Help with personal liability for a business debt

[Gemmamoffat]

Desperate for help so hoping someone can advise please.

Had to go down a business strike off route to close my Ltd company as no longer financially viable and left with debts.
All ok other than a debt with Royal Mail. They have passed the debt on to a really aggressive debt collection agency who are not being understanding in the slightest.
So when I opened an account with Royal Mail I had to sign that I would be liable for the 1k credit limit they set due to the ltd business being new. I thought fine it’s not a huge liability.
Fast forward a few years and the invoices increased and the business now has a debt with them of over 3k as they allowed me to go over my credit limit.
Now the business is not trading and being struck off I am told by the debt collector that I am personally liable. I have asked for a copy of the contract I signed and they advised that Royal Mail do not get clients to sign financial contracts so there is no contract to evidence. I definitely posted a signed agreement back to royal mail’s finance department when I opened a business account with them so I don’t know why they would say this.
My invoices are billed as such Gemma Moffat TA Explore Crafts LTD
Can anyone advise where I stand legally with this as currently the debt collector is threatening court proceedings for the full amount which will then land me with a ccj which I absolutely can not have on my credit report. I have a mortgage etc to maintain.
Thanks in advance.

 

[japancool]

The danger is that, as a business debt, this isn't covered by the Consumer Credit Act.

If you did sign to make yourself personally liable then the burden falls on you, and they could take you to court. If they get a CCJ, they *could* take it to the High Court, and high court bailiffs can take control of goods - though I'm not sure what the likelihood of this is for £3k.

But if they can't prove it with a copy of the contract, they *may* find it difficult to get a judgment. I'm sure someone else will be along to give you better advice.

 

[Mark T Jones]

There are a few anomalies here
.foremost is that an individual can't trade as a limited Company- something I'm sure RM's accounts department will know

It will be telling to see how they went about setting up the account - eg did they ask for proof of incorporation or anything that suggested they knew they were dealing with a limited company

Then of course is that contract - does it exist? What does it say?

As an opener I'd simply tell their collections person that their customer, the Ltd company is subject to strike off and that you are not aware of any PG - so please go away and stop bothering me

 

[Gemmamoffat]

The danger is that, as a business debt, this isn't covered by the Consumer Credit Act.

If you did sign to make yourself personally liable then the burden falls on you, and they could take you to court. If they get a CCJ, they *could* take it to the High Court, and high court bailiffs can take control of goods - though I'm not sure what the likelihood of this is for £3k.

But if they can't prove it with a copy of the contract, they *may* find it difficult to get a judgment. I'm sure someone else will be along to give you better advice.

Thankyou. This is my thoughts if they don’t have a contract to show I signed to be liable then surely it can’t stand? It’s hurting my brain ?

 

[Gemmamoffat]

There are a few anomalies here
.foremost is that an individual can't trade as a limited Company- something I'm sure RM's accounts department will know

It will be telling to see how they went about setting up the account - eg did they ask for proof of incorporation or anything that suggested they knew they were dealing with a limited company

Then of course is that contract - does it exist? What does it say?

As an opener I'd simply tell their collections person that their customer, the Ltd company is subject to strike off and that you are not aware of any PG - so please go away and stop bothering me

Yes my account manager was very aware that I was a limited business but said sue to it being a new business I would have to countersign for liability or they wouldn’t give me an account. As far as debt collector insists there is no signed contract which I was assuming would go in my favour. Just scared to risk getting a ccj by fighting it unless I get solid advice that they will loose in court and not me.

 

[Gemmamoffat]

Yes my account manager was very aware that I was a limited business but said sue to it being a new business I would have to countersign for liability or they wouldn’t give me an account. As far as debt collector insists there is no signed contract which I was assuming would go in my favour. Just scared to risk getting a ccj by fighting it unless I get solid advice that they will loose in court and not me.

Are you saying that I should not have been able to sign to be personally liable with me having a ltd company to start with and that Royal Mail are infact in the wrong for doing this? I assumed this was legally allowed.

 

[Mark T Jones]

Are you saying that I should not have been able to sign to be personally liable with me having a ltd company to start with and that Royal Mail are infact in the wrong for doing this? I assumed this was legally allowed.

I'm not saying that - I'm saying that what you signed is a critical factor.

If there is no evidence of a signed contract then your case lies in demonstrating that the assumed contract was between RM & A limited company without guarantees.

 

[ChrisCallaghan]

Are you saying that I should not have been able to sign to be personally liable with me having a ltd company to start with and that Royal Mail are infact in the wrong for doing this? I assumed this was legally allowed.

Very much allowable. It is very common for any bank/lender to ask directors to sign a personal guarantee, and with overdrafts it is very standard.

If they hold a valid personal guarantee, I'd heed @japancool 's advice:

The danger is that, as a business debt, this isn't covered by the Consumer Credit Act.

If you did sign to make yourself personally liable then the burden falls on you, and they could take you to court. If they get a CCJ, they *could* take it to the High Court, and high court bailiffs can take control of goods - though I'm not sure what the likelihood of this is for £3k.

First and foremost though, I'd agree with @Mark T Jones ' advice:

As an opener I'd simply tell their collections person that their customer, the Ltd company is subject to strike off and that you are not aware of any PG - so please go away and stop bothering me

If they then can evidence to you that you signed a personal guarantee, it would then be time to start making sensible offers to pay this debt. If you would then like help on managing the repayment of this debt, I'd suggest contacting https://www.businessdebtline.org/

 

[Mark T Jones]

Yes my account manager was very aware that I was a limited business but said sue to it being a new business I would have to countersign for liability or they wouldn’t give me an account. As far as debt collector insists there is no signed contract which I was assuming would go in my favour. Just scared to risk getting a ccj by fighting it unless I get solid advice that they will loose in court and not me.

There are several steps prior to CCJ - which will entail them producing a package of evidence - which in itself might address these questions.

 

[Gemmamoffat]

I'm not saying that - I'm saying that what you signed is a critical factor.

If there is no evidence of a signed contract then your case lies in demonstrating that the assumed contract was between RM & A limited company without guarantees.

Thankyou so much. Will the invoices being made out with my name on and trading as have an impact on how the courts will view liability at all?

 

[ChrisCallaghan]

Thankyou so much. Will the invoices being made out with my name on and trading as have an impact on how the courts will view liability at all?

I don't think so. Assuming the account with Royal Mail is in the name of your limited company, it will boil down to whether you signed a personal guarantee.

Just to clarify, what is the name on the Royal Mail account? I'm assuming it is a bank account?

 

[Mark T Jones]

Thankyou so much. Will the invoices being made out with my name on and trading as have an impact on how the courts will view liability at all?

Nobody knows.

You need to focus on whether there actually is a contract with a PG. If there is, then you need to be looking at ways o pay, either by instalments or potentially a lump-sum offer.

If they can't find evidence of a PG, then demonstrate that the contract was clearly with the limited company.

 

[WaveJumper]

Have you not kept copies of contracts you signed seems the sensible thing to do when in business, you're not necessarily going to pass on any info but at least you would know where you stand in your own mind plus you'd have a pretty good idea what "problems" could be coming your way. Hopefully no other PG signed.

 

[japancool]

Have you not kept copies of contracts you signed seems the sensible thing to do when in business, you're not necessarily going to pass on any info but at least you would know where you stand in your own mind plus you'd have a pretty good idea what "problems" could be coming your way. Hopefully no other PG signed.

Presumably, if she had, the OP wouldn't be asking this question.

 

[Newchodge]

Thankyou so much. Will the invoices being made out with my name on and trading as have an impact on how the courts will view liability at all?

Do you mean that Royal Mail invoiced you personally, trading as something else? That may be an issue.

 

[kulture]

the important thing to do is calm down. Stop worrying so much. As stated above, say that you do not accept liability for the the debt. Say that you will only correspond in writing and that if they believe that you are personally liable, they must provide proof. Repeat this until they either provide proof or go away.

 

[WaveJumper]

Presumably, if she had, the OP wouldn't be asking this question.

Presumably, if she had, the OP wouldn't be asking this question.

Its pretty clear the OP knows they signed an agreement which carried a PG and for them and anyone else who comes along to read this, its a pretty good idea when in business to keep copies off contracts or anything else you may sign for that matter which carries a liability with it. You know just in case you have to refer back to it at some point. And I did mention even if they did its not something you may be wanting to disclose to those chasing you for payment BUT at least you know where you stand with this or any other liabilities which might be coming around the corner to catch you out.

As mentioned above OP can sit tight let them prove the liability but in the mean time (personally knowing that they possibly will) start to think of the best way formed for themselves and ill mention it again make sure you have not perhaps unwittingly signed any other PG's

 

[Mark T Jones]

its a pretty good idea when in business to keep copies off contracts or anything else you may sign for that matter which carries a liability with it. You know just in case you have to refer back to it at some point.

People are astounding!

As a matter of process, I email copies of docs to be signed a few days - sometimes weeks - before I turn up to sign them. The email suggests that they read / question / seek professional advice. 99.9% haven't even opened the attachments.

On signing I suggest that they take copies for their records (whilst there is no official cooling off period, in reality they can usually dip out at any point before the deal is paid out). Nearly all decline to do so.

Typically, the first we hear is year end, when their account asks to see contracts (Which will have been sent counter-signed by the lender & immediately lost).

 

[Chris Ashdown]

Personal Guarantees are often open ended in their wording especially with banks, whilst you may sign for a PG of say £1000 the wording is often for that amount or something along he lines of increasing as required (note just a loose interpretation,) but covers the banks from making multiple adjustments over time to meet your requests

 

[DontAsk]

So when I opened an account with Royal Mail I had to sign that I would be liable for the 1k credit limit they set due to the ltd business being new. I thought fine it’s not a huge liability.
Fast forward a few years and the invoices increased and the business now has a debt with them of over 3k as they allowed me to go over my credit limit.

I would argue they increased your credit limit, rather than simply letting you go over it, much like credit card providers do, or used to do. The contract will almost certainly have covered this eventuality.

I can't see this being settled in your favour.

 

[MBE2017]

Everything needed to be said was said in post 16 by kulture.

OP, until you find out what you signed and agreed to, you will not know what to do next.

 

[kulture]

The thing is I have never heard of the Royal Mail asking for a personal guarantee. I can’t help but wonder if it actually was a proper guarantee document that the OP signed.

Until they produce it, you should not admit any liability.

It is perfectly reasonable to ask for copies of contracts and proof of liability. Collection agents may bluff and bluster, and indeed my do so even louder when they don’t have the proper documentation, in an attempt to get you to admit liability.

 

[Newchodge]

The thing is I have never heard of the Royal Mail asking for a personal guarantee. I can’t help but wonder if it actually was a proper guarantee document that the OP signed.

Until they produce it, you should not admit any liability.

It is perfectly reasonable to ask for copies of contracts and proof of liability. Collection agents may bluff and bluster, and indeed my do so even louder when they don’t have the proper documentation, in an attempt to get you to admit liability.

That is why I think they have put the account in the OP's name, 'trading as'. see posts #10 and #15

 

[japancool]

in an attempt to get you to admit liability.

This is a good point - you haven't already admitted liability to them, have you?

 

[DontAsk]

That is why I think they have put the account in the OP's name, 'trading as'. see posts #10 and #15

But, as has been pointed out, Fred Smith Limited can trade as Joe Bloggs, but not vice-versa.

 

[Newchodge]

But, as has been pointed out, Fred Smith Limited can trade as Joe Bloggs, but not vice-versa.

I know. But if Royal Mail invoiced Gemmamoffat trading as something else, where is the Ltd company in that scenario? If it said trading as something else Ltd, fair enough, but I don't think they are that stupid.

 

[Mark T Jones]

OP, until you find out what you signed and agreed to, you will not know what to do next.

This.

Without that it's all conjecture and guessing.

 

[japancool]

If it said trading as something else Ltd, fair enough, but I don't think they are that stupid.

According to gemmamoffat in the OP, that's exactly what they did though...

 

[Gemmamoffat]

Very much allowable. It is very common for any bank/lender to ask directors to sign a personal guarantee, and with overdrafts it is very standard.

If they hold a valid personal guarantee, I'd heed @japancool 's advice:


First and foremost though, I'd agree with @Mark T Jones ' advice:


If they then can evidence to you that you signed a personal guarantee, it would then be time to start making sensible offers to pay this debt. If you would then like help on managing the repayment of this debt, I'd suggest contacting

Thanks so much! Apparently they have no signed contract from me ?‍

Very much allowable. It is very common for any bank/lender to ask directors to sign a personal guarantee, and with overdrafts it is very standard.

If they hold a valid personal guarantee, I'd heed @japancool 's advice:


First and foremost though, I'd agree with @Mark T Jones ' advice:


If they then can evidence to you that you signed a personal guarantee, it would then be time to start making sensible offers to pay this debt. If you would then like help on managing the repayment of this debt, I'd suggest contacting

There are several steps prior to CCJ - which will entail them producing a package of evidence - which in itself might address these questions.

There are several steps prior to CCJ - which will entail them producing a package of evidence - which in itself might address these questions.

perfect! Will I have an opportunity to offer a payment plan if they do pull any evidence of a contract out the bag once they send to the courts?

Very much allowable. It is very common for any bank/lender to ask directors to sign a personal guarantee, and with overdrafts it is very standard.

If they hold a valid personal guarantee, I'd heed @japancool 's advice:


First and foremost though, I'd agree with @Mark T Jones ' advice:


If they then can evidence to you that you signed a personal guarantee, it would then be time to start making sensible offers to pay this debt. If you would then like help on managing the repayment of this debt, I'd suggest contacting

I don't think so. Assuming the account with Royal Mail is in the name of your limited company, it will boil down to whether you signed a personal guarantee.

Just to clarify, what is the name on the Royal Mail account? I'm assuming it is a bank account?

So the invoices are addressed to Gemma Moffat T/A Explore Crafts LTD. I had an online business account which is in the name of Explore Crafts and then invoices were paid via direct debit directly from the business bank account

 

[Gemmamoffat]

Do you mean that Royal Mail invoiced you personally, trading as something else? That may be an issue.

Yes my name and trading as the ltd business name are in the invoices

 

[Gemmamoffat]

I would argue they increased your credit limit, rather than simply letting you go over it, much like credit card providers do, or used to do. The contract will almost certainly have covered this eventuality.

I can't see this being settled in your favour.

Thanks for the honesty I strongly suspected this myself

 

[Gemmamoffat]

This is a good point - you haven't already admitted liability to them, have you?

No I haven’t

 

[Gemmamoffat]

According to gemmamoffat in the OP, that's exactly what they did though...

Correct

 

[japancool]

No I haven’t

Sometimes, the most unexpected, and common things that we would routinely say can be taken as acknowledgment.

You said they were being completely unreasonable - whay conversations have you had with them so far?

 

[DontAsk]

So the invoices are addressed to Gemma Moffat T/A Explore Crafts LTD.

Did they decide that, or did you tell them that was the business name?

It does sound like they think you are a sole trader, but missed the Ltd bit.

 

[Elliot Green]

For a PG, if there is no consideration then if it is not set up as a deed it *might* be unenforceable.

However if the account has been set up as a sole trader account it is improbable a PG would have been put in place as there would be no need.

 

[dylanmarlais]

You really do need to see the personal guarantee if it exists and if Royal Mail have a copy of it. They must prove the debt. Deny that there is a personal guarantee. Say that you have no recollection of signing a personal guarantee. It is for them to prove otherwise. Make no admissions. If a personal guarantee is provided, the wording is all important. Before taking proceedings they must comply with the pre-action protocol and set out the basis of their claim. The claimant will be Royal Mail. They must evidence the personal guarantee. You will be given time to respond. Do not allow the debt collection agency to bully you.

 

[Michael Loveridge]

Firstly, it's only Royal Mail who can take court proceedings against you unless they have assigned the debt to the debt collectors (in which case the debt collectors would have had to send you notice to that effect). The debt collectors (unless they're solicitors) cannot issue court proceedings themselves.

Secondly, whether it's Royal mail or the debt collectors pursuing the claim they MUST comply with the debt protocol - https://nationaldebtline.org/fact-sheet-library/pre-action-protocol-in-the-county-court-ew/ before issuing any court proceedings.

If, as sounds likely, the debt collectors (and please name them for the benefit of other readers) they haven't complied with the protocol you should reply to them saying that you intend to report them for this very serious failure to the Financial Conduct Authority with a view to having their Consumer Credit Licence (which they need to do debt collection) revoked.

But as others have said the first thing you need to do is to contact Royal Mail directly in writing and demand that they supply you with a copy of the contract they are trying to enforce. Until you've seen exactly what it is you're dealing with nobody can advise you what to do.