Business loan PG being enforced - Solaris debt collectors demanding payment or court - help!

pocketwaffle1

My business used Capital on Tap for a loan. Unfortunately, the business went downhill as a result of the COVID Lockdowns, and I’ve received a letter from Solaris Law, representing Capital on Tap, informing me that they intend to pursue me personally due to a personal guarantee I signed. (I don’t recall any mention of a personal guarantee, just a tick box to accept terms, but after researching online, I’ve discovered plenty of people have had similar experiences).

Anyway, the business was a music festival and relied heavily on investment from me and the other partners. Two years ago, we cancelled what would have been our most recent instalment. We had hoped to turn things around, but due to the money required to sustain it, it’s been practically impossible, so I’ve been in conversation with Business Debtline about the next steps to take. 

Business Debtline has been helpful, but I’m a bit confused about how I should respond to Solaris. I had a Google and saw there are some knowledgeable people on here, so I’m hoping some of you can help me understand what to do next.

The letter they sent me wasn’t a letter before action. It was a letter saying you owe £X and we are going to pursue you for it because you signed a PG. After speaking to Business Debtline, I wrote to them telling them I’m seeking debt advice and asking for breathing space. They replied to me this week, saying they’ll give me an extra two weeks to come up with an offer of payment, but if I don’t, they may pursue me through the courts.

I also got into some personal credit card debt during this time and had advice to stop paying the credit card bills I couldn't afford, to let the accounts default and request CCA documentation before making offers to the creditors.

I’m still self-employed, albeit in a different industry, and I’m earning a touch over minimum wage. The credit card repayments I was making were crippling and left me with practically nothing. My relationship broke down. My landlord decided he wanted to sell the flat I lived in, and because I had no income for the three months leading up to that, I was unable to secure a rental of my own and have been lodging with an elder family member.

I wanted to try and keep up-to-date with my credit card payments and got into a pattern of missing one or two payments and then making a payment, and so on, because I was terrified of defaulting. A friend told me that I should get some advice, and that's when I was told to stop making the payments, etc. 

This was all recent (I’ve missed one payment on the personal credit card and will continue until the account defaults), I was hopeful I might be on the way to sorting out my personal finances, and then I had this letter from Solaris through the door, and I’m at a loss as to how to handle it.

Is there an equivalent process I need to go through when dealing with Solaris regarding this debt?  I believe it’s an unsecured business loan and, as I understand it, those are not covered by the CCA? I’m really worried that they want me to come up with an offer of payment to them in two weeks, or they’ll take me to court. It goes without saying, I don’t have the money to pay what they’re demanding. It could be 16k, could be 20k, not sure because Solaris quoted two different amounts on the letter. To be honest, I just don’t know what I’m going to do about this, and it’s worrying the life out of me. Are they just going to take me to court and force me to give them all my wages, or force me into bankruptcy? 

I’m really hoping somebody can give me some direction on how to handle this. 

Thanks if you read this far.

MattMattMattUK

pocketwaffle1 said:

My business used Capital on Tap for a loan. Unfortunately, the business went downhill as a result of the COVID Lockdowns, and I’ve received a letter from Solaris Law, representing Capital on Tap, informing me that they intend to pursue me personally due to a personal guarantee I signed. (I don’t recall any mention of a personal guarantee, just a tick box to accept terms, but after researching online, I’ve discovered plenty of people have had similar experiences).

Anyway, the business was a music festival and relied heavily on investment from me and the other partners. Two years ago, we cancelled what would have been our most recent instalment. We had hoped to turn things around, but due to the money required to sustain it, it’s been practically impossible, so I’ve been in conversation with Business Debtline about the next steps to take. 

Business Debtline has been helpful, but I’m a bit confused about how I should respond to Solaris. I had a Google and saw there are some knowledgeable people on here, so I’m hoping some of you can help me understand what to do next.

The letter they sent me wasn’t a letter before action. It was a letter saying you owe £X and we are going to pursue you for it because you signed a PG. After speaking to Business Debtline, I wrote to them telling them I’m seeking debt advice and asking for breathing space. They replied to me this week, saying they’ll give me an extra two weeks to come up with an offer of payment, but if I don’t, they may pursue me through the courts.

I also got into some personal credit card debt during this time and had advice to stop paying the credit card bills I couldn't afford, to let the accounts default and request CCA documentation before making offers to the creditors.

I’m still self-employed, albeit in a different industry, and I’m earning a touch over minimum wage. The credit card repayments I was making were crippling and left me with practically nothing. My relationship broke down. My landlord decided he wanted to sell the flat I lived in, and because I had no income for the three months leading up to that, I was unable to secure a rental of my own and have been lodging with an elder family member.

I wanted to try and keep up-to-date with my credit card payments and got into a pattern of missing one or two payments and then making a payment, and so on, because I was terrified of defaulting. A friend told me that I should get some advice, and that's when I was told to stop making the payments, etc. 

This was all recent (I’ve missed one payment on the personal credit card and will continue until the account defaults), I was hopeful I might be on the way to sorting out my personal finances, and then I had this letter from Solaris through the door, and I’m at a loss as to how to handle it.

Is there an equivalent process I need to go through when dealing with Solaris regarding this debt?  I believe it’s an unsecured business loan and, as I understand it, those are not covered by the CCA? I’m really worried that they want me to come up with an offer of payment to them in two weeks, or they’ll take me to court. It goes without saying, I don’t have the money to pay what they’re demanding. It could be 16k, could be 20k, not sure because Solaris quoted two different amounts on the letter. To be honest, I just don’t know what I’m going to do about this, and it’s worrying the life out of me. Are they just going to take me to court and force me to give them all my wages, or force me into bankruptcy? 

I’m really hoping somebody can give me some direction on how to handle this. 

Thanks if you read this far.

Do you actually have any assets for them to come after as from the sound of it you do not own your own home etc.?

It may be worth considering bankruptcy, wipe the slate clean. How much do your personal debts total?

RAS

Or a DRO if your total debt is below £50k and you meet the excess income and asset requirements.

Depends how much you are paying the relative for lodging?

ManyWays

What did Business Debtline suggest?

pocketwaffle1

Business debt line have suggested the best course of action would be to self negotiate with the debts to come to an agreement I can afford. Everything was fine until this capital on tap card popped up that I didn’t even know about.

I don't have any assets at all but I am potentially going to become homeless soon as my family member's house will be sold to fund her care so I was hoping to go down this self negotiate route with all the debts so that I don’t jeopardise my credit file too heavily and I can obtain a private rental agreement. 

Anyway, I have done a budget with business debt line and have a pro rata figure for all of them (£54k total, half is with family). The figures don’t look too bad. The question I have is should I allow my Barclays credit card and loan to go into default before negotiating with them? I have been told this is vital to be able to succesfully negotiate but that could take 3 months and then according to the email from Solaris Law I need to go back to them at the end of September... What I don't want to do is to agree to something with Solaris Law and then Barclays decline my offer in a few months time so should I negotiate with all of them now or wait? Or should I request more information from Solaris Law first, drag it out a little because as far as I am aware they haven’t added the debt to my credit file yet or issued a letter before action; however I severely do not want to jeopardise my opportunity to negotiate with them by not replying in time…. Sorry I hope that makes sense.

sourcrates

Firstly, until a debt defaults, the original terms and conditions still apply, which is why creditors won`t accept any long term reductions to contractual payments whilst agreements remain in force, once the debts have defaulted however, the original terms no longer apply, and so affordable arrangements can then be made with the lender.

Second, Solaris and Barclays will not decline anything, any proposed credit payments must be affordable, inline with FCA guidance, so going forward, payments will be decided by your available disposable income, rather than what the creditors may want you to pay, and if they don`t like what is offered, they have very little recourse to change that, all they can do is sell your debts on to a 3rd party, a coarse of action which is more than likely to happen anyway.

So you see there is no negotiation as such, payments are decided by your available budget, you work out what you need to live on, and what is left you then distribute to your creditors either on a pro-rata basis, or by value of debt, so there is no acceptance or declining of payments, you just pay what`s affordable and they have to accept that.

Please forget all about bankruptcy, although it might work very well for someone in your position, as you have no assets to realise, it would cost them a fortune to make you bankrupt, for absolutely no gain whatsoever for them, but it would rid you of all your debts, and there would be no real downside to it for you, but they won`t do it for the reasons stated previously.

They may try to use it as a bluff to make you panic and pay more than you can afford, the same goes for the threat of legal action, but affordability rules apply to legal action as well, so taking you to court would not see them get any more money than you would have offered from your budget anyway.

Creditors can posture and demand all they want, the bottom line is always going to be affordability, they cannot take what you do not have, its simple maths.

RAS

From the point of view of personal safety, your priority is to forget paying creditors and save up in an attempt to get enough to secure a rental before the house in which you live is sold.

Check what the Local Housing Allowance is in your area and adjacent ones, consider your age and check whether you'd get any help towards renting at the LHA amount. 

It would be better to do this before any action from Solaris, if possible.

Landlords look at affordability not credit records, though they can see CCJs and bankruptcies once reported.

pocketwaffle1

@sourcrates thank you. Everything you say makes absolute sense. 

Just for the avoidance of doubt as I now understand the process I have to go through with Barclays, i.e. wait for the credit card & loan to default so I can agree new arrangements which will take circa two/three months from now... But with regards to Solaris Law do I just sit and wait as well or at which point should I offer them the monthly amount based on my budget?... Do I need to do this by the end of the month as they have requested? Or can it wait until I am in a position to offer new terms to Barclays as well? As far as I can tell, they have not activated the PG and added what was a business debt to my personal credit file yet, it just seems like a threat to force my hand at this stage...

In their original letter the main opening statement is as follows:

"this correspondence is a request for payment of sums owed by you to our client and is sent in accordance with the pre-action protocol for debt claims. It is an attempt to settle this matter without recourse to litigation and it requires your immediate attention. If you do not respond within the time frame specified below, legal action may be taken against you without further notice."

Then their latest email after I informed them I was seeking advice from business debt line was as follows:

"In light of your below email, we will extend the hold on the file for a further 14 days to allow you time to seek advice.We look forward to receiving an update on your current circumstances as well as your offer of repayment by the 2nd of October 2025.

Further Action

Please be advised if we have not heard from you within this time frame, we may issue court proceedings without further notice to you."

Thanks again, much appreciated!

sourcrates

A few further question`s:

Can you afford to service the Solaris debt now?

would a CCJ be detrimental to you?

It sounds like they intend to take legal action with this one if you don`t come up with a payment plan within the timeframe specified, so, your choices are:

let them take you to court (you don`t actually go to a physical court, its all done online and by post).

You fill in the court forms they send you, which will show how much you can afford to pay monthly, keeping in mind the other debts will need to be serviced after they default.

Judgement is granted against you, and you pay what the court orders, on a monthly basis, a figure which will be based on your budget and disposable income.

You then have a legally binding, court approved payment plan the creditor cannot change, without resorting to the courts again.

Or, you can make an informal agreement with them now and avoid all of the above.

pocketwaffle1

Thanks again @sourcrates

A CCJ would not be ideal due to my living situation, it will make it a lot harder for me to move out of here. 

I can afford to service it if both Solaris and Barclays agree to a Pro Rata type deal between them. Because Solaris is one of the largest debts, they would be offered £170 on a pro rata which I feel is quite substantial amount on £16.6k but that would only be manageable based on Barclays agreeing to much lower payments (£40 & £60 on a £4,000 credit card and £6,300 loan respectively) once the default happens so I guess I would be running a bit of a risk by doing a pro rata deal with Solaris now to try and "make an informal agreement with them now and avoid all of the above" while I go down the route of default with Barclays. Would somebody like Barclays agree to that offer of repayment from your experience?

Thanks again




 

sourcrates

As I said, there is no agreement to be made, you pay them what you can afford, according to your budget, and that is it.

You call the shots, not them, you need to adjust your mindset now when dealing with creditors, they get paid what you can afford, not what they may require from you, whether that be £10 a month or £50.

If they don`t like it, all they can do is sell the debts onwards, and you offer the same again to whoever buys them.