NEW DEVELOPMENT AS BANKS USE MORE DEBT MANAGEMENT COMPANIES.

 

There has been an interesting development since the 1st January in that the banks (Barclays, HSBC, LloydsTSB and RBS/Natwest) in particular have begun to dump personal guarantee cases to external debt management. This is good news for a number of reasons:-

1. It is a reflection of the fact that they are struggling with the workload of personal guarantee claims. They are probably overloaded with cases generally, as most bank departments and their subsidiary debt management and solicitor firms also deal with normal consumer credit act agreement defaults (eg loans, credit cards and overdrafts), and these are probably being passed to the debt management companies as well.

2. It actually reflects good banking practice- old uncollected debt is both a burden on their balance sheet and resources, so they have to make decisions at some time as to what to do with this. A reason why we say buying time is something that works in your favour.

3. It is unclear as yet if the debt management companies are for the most part acting as agents for the banks or whether they have actually bought the debt from the banks. In either case, with regard to personal guarantee claims this creates a further barrier to them collecting- this is because defaulted personal loans, overdrafts and credit cards have a set process as they effectively have proof of debt- not so necessarily with PGs.

4- If they have purchased the debt, then it starts to be a home run for the personal guarantee holder- they rarely have all the documentation to hand and when they try and get them off the bank, the banks are notoriously bad at providing the necessary information to them (as they can be to us), often citing the fact that the debt management company have bought the debt and it is there issue now.

For more information on Personal Guarantees and what we can do to help go to personal-guarantee.com

 

Personal guarantees with a charge on a personal property.

If the bank took a charge on a property at the time of or as part of a personal guarantee being put in place, they have a duty of care to ensure that a co-owner (not intricately involved in the business) of that property is fully informed on the situation. So, for example, if the financials of the company are not in good shape, the bank needs to ensure that the co-owner is aware of the risk they are exposing themselves to.

Also, if the bank offered new facilities whilst relying on such a personal guarantee and charge that had been put in place sometime before, then again they have a duty of care to imform that co-owner of the circumstances and obtain their consent.

The bank cannot necessarily rely on the involved partner giving all the facts to that co-owner.

For more information, take a look at our website personal-guarantee.co.uk, or give us a call on 0845 055 8457 0845 055

 

Company cross guarantees

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Unless companies are in the same group of companies, it proves difficult for banks to enforce inter-company cross guarantees. The question is, what sort of consideration would a third party gain from making such a guarantee?

Each case always has to be considered on its own merit but it is an important issue, so get good advice so you can be sure of your ground.

For more information, take a look at our website personal-guarantee.co.uk, or give us a call on 0845 055 8457 0845 055

 

Mainstream bank centres for dealing with Personal Guarantees

In each of these blogs, I will try and provide some insights into how the institutions such as banks approach their calling in of personal guarantees.

Most of the mainstream banks have centres that deal with the chasing of personal guarantees- so although the local manager might send the initial demand letter and try to negotiate a repayment plan, they have little authority to do a deal and will often suggest taking an interest bearing loan.

An agreement at this stage would be a result for the bank, but certainly not for the person who signed the personal guarantee!

However, the longer the matter is being dealt with at this level, the more time the personal guarantee holder buys themselves, so don't be in too much of a hurry to move it on to the banks' centre! And remember, many personal guarantees are at best dubiously enforceable and many are not enforceable at all.

For more information, take a look at our website personal-guarantee.co.uk, or give us a call on 0845 055 8457 0845 055

HSBC- how they operate.

In the last 15 months or so, we have seen a department allegedly based in Canary Wharf but actually based in India manage collections regarding PGs- the long Indian names and .in email addresses tend to give them away. However, they are difficult to contact and relatively slow to respond, which is great under normal circumstances if you are fighting a war of attrition but dreadfully frustrating if you actually want to do a deal. We have seen a recent move by HSBC to use their internal Birmingham based resource, Metropolitan Debt Collection Services and DG Solicitors, but again find they can be just as ineffective in pursuing on behalf of the bank. For more information, have a look at our website at www.personal-guarantee.co.uk