Personal Guarantee Need Help

[Former Director]

I signed a personal guarantee on a contract hire agreement in 2004 for 3 years for my newly established company. We paid every payment under the original agreement then decided that we still needed the van and asked the finance company to set up a new agreement. They agreed and lowered the monthly cost. Unfortunately last year we suffered severe bad debt and had the van repossessed. They are now chasing me in court for full payment and invoices to be paid. My company is currently going into liquidation and my argument is that I did not have a guarantee on the new agreement, although I do not think we signed new paperwork, and that I do not owe the money and should go through the liquidation process. Does the new agreement come under the original guarantee. Please help me as I cannot afford legal representation.

[Guest]

Re: Personal Guarantee Need Help

A personal guarantee is a separate contract, totally divorced from the loan or hire agreement that you were originally guaranteeing.

Unless you have specifically sought and been granted a release from this contract, your liabilities under the guarantee may continue, regardless of the fact that the van has been repossessed and the company is going into liquidation.

It may be possible to negotiate your way out of this, but you are going to need legal representation as a great deal will depend on the structure of the original contract.

[stevokenevo]

Re: Personal Guarantee Need Help

I was told years ago, a personal guarantee is like signing a blank cheque with no date on it.

The only person who can cancel that cheque is the person you wrote it too.

I think you will need to do a bit of negotiating.

[Shazzaw]

Re: Personal Guarantee Need Help

Hi all,

I'm in a similar position in that I have today received from Shakespeare Putsman solicitors a request for circa £15,000 that was an overdraft for my business which my accountant shut down / liquidated (unsure of the correct term) last year.

I think that in order to get the overdraft I had to sign a guarantee of some sort but do not have any of the paperwork relating to this.

Basically I simply have no way of paying this debt and will try to see what I can do.

My question is would it be worth (1) initially writing back to SP saying that the debt relates to an overdraft on a Ltd company busiess account and that I'm not persoanlly responsible for this ?? Basically just to see what they come back with?? Or (2) ask for them paperwork which says I am personally liable and see what they come back or (3) both??

Any advices as ever appreciated.

thx

shazzaw

[WendyB]

Re: Personal Guarantee Need Help

Well, the fact that it a Ltd company is neither here nor there, really, because once you give a personal guarantee the limited liability goes out the window. It might be worth writing to them and trying it on, and see what they come up with, then take it from there.

[Shazzaw]

Re: Personal Guarantee Need Help

Thanks Wendy.

I guess no harm in writing to them to see what they can provide me with in terms of paperwork signed. I'm assuming that like a credit card / loan they would have to provide a valid agreement?? Would any such agreement only be enforceable under CCA or because it relates to a business (although it's a personal guarantee) this not be the case.

Thx,

shazza

[WendyB]

Re: Personal Guarantee Need Help

I'm not really up on it, but I wouldn't have thought for a minute it would be covered by CCA. Basically, a personal guarantee is just that - you personally guaranteeing the loan/overdraft/whatever debt will be paid back by you personally if the circumstance arises. However, they still must provide proof that you actually gace the guarantee in the first place.

[Paule]

Re: Personal Guarantee Need Help

Thread moved to Business Debt forum.

PKea

[Former Director]

Re: Personal Guarantee Need Help

Thanks for that my argument is that the original hire agreement was for 35 months which I fulfilled they then set up a new agreement after this at a cheaper rate and there was no personal guarantee on the new arrangement!

[Guest]

Re: Personal Guarantee Need Help

Re-read the first sentence of post #2, your argument is simply not valid.