Sole Trader Bounce Back Loan RBS

Campbell2020

During lockdown I took a bounce back loan through RBS. We have never had any borrowings in 20yrs however the business was being badly affected and decided to apply for a loan to help pay for things as we had no other support available. The business has now closed and I am faced with a sizable loan. RBS has passed it out for collection and although I haven't responded they have come back with a payment plan or discount offer if I settle. I realise as a sole trader I am liable for the debt (unless I' m missing something and it can be written off ?) I have no way of paying it back from savings (there is none) although I have a good credit score and wonder if I should take a loan out for some of the debt and offer a reduced amount or payment plan with collection agency? Any Advice from anyone who has been in a similar situation. Loan is for 50K.

robber2

Sorry if this is all a bit negative, theres no way the debt will simply be written off.  Whether its personal, sole trader or limited company the bank will want the debt settled one way or another.

With a defaulted loan of that level I doubt you would be able to find anyone who would consider giving you a further loan. Based on the limited amount of information you have given I think you are left with little option but to seriously consider bankruptcy.

400ixl

robber2 said:

With a defaulted loan of that level I doubt you would be able to find anyone who would consider giving you a further loan. Based on the limited amount of information you have given I think you are left with little option but to seriously consider bankruptcy.

That is rather poor advice. They should certainly be seeking the advice of a debt charity, but jumping to a bankruptcy conclusion is a hell of a leap and could be very damaging to the OP.

I assume this is unsecured debt?

Others will be along who specialise in this, but didn't want the OP to be taking that advice alone.

Campbell2020

Yes thanks Robber2 most unhelpful. 20 years of trading without debt and through no fault of our own we are looking at ways of solving the problem and bankruptcy is not the solution. I have a very good credit score as the debt is currently not at a stage whereby it is affecting my score or chances of securing a loan.  Yes it is unsecured debt 40ixl..however I'm asking if taking the discount and looking to pay it is a better option by spreading the loan over say 7yrs or if there are any other solutions available.

CliveOfIndia

It's worth noting that your score is meaningless and will have no bearing at all on your ability to obtain credit.

However, what will be a factor is affordability.  50K is a large amount, and is most likely above the limit of most lenders for an unsecured personal loan.  What is the discount they've offered you - would that bring the amount down to a figure that you might have a chance of getting a loan for?

You say they've offered a payment plan - is this something that's feasible for you?

The problem with any loan is that, for a relatively large sum, you might struggle to get accepted (at least with a sensible APR) on affordability criteria.

I'll second what the previous poster said - speaking to one of the debt charities or CAB would be a good first step, they will likely have far more relevant knowledge of this scenario and should be able to offer some useful advice.

robber2

I wish you well but based on the minimal amout of background information you have provided I think you will stuggle to get yourself out of this. You have no savings and have very little chance of getting fiurther loans.

It would of course be a good idea to get advice from charities and professionals rather than anonymous posters on the internet but unless you currently have a decent income, other means of support or assets to dispose of its going to be difficult

newdriver101

OP - BBL are not like “normal” loans, they did not require personal guarantees as they are government-backed but this means if the bank/collection company cannot recover the amount they can go back to the government to claim this and the government will look into how the funds were used and if they were “misused” it may be a big problem for you…
Please note, i am not suggesting that you misused the funds, simply that my guess - and it is only a guess - the govt is unlikely to just let these loans go without a full investigation… If you are able to agree a comfortable payment plan (or agree a settlement amount that you can afford - seems unlikely from your post) then that may be the best option as this loan does not necessarily end with the bank/collection company - the govt can step in and if they do they will look into the business + how the funds were spent…

I don’t know if anyone really knows yet the extent to which the banks will pursue the monies from the govt or the extent to which the govt will in turn pursue these loans from the individuals…. I’ve read a couple of cases where the govt has pursued the matter + the individuals were jailed for misappropriating a BBL (these were clear cases of fraudulent use)…. I think it will take a few years before there are a substantial number of these cases where a pattern can be established to reflect how the govt will treat these loans for various scenarios. I suspect most people in your situation are paying the minimum - didn’t they extend the loans + allow 10 years to pay?? 

You haven’t stated if you are working now or have a regular source of income, if you do, my 2 cents worth would be to pay the minimum if you can agree a payment plan + stay under the radar….  Otherwise, i would go to the debt charities for support as others have suggested.

Good Luck!

Campbell2020

Thank You Newdriver101 for your comments. I will seek advice from debt charities and see where we go with it. Thank you.