Personal Guarantee loan

MrBojangles42

Hi all, bit of a mix of issues so if this is the wrong forum please move!

Long story short we took a 300k£ business loan out many years ago and i signed a PG's.

No issues there as i didn't have a house back then and the business was going from strength to strength.

Now COVID has hit it has decimated our business and our income has literally dropped to £0 and people are refusing to pay us. The government loans have been declined (and are a bit of a joke anyway) and we have now defaulted on the loan payments. We hit a downturn at Christmas and we have never picked back up.

We have approx 50% of the loan remaining. I have offered to pay 50% of the loan amount per month for 6 months, then back up to the original agreed amount and once the term ends the shortfall as a lump sum. My personal income on paper is now low and my outgoings are more than my income. My wife works but her salary just about helps us break even at the moment. My offer has been declined and they want to go for a CCJ. In reality how will this affect me? I am concerned about my house which has some equity in it, on the basis that it is my family home with kids etc. If they forced a sale i would have no where to go with the kids. I don't have any other assets etc. The offer to pay 50% of the loan was from a friend who runs his own business who offered to help prop me up for 6 months whilst we got through the storm it was not something i can personally afford. I estimate the business will be trading again in 3-4 months back to its strengths but by then i fear it will be too late.

TripleH

Who is threatening the CCJ? I may be wrong, but for business loans, they would only pursue if the business was deemed to no longer be a going concern (in this environment that would apply to a vast number of businesses based on an immediate snapshot). 
With the personal loan, I would still expect them to have to go down the formal process of getting a CCJ (shouldn't be automatic) but this would still givevyou chance to negotiate. Are you sure they don't mean a secyred charge against your property? 
You might be better going on a business forum about the business aspect.

MrBojangles42

hi, thank you the business loan has defaulted and they are now looking at a CCJ and then a charge on my property as i personally guaranteed the business loan. They have threatened that the CCJ will be automatic (there is no defense i guess) and then a charge would follow and subsequently a forced sale.

TripleH

I don't think it can be automatic, a court has to issue it and you have the right to attend and present your case or circumstances. I would keep details of the offer you made to them to repay the guarantee to show you made an attempt to offer to pay. Definitely ask on a business forum as there may be rules specific to business loans.

Brock_and_Roll

The lender of course has a right to enforce its security on a defaulted loan, obtain judgement and place a charge on the house or any other assets. But as to what actually happens is a numbers game and depends on the circumstances. How much is the default amount vs the OPs share of the equity? If the there is significant positive value for the lender, they may well be happy to sit on the CCJ and entertain any plans for the business restarting payments.
Likewise, if there is only a very small amount of equity vs the default amount, the lender is unlikely to pursue a sale given the forced sale value and all the costs.
This debt has reached "real person" stage with the lender - I would try and sit down with them and have a detailed discussion about plans and how things can play out given a variety of scenarios.

vitaweat

I'd try lemonfools.co.uk for advice on business loans.  

MrBojangles42

Brock_and_Roll said:

The lender of course has a right to enforce its security on a defaulted loan, obtain judgement and place a charge on the house or any other assets. But as to what actually happens is a numbers game and depends on the circumstances. How much is the default amount vs the OPs share of the equity? If the there is significant positive value for the lender, they may well be happy to sit on the CCJ and entertain any plans for the business restarting payments.
Likewise, if there is only a very small amount of equity vs the default amount, the lender is unlikely to pursue a sale given the forced sale value and all the costs.
This debt has reached "real person" stage with the lender - I would try and sit down with them and have a detailed discussion about plans and how things can play out given a variety of scenarios.

Thank you, I am not concerned or do i think it is wrong they can place a charge on the property, we borrowed the money and circumstances right or wrong they should get their money back. My issue is that i have proposed a fair way of this happening and they will not entertain this. Ultimately a CCJ will only smash my credit record to pieces, and i cant see how a judge would order repayments anything more than a few £hundred. They are not interested in sitting down and simply want to escalate this to solicitors, they have put £10k onto the loan for recovery!

How likely is an order for sale given joint family home with small children ?

Brock_and_Roll

I cant answer the 2nd part of your question - think you need proper advice. I would have thought it unlikely but not my area!
With regards to your credit rating, I suspect it is already knackered as you have defaulted on the loan. But I guess you dont need credit right now anyway.

MEM62

MrBojangles42 said:

They have threatened that the CCJ will be automatic  

No CCJ is automatic.  You have a right to put your case and he heard.  
The fact that you gave a personal guarantee is your issue. The lender has the right to pursue you personally as the business is unable to meet its commitments.  There will be many small businesses in your position and I am sure that, even if the lender goes to litigation, it will take some time to get to court in the current circumstances.  So that at least buys you some time.  You need to speak with business debtline for proper advice. 
As for the current business interruption loans, they are useful for many businesses and do provide a lifeline but your business has to viable.  Perhaps any lenders you have spoken to thus far do not feel that your business is viable or able to support the repayments.  Have you spoken to your accountant about this?