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Comparison on PG Debt call for Joint and Several Bank debt claim

Independent Banking Advisory Service (IBAS) - launched in 1992 as a specialist unincorporated business banking membership organization assisting bank customers with UK business banking account loan disputes and business banking debt disputes with their bank. Our analysis and investigation of business bank loans, bank accounts, banking contracts, business banking account facilities and banking debt recovery information has been instrumental in our member's success.

IBAS is now in it's 25th year helping/guiding those with UK Business Banking disputes and Director's Personal Guarantee business debt claims - IBAS is the only UK non profit organization which provides business banking customers with specialist business banking assistance and specialist business banking guidance and also IBAS specialist business banking investigations.

The first question in your mind when you receive a demand on your personal guarantee will probably be is this personal guarantee valid?

Also, your next question should be can this personal guarantee be contested in any way - if so how?

Contact IBAS to see how we may help you

Banks seek security for lending in many ways - but the Personal Guarantee has proved to be the easiest and the simplest way for a banker to take security (and the least resisted by the customer) particularly when bankers have not been truthful and stated: ʻitʼs only a piece of paperʼ or ʻthe bank will never rely on itʻ or when security on the home is being taken - plus, the well used banker's phrase of: ʻdonʼt worry we will never take your home, even if the business failsʼ - a great many customers have since found that phrase was completely untrue!

These are areas in which IBAS has been ʻworkingʼ since 1992. We have found over time through our investigations that what was said before the personal guarantee signing or before other security for borrowings was taken is probably the most contested ʻbanking relationshipʻ dialogue. We do not think there is any mystery to that.

Whilst bankers are very well aware of the legality of the signed Personal Guarantee - because their banking exams specifically cover all aspects of taking valid security for the bankʼs benefit and how the bank will enforce on it later when required - it is often the ʻsellingʼ of the signing of a personal guarantee for a business which has been ʻmiss statedʼ by bankers - due to the bankers quest to obtain the maximum security for their lending and for meeting loan/account/security targets.

IBAS investigation on such matters focus on obtaining all information and evidence to properly investigate not only the circumstances of the lending but also the circumstances around the taking of all security by the bank.

IBAS has specialized in Director's Personal Guarantee advice & help in UK debt disputes and Guarantee validity issues since 1992.

As one of our members stated: "I discovered IBAS via a Google search for “personal guarantee advice”. Until this point I didn’t know that such an organization existed. At the same time I had also started talking to a number of solicitors about my position. The reason that I put my faith in IBAS was that it was clear they had extensive knowledge about PG’s. It seems to be a very specific area of law and whilst the solicitors were very gung ho it was clear they did not have as much specific expertise as IBAS. Since taking on my case IBAS have provided detailed, accurate and realistic advice. They are comfortable handling the various tactics deployed by the banks and provide strength and support during what can become a very stressful situation. I would probably have caved in or lost had IBAS not been handling my case." - MJ

Directors Joint & Several Personal Guarantee debt claim

Joint and Several Personal Guarantee liability provides the bank with legal assurance that each of the signatories to the agreement will be held 100% liable for the full outstanding debt. It is not (as many believe) a shared or 'proportionate debt' which may then be equally divided between the directors once demand has been made. Also, the directors being claimed against for a personal guarantee claim by the bank/lender will have different assets and their available equity may vary considerable - which can 'tilt' the bank/lenders strategy at debt recovery. Any joint and several personal guarantee or mortgage agreement will state that each director or partner is liable to pay the full amount of the debt. 

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"I am really grateful to IBAS for the support and advice received over a personal guarantee I signed with HSBC. When the business went into administration in 2008,  I immediately sought legal advice with a local solicitor. After two years of legal correspondence, I received Court Papers claiming the full amount of the debt. The guarantee was joint and several with two other business partners and it was called upon for all three of us. After receiving the Court papers I realized I needed to receive more specific and expert advice. I found IBAS through an Internet search and after my case was accepted in Feb 2011, I was advised I did not have a defence and the most sensible option was for me to negotiate a payment with HSBC through IBAS. HSBC eventually accepted my final offer. My other two business partners both decided to go to Court - unfortunately losing their cases and receiving summary judgments. They are now both waiting for the judgment to be executed with the risk of HSBC enforcing the order with an order for a sale of their properties. Thank you IBAS for looking at my case so promptly and efficiently and for guiding me to make the right decision - however difficult it was." - SS

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Comparison of results for three directors faced with Joint & Several Personal Guarantees debt claims for a Limited Company business debt claimed by the bank - (Joint & Several liability (of a legal obligation) means - an obligation undertaken by two or more people, each individual having liability for the whole).

Director ‘A’ - Director's Joint and Several Personal Guarantee debt claim was settled on IBAS advice and a negotiated settlement achieved - the other two Directors (B & C) proceeded to court on the same Joint & Several Director's Personal Guarantee debt liability claim, one by using ‘DIY’ defending and the other using solicitor’s advice.

IBAS has been able to compare the results of directors personal guarantee advice and help directly provided by IBAS to Director ‘A’.

Director 'A' sought and then took IBAS advice from the start of the bank's claim until IBAS resolved the bank's claim. The other two ex directors (B & C) both defended the bank’s claim until Judgment was obtained by the bank - against them both.

IBAS provided the best strategy to obtain the best result possible for Director 'A' on the bank's director's joint & several personal guarantee debt demand.

Director ‘B’ continued with ‘DIY defending’ using ‘internet forum type’ arguments which are unfortunately often completely inaccurate, unworkable or out of date.

Director ‘C’ took a solicitor’s advice and defended the bank's legal claim on the director's bank personal guarantee using that advice.

All three Directors family homes were ‘at risk’ from the bank’s debt claim which was due to the Joint & Several Director's Personal Guarantee which they had all signed.

Once we established that there was no defence to the bank’s claim and the Director's Personal Guarantee Joint & Several liability was fully and legally claimable by the bank, IBAS was totally objective and factual with our member. Defending a bank’s claim up to judgment where a defence does not exist will incur extra legal costs. Those extra costs are inevitably added to the debt itself and that may mean the family home is lost as a result.

IBAS strongly advised our member to limit their exposure to the bank’s claim and to protect their position. The member agreed and IBAS started negotiations with the bank’s solicitors. IBAS continued negotiating with the bank’s solicitors on our member’s behalf and advised our member at what level settlement should be aimed.

Director ‘A’ settled after IBAS advice. Any Director facing demand for payment from a director's personal Guarantee debt liability or debt claim should note that based on these figures which were calculated up to Judgment, that - IBAS provided Director A with exceptional value for the result that we gained for them.

Director ‘B’ & Director ‘C’ continued to defend the bank’s claim right up to judgment and due to this continued legal action further costs then arose for which they were liable.

Both Director ‘B’ & Director ‘C’ lost their defence and both Directors received Judgments against them personally for the full claim, which inevitably included the further costs and fees for continuing their defence actions. Both Judgments for debt will inevitably be followed by a Charging Order over marital homes, which will also add a further fee cost plus Statutory Interest on the debt (currently at 8% per annum).

However, if no payment is agreed to satisfy the Judgment Debt - the bank may also apply for an ‘Order for Sale ’ of their property. That would require the bank to satisfy the court that this is the only way to obtain payment in order to ‘discharge’ the Charging Order and would also be the additional ‘sting in the tail’ for those continuing to defend where real defences do not exist.

IBAS is a highly experienced and specialist membership organization (Established in 1992) and used to resolving Director's Personal Guarantee, Personal Guarantee/Indemnity issues and business banking disputes. Our aim is to provide the best professional advice and direct assistance to protect our members. IBAS offers specialist and individual Personal Guarantee advice and assistance and will establish how best your Personal Guarantee may be negotiated.

Summary of results:

Director ‘A’ received IBAS's individual and specialist professional advice.IBAS advice proved to be the most effective strategy and for Director ‘A’ that meant not only did they save a lot of money - but also:

Director ‘A’ had the stress and worry of the bank’s claim against them removed.

Director ‘A’ does not have their home at risk from any attack by the bank from the PG claim.

Any Director facing demand for payment from a personal Guarantee debt liability should note that IBAS value in this case to Director ‘A’ was exceptional.

Director 'B' & 'C' both face a much larger debt and and Director 'C' also paid their own solicitor's costs and fees.

Judgment against both Director 'B' and 'C' means they both face a debt of £70k more than the settlement figure achieved by IBAS for Director 'A'. They also face extreme pressure after Judgment with a very uncertain and stressful future.

The facts from this case prove that IBAS's individual and specialist professional advice and strategy is extremely effective for business banking claims and Director’s Personal Guarantee ‘calls’ or debt claims and it could ‘tip the scales’ for you.

IBAS 'case work' experience since 1992 has shown us how banks operate. IBAS has specialist knowledge, gathered from IBAS investigations of business banking account disputes over time and all IBAS knowledge and experience is used on your 'case' - no other organization has either our experience or IBAS knowledge.

Bank debt recovery officers are trained to control conversations with customers once they have them on the phone. Bank debt recovery officer's training and their legal knowledge at debt recovery provides banks with a distinct legal and also psychological advantage. Particularly, when the customer is attempting to 'negotiate' themselves using the telephone. It is not an ordinary conversation and the customer is immediately placed under pressure and at a disadvantage as the bank's debt recovery officer takes control of the conversation to obtain what they want - which is information to use against you. They are not employed to 'advise' you - they are employed by the bank specifically to protect the bank and get your money from you. Customers have little knowledge of a bank's debt recovery strategy or how it operates but Bank debt recovery units are very skilled in defending the bank's position and are trained to use their legal position and knowledge to prevent defences from arising at an early stage in the bank's claim. That is why they seek your asset/income information - as a first priority. Immediately, they are provided with that information the customer is under pressure for payment regardless of any disputes or complaints which you may have previously raised.