What can you do if you have guarantors on loan but struggling to pay

Discussion in 'Insolvency' started by Rebecca1982, Oct 13, 2018.

  1. Rebecca1982

    Rebecca1982 UKBF Newcomer Free Member

    6 0
    Im looking to try and get some help im absolutely desperate for some legal advice, my partner bought a mobile sandwich van he got finance ( nationwide corporate finance/alfandari)to pay and his mother and stepfather are guarantors on it as they own their own house ,we are really struggling with the repayments and don't know what to do , the people who sold us the buisness were not honest with us so the cafe isn't covering the loan , the payments started in jan this year and the cost is approx 300 every week over a period of 4 years ,the business cost 40,000 and APR 49% , we have spoken to a soliticor who advised to ask his mother to get equity release on the house then to pay off the finance company with that ,then pay her back , when we asked for a settlement cost they have come back with 57,000 , we feel this is just morally wrong ,can they do this ? Do we stand anywhere regarding anything ? Regards Becky
     
    Posted: Oct 13, 2018 By: Rebecca1982 Member since: Oct 13, 2018
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

    9,765 1,018
    Well if you don't pay your guarantors are chased for payment as they agreed.
     
    Posted: Oct 13, 2018 By: Mr D Member since: Feb 12, 2017
    #2
  3. Rebecca1982

    Rebecca1982 UKBF Newcomer Free Member

    6 0
    I know this but what I mean is are there any ways around it as it's not an option for his mother to lose the house
     
    Posted: Oct 13, 2018 By: Rebecca1982 Member since: Oct 13, 2018
    #3
  4. Mr D

    Mr D UKBF Legend Free Member

    9,765 1,018
    Pay the required payments. Or clear the debt - those are the only two I can think of. Money is payable, the lender seeks to collect one way or another. They take a risk lending to a business, to be honest a home loan would have been a LOT lower percentage cost.
     
    Posted: Oct 13, 2018 By: Mr D Member since: Feb 12, 2017
    #4
  5. Rebecca1982

    Rebecca1982 UKBF Newcomer Free Member

    6 0
    We looked into his mum getting equity on her house but the amount wouldn't cover what we owe
     
    Posted: Oct 13, 2018 By: Rebecca1982 Member since: Oct 13, 2018
    #5
  6. Simon Green

    Simon Green UKBF Regular Free Member

    109 9
    Personal Bankruptcy is the quick fire option for this one! Is his mother fully aware of your business predicament?
    And are you absolutely clear and certain that a personal guarantor was signed into law?
    If the answer to my last question is Yes then the quick fire option will bring fundamental closure and end, that way you can all move on.
     
    Posted: Oct 13, 2018 By: Simon Green Member since: Dec 4, 2017
    #6
  7. Lisa Thomas

    Lisa Thomas UKBF Enthusiast Free Member

    2,251 276
    Bankruptcy is not necessarily the best option - you need to get some insolvency advice and explore the options available to you of which Bankruptcy might be the best solution.

    Sion has suggested you go Bankrupt and 'move on' but your MIL's house will then be at risk due to the guarantee.

    This may be the ultimate end result but please take proper advice before making that decision from someone who has your full financial picture rather than a quick fire e-mail on a forum including mine.
     
    Posted: Oct 15, 2018 By: Lisa Thomas Member since: Apr 20, 2015
    #7
  8. Phil Meekin

    Phil Meekin UKBF Contributor Full Member

    53 8
    Hi Becky
    You are in a very difficult situation and I agree with Lisa, don't just jump into bankruptcy. It might be the best option but you need to exhaust other avenues. Although you have taken advice from a solicitor, I would be tempted to speak to another for a second opinion - the first meeting is usually free.
    You need to choose a solicitor who deals in commercial litigation (not with a view to going to court - that's very expensive) but to look at the whole picture.
    • Did your partner's parents understand the implications of what they were signing (were they offered independent legal advice?); if not the guarantee may not necessarily be enforceable.
    • Are they elderly / vulnerable?
    • Let the solicitor examine a copy of the guarantee.
    • If they do go down the equity release option you may be able to settle for a "full and final" amount - less than the £57k. Everything is negotiable - this may be feasible
    • It sounds as if you may have been given false information by the vendors of the business, but pursuing that would be difficult / expensive.
    ...and then I would speak to an insolvency practitioner who can consider "the big picture" and base advice on all the circumstances.
    Cheers
    Phil
     
    Posted: Oct 15, 2018 By: Phil Meekin Member since: Apr 10, 2018
    #8