Personal Garrantee

locteau

Hello everybody,

I am looking for some advises. I made a loan with a business partner of 25k to purchase equipment and we signed a personal garrantee of 10k at the time. I left the business for another job 6 months ago and the bank is saying that if the company do not make repayments I am still liable for it. The loan is in good standing order at the moment but should I be worry for the future if the company managed by other people now goes down ?

I have no involvement anymore and do not owned any of the asset, do I still have to pay the loan and be responsible for it if something happen ?

Thank you so much

coylemj

locteau wrote: »

I have no involvement anymore and do not owned any of the asset, do I still have to pay the loan and be responsible for it if something happen ?

Yes, the guarantee was 'personal' meaning it doesn't matter if you're no longer involved in the business, you're still liable if the business defaults on the loan.

locteau

This is bad news and does feel wrong. Today we owed 16k left on it and I have no use of the equipment we bought at the time and they are using it.

It sounds strange that it is in the hand of the new owners and if they mess up, I end up to be responsible :-(

Thanks for the reply

nhunter100

locteau wrote:

It sounds strange that it is in the hand of the new owners and if they mess up, I end up to be responsible :-(

You signed a personal guarantee, fairness doesn't come into it. You are liable if payments are missed by the otherparty/business.

ytpe2r5bxkn0c1

A personal guarantee is just that. It was not a loan against a business but against you personally. You really need to watch these things if you are in business.

If you were a partner then were you bought out? If not then as a partner, make sure the debt is paid off.

EoinCorcoran

Wow! You're in a bit of a STICKY situation there, lad!

locteau

It's ok, it's only if something goes wrong and 16k left is 8k for each guarantor.

I suppose it is the same if was a guarantor for someone else. if they don't mess up I am fine :-)

But since the leaders of the company are different, can I argue this ? :-)

Who said retirement is easy ! oh sorry have to wait 68 now :-)

nhunter100

locteau wrote:

It's ok, it's only if something goes wrong and 16k left is 8k for each guarantor.

Does the loan agreement say you are only responsible for half the outstanding loan if payments are not met? I find that very unlikely.

locteau

No it said 10k each so do you mean in case the other guy can't pay I am liable up to 10k then ?

nhunter100

locteau wrote:

No it said 10k each so do you mean in case the other guy can't pay I am liable up to 10k then ?

If the loan contract states you are only 50% liable then you are on the hook for 50% until the loan is cleared. Your only hope is that the loan is performing.

2RockMountain

You really should have considered this when you left the business. Did the remaining partners buy out your interest? You could always ask them to remove the guarantee now, but you don't have a great negotiating position if they say no.

L1011

locteau wrote: »

No it said 10k each so do you mean in case the other guy can't pay I am liable up to 10k then ?

Depends on what you signed - you should have got professional advice if you don't understand it.

dudara

Moved to Banking & Insurance & Pensions