Acting as guarantor

Tim_Jeff

As a sole trader I took out a business loan with Lloyds Bank for which my Father has to stand guarantor. Two years later I took a business partner and with them paid off this original and under the partnership took another loan with Lloyds. A few years later the partnership broke up and the company got into difficulties repaying the new loan . Lloyds then went after my Father with threats of repossession of his house and in person from their own thugs in the end he paid up.

I have always questioned if Lloyds did this legally as the loan my Father had signed as guarantor had been paid off and the money owing was on the new loan which was for a lot more money than the original loan? Lloyd insisted at the time that once you sign with them as guarantor for someone else it stays with them and the guarantor will be liable at any time for what ever loan they take out.

Can anyone shed any light on this for me please I would be grateful.

gb12345

Sounds very dodgy to me - your father acted as guarantor for one loan, which was repaid and then they made him repay another loan that he had no involvement with.

Was it actually Lloyd's "thugs" they chased him or was the loan sold to a debt collection agency?

First off how long ago did this all happen?

Tim_Jeff

I have to admit it was a while ago 1996/1997. It was Lloyds themselves not an agency, we were summoned to an office (not in a bank) but occupied by Lloyds. Where we were subjected to a manager sat at his desk telling us we had to repay the loan or they would go after my Father who was trying to negotiate with him. Behind us by the door were two very large men effectively blocking our way out. I did find the experience quite menacing at the time.

I suppose I have asked this today 1. to see if they could do this 2. if anyone else has had experience of this kind of treatment.

I know it is a while ago and nothing may now be able to be done.

Thanks for your reply.

Apples2

All seems a bit far fetched, almost got the Hollywood treatment

Where these loans two separate loans or did you top the first loan up under the original guarantor based terms?

As you were made bankrupt in 1996, just months before applying for a loan (???) I can't see how any lender would have given you the time of day without a guarantor in place.

pauletruth

matters not its out of date you should have challenged it at the time.

Tim_Jeff

Two separate loans, the first was cleared as the new loan was with me and my partner, we had a good business at that time we both had houses so no need for my Father to be involved.

I admit it does seem the treatment was a far fetched, but it is how it happened I kid you not!

Thrugelmir

Tim_Jeff wrote: »

I have to admit it was a while ago 1996/1997. It was Lloyds themselves not an agency, we were summoned to an office (not in a bank) but occupied by Lloyds. Where we were subjected to a manager sat at his desk telling us we had to repay the loan or they would go after my Father who was trying to negotiate with him. Behind us by the door were two very large men effectively blocking our way out. I did find the experience quite menacing at the time.

Sounds like the matter was passed to debt collection agents.

Thrugelmir

Tim_Jeff wrote: »

Can anyone shed any light on this for me please I would be grateful.

What did you father actually sign?

Did you take legal advice at the time?

Newbeginnings

You need to read the guarantor form which was signed as finance companies can use "continuing" guarantees which effectively carries onto each new loan thereafter. If sounds as if your father signed a continuing guarantee rather than a specific guarantee for a single loan.

Tim_Jeff

Thanks Newbeginnings.

"signed a continuing guarantee rather than a specific guarantee for a single loan."

This might be the case, though I would imagine not highlighted by the bank at the time of signing! bit like not being told your loan protection will be useless if you take it out.

If this continuing guarantee is still common practice is it highlighted at the time the loan is taken out. If not its a case of guarantor beware.

rdwarr

I had this.

I put my flat up as security for a business loan. Some years after the loan had been paid off I noticed that the bank still had a charge on the property. Turns out the bank hold the guarantee until it's explicitly removed in case further borrowing is required.

So, this does seem quite standard practice, albeit somewhat hard on an unwitting guarantor.

When you took out your second parthership loan what did you think the bank were using as security? Had you put something else up?