Hi, I'm hoping for some advice. I'm 18 months into my IVA and am the sole director of a limited company. I'm still trading but the last year has been difficult and the bank have now called in my personal guarantee on a company loan and overdraft and asked me to pay back £20K. I made an offer of a payment plan which they have refused and have sent me an I & E form to complete. I'm not sure how to respond as I assume this must impact on the IVA but don't want to go bankrupt as I have 3 kids and a very stressed wife, who is worried about losing the house. Any advice would be appreciated! Thanks.
Hi Samgo and welcome to the Forum.
When the IVA was prepared it would have listed all debts including contingent liabilities which the guarantee is. Your bank should know this and the debt is captured by the IVA provided the guarantee was signed prior to the IVA being approved.
I haven't contacted my IP yet as I am concerned because having read my IVA proposal document it doesn't mention the Company overdraft or loan, (although the same bank were listed for a credit card) but is that because it wasn't a personal debt at that time? and also how much could it increase the monthly amount by considering that I'm paying what they think I can afford on the original personal debt (£50K), I obviously dont want the IP to turn round and say I can no longer afford it and have to go bankrupt! Sorry for so many questions but I'm really worried about this.
If the bank has called in your guarantee, are there trading difficulties within the company as well? Was the personal guarantee included in your IVA as a contingent liability?
You will need to speak to your IP. If the IP knew of the debt it should have been listed as a contingent liability to protect you from this particular situation. It also advises the banks that the guarantee does not afford the same protection as before.
Ok thanks, I don't think this was included as my IP knew I was a director but company guarantees weren't discussed and I've never heard of a contingent liability before so I guess the question was never asked of me and I wouldn't have thought to mention it as it was a company not personal debt at that time. So the question is whats the worst case scenario please.
It is hard to say without your full circumstances. If the company is still trading but cannot pay its liabilities that in itself is a different problem. If the company is struggling how are you managing to live and repay the IVA?
It is possible that this could fail your IVA but speak to your IP about the various options. Hopefully the new debts are not huge and would not impact too severely on your current IVA and also you will need to discuss how you are going to continue making the monthly payments.
The original company was dissolved on the advice of my accountant due to a company going bankrupt on me last year. A new company was started which is trading well and we had verbally agreed with my business bank manager to transfer the debt to the new company, they have now decided that can't be done and have called on the personal guarantee.
The personal guarantee is for £20K and the orignal IVA was £50K. Is there any way out of this mess!
Hello Andy, I haven't actually told my business bank that I have an IVA but assumed that they would know as a personal credit card with the same bank was included in the IVA.
If the new company is trading well and has effectively no debt, surely it would possible to pay yourself more now. The new debt could be added to the IVA and the increased earnings could mean increased IVA payments and therefore no decrease in dividend.
It would require the existing and new creditors to agree but if the dividend was not decreasing the existing creditors should not have a problem. The new creditor chould have been included in the original IVA anyway so hopefully they will agree too.
IPs dealing with directors of limited companies leave themselves and their clients wide open if they do not question the existence of personal guarantees. Try and find a company director who has not given any guarantees these days is like looking for a needle in a haystack.
