Personal Guarantor for company car lease

carlsagen

Hello,

I was a director for a company over 6 months ago and resigned and left to start my own fledgling business. The company i left is now failing to pay its creditors and i have had a letter today from Mercedes Benz finance.

The letter states that i am still a Guarantor and are now liable to pay for the outstanding debt and the debt moving forward. There are 5 cars in total. I cannot afford one never mind 5. The letter goes on to say that if they are not paid by the 8th of feb then they will consider the agreement terminated and the cars need to be collected however i will be liable for the outstanding amounts and the termination fees.

Im not sure what to do.

Any advice.

dealer_wins

IF you signed a personal guarantee then you are completely liable for the payments if the company is unable to make them.

zxspeccy

As stated above you become personally liable for the debt unfortunately. I am assuming the place you worked for was a Limited Company. It is common practice for financial providers to take personal guarantees from the Directors due to the Limited Liability of the company itself.

DCFC79

Did you sign anything to say you would be a guarantor ?

carlsagen

It seems stupid that you would still be liable for a directors guarantor even after resigning as a director. the finance company should do there due diligence to make sure that had someone involved with that loan that also was related to the business and of course in control of it.

Whats my options then? since i only earn around 1600 a months and 1000 is my mortgage. The amounts outstanding are now at 3k and the monthly for all cars would be approximately the same.

Thanks

CLAPTON

carlsagen wrote: »

It seems stupid that you would still be liable for a directors guarantor even after resigning as a director. the finance company should do there due diligence to make sure that had someone involved with that loan that also was related to the business and of course in control of it.

Whats my options then? since i only earn around 1600 a months and 1000 is my mortgage. The amounts outstanding are now at 3k and the monthly for all cars would be approximately the same.

Thanks

Clearly you misunderstand the meaning of being a guarantor: however a learning experience.

If indeed you did sign the guarantees and there is no other money available to make the payments, then you need to speak to the finance companies and try to come to some arrangement.

carlsagen

I was thinking i could take 2 of the cars on a reduced rate but not all. all else i can thing is i have to declare myself bankrupt. but with a triple A credit history and a house on the line, as you can imagine i want to avoid that at all costs.

CLAPTON

carlsagen wrote: »

I was thinking i could take 2 of the cars on a reduced rate but not all. all else i can thing is i have to declare myself bankrupt. but with a triple A credit history and a house on the line, as you can imagine i want to avoid that at all costs.

bankruptcy may be an option but that would depend upon the equity in your property, the amount of the debt and the longer term impact on your financial circumstances.

better to try to come to some agreement with the finance people

carlsagen

Thanks for the advice clapton.

stator

If you know anyone who's a solicitor you could ask them to look over the guarantor document to check that it is all done properly and legally binding.
It probably is though.

If you really can't afford it they might come to an agreement for less, but if you have lots of equity in your house they might hold out for the whole amount.

SeanG79

I assume you are in contact with the remaining directors?

You need to try to get settlement figures for each of the vehicles, then see what you can sell the vehicles for. Hopefully you can sell the vehicles for enough to settle the finance and avoid a voluntary surrender or repossession of the vehicles.

If there is negative equity (the finance is more than what you can sell the vehicles for), speak to Mercedes Finance, they may still give you permission to sell the vehicles provided the purchaser pays them directly and then you can come to an arrangement with them to pay the shortfall.

If the bank can see that you are willing, able and trying to settle the finance, they are more likely they are to try and accommodate.

Because you are a home owner, depending on the shortfall, they may seek a charge against the property.