What are my options?

DisabledDan

Sal2y said:

Hello all,

Due to having to liquidate a family business after covid I find myself in a situation with a comparatively large amount of debt to my current income. I have spoken with Stepchange who said because one element may be a business debt they wouldn't be able to deal with it directly and recommended Business Debtline who could deal with a combination of personal and business debt. As yet I just get a recorded message from BD asking me to ring back.

I worked for a long time without drawing an income, relying on personal loans and a credit card. Now since liquidation of the business I find I am just rinsing my overdraft every month and staying in the red. Coupled with a non secure income stream at the moment (I drive HGVs through an agency, so its essentially zero hours) I don't really know what's best. All I know is I am getting nowhere fast.

Below is a brief breakdown of debt:

Personal:
£23k between two Natwest loans
£5.4k on an HSBC credit card (Limit is £5.8k)
£2k overdraft facility with Natwest. This fluctuates between near the end or 0/a few hundred in credit.

Business/Personal:

£57k Personal Guarantee Liability on a Lloyds business loan split between me and two other guarantors with each guarantor being jointly and severally liable for the full amount.

This was essentially split between our 3 family members and we are currently negotiating with Lloyds about a repayment plan. Given our earning power their recoveries department have stated they are not expecting me or one other to be able to pay anything at the moment and are aware we're seeking debt advice. The third person is a high earner, but also has a lot of debt, so they are expected to reach some sort of agreement soon.

My main concern with this one is how to integrate it into my debt pot, as Lloyds have stated;

"Under the terms of the Personal Guarantee, each guarantor is jointly and severally liable for the full amount. If we were to receive repayment from one of the guarantors, this would mean the overall liability is reduced for all guarantors. If, for example, one guarantor was unable to make repayments, this would mean the liability would still be the full amount for the other guarantors."

So if I add 1/3 of £57k to the amount I try and find a debt solution for, the actual amount owed doesn't reduce for the other two guarantor's? 

I don't have a house/valuable assets, or hidden savings shares.

I appreciate if you have read this far and will gladly take any pointers on where to start as there is a lot of info out there and a lot of different opinions.

My current thoughts are to request a 3 month payment holiday on the loans just to give me room to build up a bit of cash and stop paying for my overdraft. It also gives me time to try and find a permanent job when the Christmas peak for agency staff is over and my income potentially drops.

Thank you for any advice.
Sal

I think you need to think of yourself,

The other parties who personally guaranteed the debt have their own situation and knew what they were getting into/  They were jointly liable, to be clear, if one party pays £20k of the £57 the amount owed becomes £37k so the amount DOES reduce.  What they mean is that if one party pays a third then they are still liable for the remaining debt balance jointly with the others.

The most important words in your post were 

"I don't have a house/valuable assets, or hidden savings shares."

So unless you plan and can afford to get a mortgage some time soon I would suggest bankruptcy, it gives you a clean slate, The IP will decide what you can or can't afford and it will probably be done with in a year.

Imagine someone just took all the grief and worry away from you, well Bankruptcy does just that.  Not having a job makes it even better because it shows you can't service the debt.

A family member of mine managed to get bank to write off £100k he personally guaranteed, he put the company into administration and offered them £20k as full and final settlement.  He even had a share of a property, I have no idea how he did it, I think his ex had claimed there was no equity or she had a claim to all of it.  

Personally I can't see them letting go of the property you mention and I doubt there is time or inclination to sell it rapidly.

If you owed less you could have considered a DRO but for £800 odd Bankruptcy seems best way forward, the other parties can then do what they want.

fatbelly

£680

Yes as I said earlier. Ultimately there has to be a reason not to go bankrupt.

Until the op gets to that point, a dmp at least keeps options open.

EssexHebridean

If the OP is likely to need to find a new rented property next year, bankruptcy may well impact on that, I would have thought. 

fatbelly

Yes that might be a reason.

With the current strategy, no defaults should be registered until at least 3 missed payments