Personal loan to start company?

MvsC3

Anybody any advice.

In 2007 I went to the bank to enquire about borrowing €25,000 over 10 years to start a small company, I had to submit a business plan etc. The loan was approved and I started trading as a ltd company, in 2010 the company closed, I paid all suppliers, the only outstanding debt being the bank. I went back to work as an employee and continued to pay the loan up until last year when I lost my job. I was paying interest only up until December 2014, now the bank want more or all and wont accept interest only.


The thing is, as I borrowed and started a limited company am I actually liable to pay off this debt? when I contacted the bank they said I received a personal loan! When I asked what was the purpose of the loan, they said personal expenses, €25,000 personal expenses!
When I explained to the Woman that it was a business loan and that the company had an account under its name, she said "I see that" but its down as a personal loan"

Surely the loan should be gone with the company?

Thanks for any replies

28064212

The company was formed after the loan was granted? I don't see how the loan could possibly have been taken out by the company so

MvsC3

Thanks for the reply, but the loan was taken to start the company and explained to the bank that the loan would be used to purchase work related items, this is why a business plan was required before the funds were granted.

28064212

But the loan was taken out in your name. Unless the paperwork states that the loanee is "XYZ Ltd", the debt belongs to you personally.

MvsC3

Thanks again for your reply

I see what you mean, about six weeks after the loan was issued, the bank issued me with cheque books that were in the companys name, does that matter? Im just looking for any info, Im annoyed with the bank that ive paid it for so many years and I feel they are putting the boot in, i know its a bank and I shouldnt take it personal, im not in a position to pay much off it, mortgage comes first, this is number 2 in the pecking order of importance to be paid.

So does that then mean, its an unsecured personal loan?

The loan is down as a personal loan, so if I couldn't come to an agreement regards repaying the outstanding amount there is not much the bank can do, cant take much, I don't mean to sound flippant but its not secured against my home or anything else, and I feel I was sold the wrong loan, cant get my head around that its a loan for €25,000 personal expenses.

unclebill98

Is it a business loan or a personal loan? It would appear to me that the previous comments nails your situation on the head.

Islander13

MvsC3 wrote: »

Thanks again for your reply

I see what you mean, about six weeks after the loan was issued, the bank issued me with cheque books that were in the companys name, does that matter? Im just looking for any info, Im annoyed with the bank that ive paid it for so many years and I feel they are putting the boot in, i know its a bank and I shouldnt take it personal, im not in a position to pay much off it, mortgage comes first, this is number 2 in the pecking order of importance to be paid.

So does that then mean, its an unsecured personal loan?

The loan is down as a personal loan, so if I couldn't come to an agreement regards repaying the outstanding amount there is not much the bank can do, cant take much, I don't mean to sound flippant but its not secured against my home or anything else, and I feel I was sold the wrong loan, cant get my head around that its a loan for €25,000 personal expenses.

It is unsecured now I would guess. But the Bank, if you don't repay it can get a judgement and register that against any assets you own including your home. they are unlikely to be a position to make you sell you home as long as you pay your mortgage but if you wanted to move house in the future you would need to clear that debt in order for a new buyer to have title to your home

Long story short. Try and repay the debt if you can, even if over an extended term

chris85

Islander13 wrote: »

It is unsecured now I would guess. But the Bank, if you don't repay it can get a judgement and register that against any assets you own including your home. they are unlikely to be a position to make you sell you home as long as you pay your mortgage but if you wanted to move house in the future you would need to clear that debt in order for a new buyer to have title to your home

Long story short. Try and repay the debt if you can, even if over an extended term

Exactly.

In fairness OP this is a personal loan taken in your name and needs to be paid. The bank will definitely look to get a judgment and secure the debt on your property.

I dont see how you can believe you were mis-sold this. Company not formed yet and you got funds from the bank. Its a personal loan to you to setup a business. You got the funds and used it. How could it go with the company when the company did not exist when you signed for the loan. legally you have not got a leg to stand on here.

Its put down as personal expenses as this was a personal expense for you. You personally got the funds to start up the company at your own expense.

Duckett

As the bank consider it to be a personal loan you can take your case to MABS
Have you spoken with them yet?

mickdw

Go to the bank with a Proposal of what you can give them monthly based on income / outgoings etc.
Mabs may be able to help with that.

MvsC3

Thanks for all replies

I haven't contacted Mabs, Im not in trouble with my mortgage (which is with a different lender than the loan) or credit union (who were very understanding and accepted my new repayments), I was under the impression that you must be in trouble with all finances, I made an offer to the bank which they didn't accept, I have been how ever been giving them €10/€15 a week just while I sort something out.

MvsC3

Chris85

I see where you are coming from, but a personal loan and business loan are different. they have different rates of interest and terms, if you went to the bank today (or even in 2007) looking for a personal loan for personal expenses you would not need to submit a business plan nor would they lend it over 10 years, maximum wold be 5 years.