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Independent Banking Advisory Service |
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Personal Guarantee, Personal Guarantees and Demands for Payment Provided a Director's Personal Guarantee to secure company bank business loan or bank overdraft? Worried about losing your home from the Bank's demand on your Director's personal guarantee? Do you have concerns regarding your personal asset position from a joint & several Director's Personal Guarantee? Personal guarantee now been 'called' and the bank has demanded payment immediately - do you understand what that means and how they will pressure you and why? Received a bank demand for a personal guarantee? - contact IBAS today - the bank will increase the pressure if you wait. An email to us will obtain our help and advice very quickly - please tell us which bank is involved and outline the issues and exactly what happened. Our response will start you on the first step to finding out what can be done and how to do it. What difference might IBAS make for you? IBAS IBAS is the most experienced organization in this field with 20 years 'track record' in Banking cases and resolving Director's Personal Guarantee issues. Our aim is to provide the best professional and personal Banking and Personal Guarantee advice service to protect our members at a low and affordable annual membership. The current practice for bank (and all banks) 'chasing' payment from a Personal Guarantee demand debt is for their debt recovery unit to obtain (by any means possible) a signed asset/expenditure form or personal financial statement. That is now obtained immediately at or after demand on a Personal Guarantee. A signed form will provide the bank with their first 'counter' to any possible defence/s. Signing any financial disclosure or providing the bank with such personal information will often destroy any later attempt to negotiate the debt on the Personal Guarantee. Some bank debt recovery officers telephone customer's immediately after demand to gain an immediate payment proposals - this will then allow the bank to enforce the debt legally and quickly. Enforcement inevitably means 'pressure' on the family home. Example A: The following statement was posted online: "The fact that IBAS have the knowledge and provide assistance in formulating the strategy, which was provided to me under membership and which provided the necessary case law ammunition and support (letters continually making the correct points) to prevent the bank gaining the upper hand (preventing me making offers which I wanted to make, just to get this case against me closed, and which would have destroyed any defence) - that strength of position then also enabled me to 'face off' the bank's threat (although the bank/solicitors knew their claim was flawed) and this strength of resistance then forced them to discontinue their action - this is all a matter of fact and something which IBAS should be very pleased about." & "I understand that so many cases are lost before they start because under threats from the bank the customer provides an offer of payment - without understanding there may be a defence to the bank's claim. Having been induced to make that offer, the bank then goes for the jugular. Apparently I am one of a very small band of successful litigants, which I wouldn’t have been without IBAS behind me." This case illustrates how cautious a guarantor needs to be - and how dangerous Director's Personal Guarantees are for those who have signed them. It also illustrates how IBAS guides those with Personal Guarantees in a resolution - but each case 'turns on' it's own facts and full information. The 'full' information is rarely immediately available. Therefore, telephone advice sought or taken at the time of a 'call' by the bank on the Personal Guarantee is a very risky strategy for any PG provider - and should be avoided. Anyone receiving a Personal Guarantee debt claim should not attempt to talk or negotiate with the bank - or attempt to answer the demand in any way. Those being chased for a Director's Personal Guarantee demand may also be interested to read our chief executive's article in 'Your Business' September 1994 which evidences how many PG complaints IBAS were receiving then! What does IBAS membership offer you? It is impossible for an individual faced with personal guarantee demand and debt claim to compare their situation with any other but IBAS is dealing with such matters daily and advises members based on individual bank attitudes and practices. IBAS membership provides the opportunity to fully investigate a personal guarantee demand for any flaws. IBAS PG membership provides experienced and professional help gained from having worked on a large volume of business banking cases and personal guarantees over 20 years - which means we can quickly identify personal guarantee demand exposure, possible defences and the actions necessary, whilst we advise and deal directly with the bank on your behalf. Example B: Mr A’s Father in law (Jack) wanted to help in Mr A's business expansion - so the bank sought a personal guarantee from Jack and also his wife (Judy) for a guarantee for 40k. The guarantees was also secured on Jack & Judy’s house as the bank had requested. The bank lent up to the limits of the overdraft agreement with Mr A and often beyond it. Jack and Judy did not work for Mr A’s business and had no control over the business borrowings. Mr A then left their daughter and a divorce coincided with the business failure. The bank issued a formal demand to Jack & Judy for 40k plus interest, plus costs. Under IBAS advice the guarantors waited until a suitable opportunity presented itself for us to negotiate the debt and release the security held by the bank. Mr A had considerable debt and his unsecured creditors petitioned for his bankruptcy. There was a considerable sum left outstanding to the bank. As the bank had obtained guarantees with security it meant that Jack & Judy were facing a 40k plus debt to the bank after Mr A’s bankruptcy. The bank requested payment but as the bank didn’t ‘push’ for repayment Jack & Judy thought they’d just ‘gone away’. However, some ten years later Jack & Judy wanted to plan an anniversary party and an overseas holiday trip. They applied for a remortgage on their home to do this. This immediately prompted a demand for full payment from the bank. The debt was then considerably more than 40k and secured under the bank’s mortgage for payment. The bank was now less ‘friendly’ - and they added interest for the 10 year period and threatened legal action would be taken to obtain full payment. Under IBAS advice the guarantors waited until a suitable opportunity presented itself for us to negotiate the debt and release the security held by the bank. Our advice resulted in a favourable settlement for the customer.
Note: Bank loans,
business loans,
overdrafts and mortgages may be covered by personal guarantees or bank
guarantees. The above is
not an unusual scenario and many personal guarantees are provided to Banks or
lenders too easily by partners, directors and spouses, other
relatives, friends and even business acquaintances. Often, guarantors have
little or no input or control with business borrowings
or the increased volume of business borrowings on which they have provided guarantees.
A hastily provided signature may prove to be a very costly error and a
stressful experience. Many guarantors
seek our assistance,
realizing their
personal position is at serious risk from an undetermined guarantee. Unfortunately,
by responding to the bank's first letter or by telephoning the bank after
it's receipt can destroy any possible defences. It Example C: - Limited Company failed - Resulting in Bank PG claim - what customer said to IBAS after settlement was agreed: "we would just like to say how fast, friendly and efficient your service is, most definitely value for money, we would recommend you and your service without hesitation, thank you for saving us from a very difficult situation."
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