Bank started the chase over an Over Draft

[franz2417]

Hi folks,

 

This is my first post. I have done a lot of reading and I am still really confused as to where I stand.

 

Long story short:

 

In 2007 my business partners and I were in the midst of acquiring a company. Our bankers at that time would not extend any further business credit under PGs or any terms (more on that later!). They wheeled in a personal banking partner though who said they would look at three personal loans of £40K to allow us to raise the total of £120K to acquire the business.

 

As it transpired, the bank opened three personal accounts with an overdraft limit of £40K on each account.

 

Things are a bit sketchy at this point as I was taken seriously ill and hospitalised for a period. My record keeping is frankly appalling and I regret this severely now.

 

I cannot remember signing any loan agreement, although I do have a vague recollection of signing to open the account.

 

Longer story short!

 

The original company we acquired using the 3 x £40K o/d was forced into administration by said bank in June last year.

 

They are currently starting the process to get back money owed under business PG's (I will need to open a different thread on this one) and have sent polite (I mean it) letter asking for my plans on how I will repay the £40K.

 

Up until now the old business and the new business have been servicing the interest on the £40K overdraft for two of the directors. I have no idea what has been happening for the third director as he left the business under a cloud before the administration.

 

We (my fellow director and I) have been keeping in contact with the bank regarding this, however I know this pleasant dialogue won't go on for ever and eventually they will set the dogs loose.

 

We have asked to see signed copies of paperwork (again informally) but they have "parried" us off, and not produced anything.

 

I guess my question is where do we stand with regard to this debt. The business can barely afford to support the interest let alone a repayment of the full amount, and personally, there is no way I can see that I will be able to service the debt personally, however I do acknowledge that the bank did hand over an overdraft.

 

I am not sure where to begin? Do I let it go legal? Do I ask them to convert it to a loan? Would they accept a final offer? I am lost!

 

I would forward to some free and frank comments on this.

 

Many thanks

 

Joe

 

I should say that I am in Scotland.

[franz2417]

Bumping. Does anyone have any advice on this? Please?

[miss muppet]

Franz, is this a limited company? Have you seen any paperwork for the personal guarantees? This is a tricky situation isen't it? Depends whether you think the company could service the loan and going that way, if things go wrong and they will almost certainly tie you into all sorts of guarantees to make the loan secure against any property you and your fellow director have privately, then what happens if you fail to keep up the payments? On the other hand if you decide to go up against them now, the first thing to do is a subject access request, £10 postal order and neither of you sign recorded delivery and see what they come up with, it does seem odd that they are not coming up with any paperwork at present.

[franz2417]

Hi There. Thanks for getting back to me.

It's a bit complicated.

 

We acquired two companies in 2006/2007. There were PGs in relation to the first acquisition to cover lending and overdraft.

 

The second company was acquired using three personal overdrafts of £40K.

 

Would raising a SAR now start the alarm bells ringing at their side. Presently they are not taking an aggressive stance. My worry is that if we raise a SAR they will see this as us being defensive, and then start to pursue us aggressively.

 

Also, why shouldn't we sign recorded delivery?

 

Many thanks for your advice.

 

Joe

[miss muppet]

I cannot remember signing any loan agreement, although I do have a vague recollection of signing to open the account.

 

Thats why - its possible they have plenty of your signatures already but at least not signing removes the temptation for a bit of blue peter work on the Bank's behalf.

 

Yes sending the SAR would raise their hackles but are you confident of the company's ability to service any new agreement?

[franz2417]

In short, I'm not sure the company would be able to service the debt going forward. And personally I know I can't service a £40K loan. I just don't know what to do. At the moment the bank are asking for "my suggestions" on how I will repay my obligations. I am at a loss how to answer this question.

 

Thanks

 

Joe

[miss muppet]

Its a dilemma Franz but what you have to remember is that this is not a moral question but a legal one, posting a link which shows just what Banks can be capable of:-

 

http://www.consumeractiongroup.co.uk/forum/legal-issues/241742-hushpuppy-round-1-hushpuppy-13.html

[franz2417]

Hi Miss Muppet,

 

Many thanks on sticking with me on this one. I have had a good read of the Hushpuppy thread and it would appear that the banks can indeed flex their muscles, however it does look like Hushpuppy may win this one!

 

My current dilemma is that I don't know how to respond to the banks request for suggestions on how I will repay. Clearly I can't ask them to convert the full amount to a loan over XX years as I simply can't afford repayments of any more that £100 per month (for example)

 

Would I go back and say that I could offer to repay at £100 per month, or offer a full and final settlement of a percentage of the amount owed? (I have a mortgage renewal coming up)

 

And if I take that approach, what would position would the bank likely take?

 

Sorry for the scattergun approach with the questions, but I can feel the panic rising!

 

Joe

[franz2417]

Hi Miss Muppet,

 

Many thanks on sticking with me on this one. I have had a good read of the Hushpuppy thread and it would appear that the banks can indeed flex their muscles, however it does look like Hushpuppy may win this one!

 

My current dilemma is that I don't know how to respond to the banks request for suggestions on how I will repay. Clearly I can't ask them to convert the full amount to a loan over XX years as I simply can't afford repayments of any more that £100 per month (for example)

 

Would I go back and say that I could offer to repay at £100 per month, or offer a full and final settlement of a percentage of the amount owed? (I have a mortgage renewal coming up)

 

And if I take that approach, what would position would the bank likely take?

 

Sorry for the scattergun approach with the questions, but I can feel the panic rising!

 

Joe

[miss muppet]

I think you are being remarkably level headed. The trouble is I think the advice most people would give you and is certainly what most people do with credit cards is to CCA them to see if they actually have any form of written and signed agreement but as you know overdrafts are a little more tricky. Also, you have said you are frightened of raising their hackles if you send them an SAR but usually peeps find that if they (the bank) haven't got the paperwork in order it tends to make them more reasonable regarding full and final offers or repayment plans. £100 a month sounds a very good offer but are you going to be stuffed if they still add interest which they could well do. I had this with one of my CC's and was paying the same amount as you have quoted, they let this run for 6 months and then said I had to send in an Income/Expenditure and had started adding interest. CCA'd them, no agreement, stopped paying and heard not a peep since.