Case Studies 54k Guarantees Reduced 22k

Scenario:

How £22,218 settled Personal Guarantees totalling £54,161.
Alan was Managing Director of a company that experienced a drop in sales for three consecutive months. In desperation to keep the firm going he gave Personal Guarantees, PG’s, to three separate creditors: £6,601, £16,860 and £30,700 respectfully. Eventually the firm went into liquidation owing numerous debts including the Crown departments. Although all these debts were cleared under the liquidation the PG’s were still outstanding and the lenders began legal proceedings to recover their sums all within a couple of months of each other; one even secured their debt against his personal property. Alan was only able to find temporary work and didn’t know how to respond to his creditors but was still under constant pressure to make the repayments.

Advice Given:

The debtor’s financial standing was fully evaluated. The debtor was advised to get the marital home valued which came back at £185,000. The mortgage was £130,000 with a high interest rate of 7.9%. After taking our advice he successfully managed to re-mortgage the property and raise a lump sum. Through skilful negotiation it was demonstrated to creditors that they would see a far greater return by accepting the offer of lump sum payments as detailed above rather than declare him bankrupt. The result meant that Alan was able to keep his home and settle his outstanding debts by re-mortgaging; with the extra cost being offset against a far more attractive interest rate.

The Outcome:

The PG of £6,601 accepted £1,218 in full and final settlement, the PG of £16,860 took £6,000 and the £30,700 settled for a lump sum of £12,000 and 24 monthly payments of £125 per month (£3,000). All agreed to release the individual from his guarantees.