Advice on Secured Personal Guarantee

[32Nirvana]

Bombshell letter today from a solicitors acting on behalf of NatWest requesting payment in full for £18460.30 within 14 days or further action may be taken which may include seeking a money judgement through the CC and applying for a charging order against our house.

What can we do?

My other half was director of a small LtD Business over 3 years ago which ceased trading. There were 2 of them that signed a secured PG for a £15000 overdraft.

Is he liable for the full amount or should it be split between the 2 of them?

And are personal finances are crap at the minute, we have a mortgage and 2nd secured loan on the house so no equity there and I am also under a DMP with CCCS to pay off all our unsecured debts.

What can we do or offer that they are going to find acceptable or reasonable as we cannot pay the full (or even half) of the amount they are asking for?

Any help or advice please????

[Sapphire]

Re: Advice on Secured Personal Guarantee

Hiya and welcome to Beagles.

Is the solicitor acting for Nat West Cobbetts by any chance ?

Sorry to say but I do believe that your other half can be held responsible for the full amount and vice versa.

Personally from previous experience I would say that you really need to correspond with the solicitor and try to come to some kind of payment arrangement for this debt.

Does your other half still keep in touch with the other director at all ? If so then it may be best that they get their heads together and try to come to a joint arrangement.

Someone else will pop along with other ideas too I'm sure.

[Guest]

Re: Advice on Secured Personal Guarantee

As above, you will find that unless specifically structured at the time, the liability for the overdraft would be joint and several, which is to say that either party to the debt may be asked to repay it in full.

What arrangements to repay the overdraft were made three years ago when the Limited Company ceased trading?

NatWest are likely to be amenable to repayment over a period of time, but may insist that this is secured by way of a charge against your house. If this happens, you should ensure that your husband is not the only party that NatWest can find or he may be the only one actually paying the debt.

[32Nirvana]

Re: Advice on Secured Personal Guarantee

Many thanks for the quick responses, we dont know what has happened to the other partner in the business (seems to have disappeared off the planet), the company didnt actually go into liquidation it just ceased trading, I think my other half believes that the agreement was that he would pay off the PG for an MSIF loan they had which was paid (but crippled us financially) and is somewhat responsible for where we are now financially and the the other guy would pay this PG so getting a letter this morning was somwhat of a shock. Stupid I know as we are going to have to pay up this as well but I just dont know how, will Natwest (Irwin Mitchell solicitors) be open to payment schedules or will they force bankrupty, we just dont have enough knowledge in this area but realise we have to pay up. The 14 days to pay in full or further action will be taken has me worried sick.

[Guest]

Re: Advice on Secured Personal Guarantee

Fourteen days is the standard period of time given for responses in cases where a claim for money is made. It is the starting point for negotiation and should not be considered as the end of any opportunity that you have to negotiate.

If your husband and his then business partner had an agreement that your husband would pay the loan and the partner would pay the overdraft, then it is of paramount importance that he is found. Is this agreement written anywhere, for example as minutes of a meeting, or in emails or other correspondence?

You may wish to write back to the solicitors and state that it was agreed the repayment of the overdraft was to be done by the other director, although do not be surprised if they inform you that they do not care, since your husband is clearly named on the personal guarantee.

If you offer a repayment schedule that NatWest agree to, no further action may be taken, provided that you can stick to the payments, although as I wrote above, they may wish to secure the debt by way of a second charge.

Why are you concerned that NatWest will attempt bankruptcy proceedings since your first post mentions county court action and a charging order?

[32Nirvana]

Re: Advice on Secured Personal Guarantee

We already have a mortgage (1st charge) and a 2nd charge (First plus) which is why there is no equity in the property at the moment, can another charge be made and if a charge is made can they then force sale in a climate were we would then be looking at selling at a loss and not being able to pay all charges? I just dont know enough about this, and neither does he although I am sure he wishes he hadnt felt like a PG was his only option at the time. Also the house is jointly owned, what are the implications of this. I mention bankruptcy because the last loan we paid off threated bankruptcy proceedings if we didnt pay it off within 12 months, we cant possibly afford to pay this off within 12 months.

[32Nirvana]

Re: Advice on Secured Personal Guarantee

Can I just ask in light of everyones knowledge/experience are Natwest/Irwin Mitchell going to be interested in a payment proposal or are they going to actively go for the charging order as well and because the house is in both of names can they force a charging order?

[Guest]

Re: Advice on Secured Personal Guarantee

They can only apply for a charging order after they have obtained a county court judgment and then only if you subsequently fail to pay. Also note that I wrote "apply" because obtaining a charging order is not automatic and must be the subject of a further court hearing.

So in short, they cannot "force" a charging order at all.

You need to do a number of things right away. Track down the absent partner in this business and have him face up to his responsibilities and you must also negotiate with NatWest in order to secure a repayment proposal that is acceptable to them, but that you can also afford.

[32Nirvana]

Re: Advice on Secured Personal Guarantee

Many thanks for your help and advice, we have constructed a letter to the solicitors explaining the situation (although we realise they probably wont care about the situation with the other partner) and offering a payment proposal based on a demands/needs statement. We have asked them for a copy of the original PG as my other half cant find his and a copy of the account as we actually dont know what charges/interest are being applied.

Thanks again it is very much appreciated, I am so thankful I found this site.

[Tools]

Re: Advice on Secured Personal Guarantee

Could you post up any letters to/from Natwest/Irwin Mitchell. This may help to advise you either now or in future as this progresses.

[Ed1237]

Re: Advice on Secured Personal Guarantee

I was in a similar situation as you. Whilst writing to them, ask for a complete breakdown of how the debt is made up. When I did this, I found errors on the account with regards to interest charges, which reduced the debt from £48k to £36. I am not saying that every bank makes errors, but it is certainly worth checking.

[32Nirvana]

Re: Advice on Secured Personal Guarantee

More advice please:

As yet we have had no response from Irwin Mitchell or Natwest, the 14 days is up on Friday (this is 14 days from date of letter we received demanding full payment of outstanding debt (business overdraft).

Anyway in response to this original letter we sent a letter to Irwin Mitchell basically offering payment proposal of £100/month (we cant afford much more than this at the moment but did suggest a periodic review with a view to increasing payment), we asked for a statement of the account and for a copy of the signed PG (we enclosed a cheque for £10 to cover admin/post, which has been banked).

My other half was beginning to worry (AS SO WAS I) because he had heard nothing so he phoned Irwin Mitchell today and asked if a reply/response to our requests/payment proposal was on its way. Basically they didnt tell him anything other than everything has beed forwarded onto Natwest, they tried to pressure him for a phone number which he is reluctant to give and they want to go through INCOME/EXPENDITURE on the phone. Now we have a DMP set up with CCCS so out IN/EX is fairly recent and upto date. My other half may flake under pressure on the phone and agree to more than we can afford. I am thinking we just send another letter with our INCOME/EXPENDITURE and out original offer.

Plus we have no idea if Natwest are going to meet our requests for statement of account and copy of signed PG.

What does anyone think??????

[Ed1237]

Re: Advice on Secured Personal Guarantee

As with all debts, the onus is on the creditor to prove the debt. They have no choice but to supply the information you have requested including a copy of the PG.