

I'm looking at purchasing a house with the next 1-2 years (providing I can get the income coming in). I'm a programmer / web developer & designer, with many years of experience, so it shouldn't be a problem.

Ideally I'm looking for no damage to credit report, and to reduce the amount if possible, or at least not pay interest on it.

bigadaj

You are 21 with 'many' years of experience. You are currently living at home with your parents, presumably have no savings if you can't repay the bank, I think you need to be more realistic in your expectations, a year or two to buy a hosue doesn't look feasible.

You can certainly look at your contract with the bank and try and get off repaying, but the probability is that you will be liable, in which case defaulting quickly might be the best option, as your six years will run from now, meaning that you could be back to even by the time you are 27.

Just curious about the reason for your business folding, was it a single large client not paying or something else?

chanz4

many years, and had a business fold at 21........ think mcdonalds have jobs your age isn't experience

bris

This doesn't add up, 21, living with parents and getting a bank to give him a £12500 overdraft. What assets did the bank see to secure the loan via the personal guarantee? They don't just give away money without knowing they have something to take.
Many years experience at 21, I think trips up this troll.

iolanthe07

bris wrote: »

This doesn't add up, 21, living with parents and getting a bank to give him a £12500 overdraft. What assets did the bank see to secure the loan via the personal guarantee? They don't just give away money without knowing they have something to take.
Many years experience at 21, I think trips up this troll.

He may have started his business while still at school and his parents may have guaranteed the loan. Some 15 year olds have amazing computer skills.

jonesMUFCforever

iolanthe07 wrote: »

He may have started his business while still at school and his parents may have guaranteed the loan. Some 15 year olds have amazing computer skills.

In that case the bank would be going after the guarantors not OP who I also believe to be a troll?
Like the way it says that I lost the business due to no fault of my own - who's fault was it then?

DCFC79

jonesMUFCforever wrote: »

In that case the bank would be going after the guarantors not OP who I also believe to be a troll?
Like the way it says that I lost the business due to no fault of my own - who's fault was it then?

Be the fault of the gods.