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Personal guarantees are often sought by banks, as an additional measure of security just in case the person borrowing the money gets into some kind of financial distress.  Over the last seven years our practice has dealt with a number of these cases and the one constant in them all is that it certainly adds additional pressure to all those parties who are involved.

In April 2017, and after twelve months of negotiations, we were delighted to be able to reach agreement with a high street bank in regards to a case of this nature.  The salient details were as follows;

In 2016, a young lady and her mother visited our office looking help with a property the daughter had acquired some years ago but was now in significant negative equity to the tune of over £60,000. The daughter was unemployed throughout the process and the mother, who had signed on as guarantor, was working part time. They came to us owing the Bank approximately £100,000 with the house only being valued around £40,000.  There was a tenant in the property for the first few years but of late the property became vacant and our client simply could not afford to keep up with mortgage payments.

Following a meeting in our office, we advised our client of the three options open to her, and the young lady decided that mediation was the best fit for her and her mum with a consensual sale of the property.  After nearly twelve months, the property was sold and there was a shortfall of some £68,000.  The bank agreed to a full and final settlement on this case of £4500 which was a terrific result for our client and her mother. We were also delighted with this outcome as we were not convinced the bank would agree to something so quick due to the PG scenario and the mothers financial wherewithal.

Scenarios where PG's are sought by banks can often be very interesting and it would be prudent that one of the first actions taken by your advisory team is that they check that the security is actually in place.  It is a well known fact that very often in years gone by, the banks were not as efficient as maybe they would be now, and often the security they have in place can be impaired.

The important point being that no matter who you get to advise you in this area, they have the relevant expertise and experience within the office to advise you accordingly. 

SO have you a property in negative equity?  Did someone in your family sign a personal guarantee?  If so and you would like a free review of your affairs, and to hear some options on what to do next? Contact our team today and we can organise a free consultation to walk you through the options.

The start of the end of these kind of scenario’s is simply to ASK FOR HELP.


Darwin Allen1 Comment