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MY SITUATION :

 

Ltd company just gone into liquidation, I have signed 5 personal guarantees. My other half has signed on two personal guarantees.

 

1) property lease- 1 year to go 30k realisation.

2) 2nd property lease- 5years (40k a year) 200k total realisation.

3) Business invoice finance ( any short fall, hopefully this should be zero)

4) LEase rental agreement on machinery (52 months 5k monthly)

5)Bank overdraft 20k

 

the last two guarantees being signed by both of us.

 

I have no assets, no house etc.... my other half owns the house mortgage 200k value of property 215K if we are lucky probably close to negative equity. (we hope)

Really need advice as what to do I have been offered employment with my salary covering existing mortgage payments and would be able to keep all bills paid.

BUT what is the likely course of action of the creditors with PGs will I be forced to sell the house even with no equity, will they just file for bankruptcy, or should we both go bankrupt before they start hounding me, bailiffs etc...

 

Really do not know what will happen? any enlightenment would appreciated.

 

Sorry for such along post but I'm pretty worried and stressed with my situation.

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If you have little or no equity and you can realistically afford to keep the house then it is likely that Bankruptcy is your best option for both of you. With the amount you owe even if you lose the house then it is likely ot be your best solution.

 

Some info here http://www.consumeractiongroup.co.uk/forum/formal-solutions-bankruptcy-administration/56970-insolvency-dealing-debt.html

 

Have a read and come back with any questions you have.

Consumer Health Forums - where you can discuss any health or relationship matters.

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Thanks for the reply relly needed someones input.

 

I had a look at your advice, in my situation do I wait to be made bankrupt or do I go ahead with it myself.

Do you think i will have bailiffs knocking on my door regularly?

 

Most of my debts are related to a failed business I do have a couple of personal credit cards , i have savings to clear these should I clear them( ie would it be favourable in the eyes of OR if my debts were only those associated with ltd company ) a early discharge perhaps.

 

or

 

is it a case that nothing will help in my favour in the eyes of the OR

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Just to clarify : the debts of the limited company are separate from yours. If the company is in liquidation then its debts are payable by the liquidator from company's assets.

In your case the assets consist of (at least) some machinery - or has this been reclaimed by the vendor?

 

You have personally guaranteed some of these debts, and you guarantees can be viewed as assets of the company if you like. Hence your own company (as well as the creditors) is looking to you to make good on your guarantee. If you are unable to do so then you are in a bit of bother.

 

Have you told the creditors of the situation? You might be able to get a sympathetic hearing from them with the prospect of deferred and/or reduced payments.

In the case of the leases can you sublet or sell? I appreciate this may be very difficult at the moment because of the recession.

In the case of the machinery can you ask the vendor to take it back with some credit against the outstanding amount? Again this may be difficult.

Can you ask the bank to freeze interest? Unlikely as banks are looking to recoup their losses through penal interest rates on people such as yourself.

 

As for business debts not covered by guarantees I'm afraid you will have to tell the creditors they are going to be out of pocket. From personal experience I know you will get a pretty hostile reaction - after all, no-one likes being told they have lost a significant amount of money.

 

As for your personal debts, again you will have to make arrangements where possible with creditors. Don't expect any sympathy with banks and credit card companies. In one instance the credit card company upped the interest by more than 20% as soon as she advised them.

As for your wife's personal debts I guess the same applies.

 

Are the personal guarantees secured (eg. on your house)? If not then there is no prospect of a forced sale as things stand. You will need to be aware that creditors can chase both of you for the debts, and if one of you is unable to pay the full amount then the other one will be pursued for the balance. There is no concept of 'equal' shares here.

 

As for bankruptcy the company debts are of no interest to the Official Receiver. You and the company are two separate entities and it is only you that is going bankrupt. The personal guarantees are your personal obligations (debts) and, because they relate to yourself, will be of interest to the OR.

Instead of going bankrupt have you considered an IVA? You say you have the prospect of a job and this might help you to pay this off. It will almost certainly mean that some of the debt may be written off when the IVA finishes. I'm not knowledgable on IVAs so you need additional advice here.

I really do appreciate all those 'thank you' emails - I'm glad I've been able to help. Apologies if I haven't acknowledged all of them.

You can also ding my gong if you prefer. :)

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Thanks for the reply relly needed someones input.

 

I had a look at your advice, in my situation do I wait to be made bankrupt or do I go ahead with it myself.

Do you think i will have bailiffs knocking on my door regularly?

 

Most of my debts are related to a failed business I do have a couple of personal credit cards , i have savings to clear these should I clear them( ie would it be favourable in the eyes of OR if my debts were only those associated with ltd company ) a early discharge perhaps.

 

or

 

is it a case that nothing will help in my favour in the eyes of the OR

 

Personally I would hang on ot the savings and use the money first to pay the BR fees and buy any essential itms you may need eg stock up the cupboards and freezer, the car may need a service and you may both need winter coats and shoes. Whne you go BR you will need a few hundred in cash whilst you sort out new bank accounts to cover your day to day living - anything over that will be taken by the OR. At this stage you should not be giving any creditor preferential treatment, only your priority bills which are mortgage council tax etc.

 

Just to clarify : the debts of the limited company are separate from yours. If the company is in liquidation then its debts are payable by the liquidator from company's assets.

In your case the assets consist of (at least) some machinery - or has this been reclaimed by the vendor?

 

You have personally guaranteed some of these debts, and you guarantees can be viewed as assets of the company if you like. Hence your own company (as well as the creditors) is looking to you to make good on your guarantee. If you are unable to do so then you are in a bit of bother.

 

Have you told the creditors of the situation? You might be able to get a sympathetic hearing from them with the prospect of deferred and/or reduced payments.

In the case of the leases can you sublet or sell? I appreciate this may be very difficult at the moment because of the recession.

In the case of the machinery can you ask the vendor to take it back with some credit against the outstanding amount? Again this may be difficult.

Can you ask the bank to freeze interest? Unlikely as banks are looking to recoup their losses through penal interest rates on people such as yourself.

 

As for business debts not covered by guarantees I'm afraid you will have to tell the creditors they are going to be out of pocket. From personal experience I know you will get a pretty hostile reaction - after all, no-one likes being told they have lost a significant amount of money.

 

As for your personal debts, again you will have to make arrangements where possible with creditors. Don't expect any sympathy with banks and credit card companies. In one instance the credit card company upped the interest by more than 20% as soon as she advised them.

As for your wife's personal debts I guess the same applies.

 

Are the personal guarantees secured (eg. on your house)? If not then there is no prospect of a forced sale as things stand. You will need to be aware that creditors can chase both of you for the debts, and if one of you is unable to pay the full amount then the other one will be pursued for the balance. There is no concept of 'equal' shares here.

 

As for bankruptcy the company debts are of no interest to the Official Receiver. You and the company are two separate entities and it is only you that is going bankrupt. The personal guarantees are your personal obligations (debts) and, because they relate to yourself, will be of interest to the OR.

Instead of going bankrupt have you considered an IVA? You say you have the prospect of a job and this might help you to pay this off. It will almost certainly mean that some of the debt may be written off when the IVA finishes. I'm not knowledgable on IVAs so you need additional advice here.

 

An IVA is not really suitable for many people and with this level of debt the repayments would be around a minimum of £3.5k per month.

Consumer Health Forums - where you can discuss any health or relationship matters.

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