Help with a Capital on Tap guarantee

t0mbop

Hi all,

I’m hoping someone with experience of business credit card guarantees or credit reporting can give me a bit of guidance.

I was guarantor on a Capital on Tap business credit card. Since the business closed, I accept I’m responsible for the balance personally under the guarantee. I’ve been cooperative from the very beginning – I’ve never disputed liability, I’ve been upfront with them, and I’ve done a full income/expenditure breakdown to show what I can realistically afford.

The issue is the repayment structure. Capital on Tap require a minimum of 10% of the balance each month, which is way above what I can manage. I’ve been making payments, but less than this 10%. As a result, they’re reporting me to the credit reference agencies as being in arrears.

From my point of view:

• I accept I’m liable for the balance, and I want to pay it down.
• I’m not ignoring them, I’m trying to do the right thing.
• The problem is simply the scale of the monthly minimums – they don’t match my affordability.
• My biggest worry is my credit file. Rolling arrears every month feels harsh given my will to cooperate and establish a payment plan and I’m worried about how damaging this will be long term.

I’ve read mixed things about “arrangement to pay” markers – some say they’re as bad as a default, others say they’re better than endless arrears. I’ve even wondered whether a full and final settlement might be an option down the line, but I’m not sure if it’s too soon.

So I’d really appreciate some advice on:

• What’s the least damaging option for my credit file if I can’t meet the 10% minimum?
• Is it better to try for an arrangement to pay, or keep paying what I can and accept rolling arrears?
• Are there any other options people have managed in this situation?

I’m not trying to avoid it – I just want to handle it responsibly and protect my credit standing as much as possible.

Thanks in advance for any thoughts or experiences.

JadedAngel88

Arrangement to pay - say it takes you 10 years to pay off this debt the account won't drop off your credit record for another 6 years after, so will be reported on your credit file for 16 years. 

Default - defaulted debt will drop off your credit file after 6 years regardless of what the balance is.

If you can only pay them what you can afford to pay then that's what they get. 

I know nothing of business debt but do know there is a debt helpline for business debt, I can not remember what its called sorry. Hopefully someone more knowledgeable than me will assist. 

Grumpy_chap

t0mbop said:

Hi all,

I’m hoping someone with experience of business credit card guarantees or credit reporting can give me a bit of guidance.

I was guarantor on a Capital on Tap business credit card. Since the business closed, I accept I’m responsible for the balance personally under the guarantee. I’ve been cooperative from the very beginning – I’ve never disputed liability, I’ve been upfront with them, and I’ve done a full income/expenditure breakdown to show what I can realistically afford.

The issue is the repayment structure. Capital on Tap require a minimum of 10% of the balance each month, which is way above what I can manage. I’ve been making payments, but less than this 10%. As a result, they’re reporting me to the credit reference agencies as being in arrears.

From my point of view:

• I accept I’m liable for the balance, and I want to pay it down.
• I’m not ignoring them, I’m trying to do the right thing.
• The problem is simply the scale of the monthly minimums – they don’t match my affordability.
• My biggest worry is my credit file. Rolling arrears every month feels harsh given my will to cooperate and establish a payment plan and I’m worried about how damaging this will be long term.

I’ve read mixed things about “arrangement to pay” markers – some say they’re as bad as a default, others say they’re better than endless arrears. I’ve even wondered whether a full and final settlement might be an option down the line, but I’m not sure if it’s too soon.

So I’d really appreciate some advice on:

• What’s the least damaging option for my credit file if I can’t meet the 10% minimum?
• Is it better to try for an arrangement to pay, or keep paying what I can and accept rolling arrears?
• Are there any other options people have managed in this situation?

I’m not trying to avoid it – I just want to handle it responsibly and protect my credit standing as much as possible.

Thanks in advance for any thoughts or experiences.

By the sounds of it, you are in arrears so the reporting to the CRA is correct.

Business lenders tend to be rather more determined in recovering their debt than consumer lenders.

How large is the loan?
What percentage are you repaying each month?
Are you even paying sufficient to clear the interest that is accruing?

Do you have any savings that can make a meaningful dent in the debt?  Or anything that can be sold to make a meaningful difference?  

t0mbop

Ah ok,

I guess I found the whole thing very frustrating as my business closed in February, and instead of burying my head in the sand, they recommended on the telephone in March to wait for it to exceed 90 days then it will move over to me, as if this was some sort of standard practise. That would have made it June. In late May I contacted them again proactively to discuss a payment plan and since then it's been very difficult to actually get a response out of them.

I complained, and said it felt that time was being "wasted" by them and that this could have been in place already. Bizarrely, they upheld the claim and agreed, and credited me £50 for the trouble. Unfortunately, they now say there's nothing they can do regards reporting as it's gone on too long and it seems rather unjust.

I'm tempted to just pay it off on another "personal" credit card and manage it that way, at least then it won't be rolling late payments/arrears. I know it's moving debt but it seems like a reasonable option? The balance is approx £5700 and all interest has been frozen, as part of their alleged duty of care. It just seems incredibly frustrating that if I said I'd pay it back £100 per month, that's nearly 5 years, of constant late payments/arrears being marked against me? Even though I'm paying? So my personal credit file is completely trashed even though I'm paying?

It's very galling as like many others I'm sure I could have just ignored them and dragged it out, given them the run around and tried to avoid it like the plague. I was proactive in contacting them before the DD failed and it was explained to me their process is to let it go past 90 days then it moves over to me personally, then I can deal with it. Perhaps I should have queried that part..

Thanks.

Grumpy_chap

So, a £6k debt which the lender is expecting (as per their terms) to be repaid in 10 months, so £600 per month.
You are currently paying £100 per month which is well below the lender's expectation so possibly not surprising they were not willing to agree that as a payment plan.

If you have closed your company, what are you doing for personal income?
Is there a prospect of your personal income increasing to a higher level?
Have you prepared a budget for your current financial position?  If not, it would be worth doing so.  You could visit the DfW (debt fee wanabee) area of the forums and use one of the SoA (Statement of Affairs) tools - the lemon fool one seems to be suggested with some frequency.

I can't see that had you let this drag on it would have made things better in the long term, so to have acted as you have is probably for the best.

If the interest has been frozen (indefinitely or for a fixed period of time ?) that at least means the debt is not growing.

EDIT to add:  in the short term, the OP should continue making the payments they can towards the debt.

QrizB

Lemon Fool SOA calculator:

https://lemonfool.co.uk/financecalculators/soa.php