# My Partner's Debts



## Moneyworries (9 Aug 2009)

My Partner went into a Limited business with his brother a couple of years ago.  I was concerned when he told me that they were going to take out a large personal loan to expand the business. 

They bought some extra land to build a shop/cafe on. At the time, when I expressed my concerns, he told me not to worry, they were not borrowing on our home (which I own 100% jointly with him) and that I would not be liable for the loan in any way shape of form. 

They explained that they had put up a couple of barns, which they had owned jointly since they were teenagers as securtity against the loan. The bank were quite excited about their plans and agreed to lend them further money to build the new building with.  That, of course, was before the banks were in trouble. 

As it stands now my partner and his brother have bought the extra land and the bank are refusing to loan any more money to build the shop/cafe. So, in effect, they own a worthless plot of land with a huge loan.  

The bank are now putting them under pressure to repay the loan, but they have no way of repaying it. My partner and I have always done everything by the book.  We've both worked so hard and we have cleared our mortgage on our home. However, I have been told that the bank could force us to sell our home to get their money back. We are not married and we have no kids, so it wouldnt be classed as a family home? Is this the case?  I'm sick with worry and don't know what to do.


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## Moneyworries (11 Aug 2009)

*Re: My Parner's Debts*

I'm new to the site, but as no one has replied, I guess no one out there knows the answer to my problem?  Any ideas on where I might get some help would be appreciated.


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## niceoneted (11 Aug 2009)

*Re: My Parner's Debts*

Does your partner and his brotehr have any income at all from any job/work/business or otherwise that they can use  to pay towards the loan?
Is there a possibility of selling the land?
Is there a possibility of leasing out the land - would it be good as agri land?
What is the amount of the loan and what are the repayments/term of the loan?


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## Cat101 (11 Aug 2009)

*Re: My Parner's Debts*

Have you made an appointment to speak with your bank manager?


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## jhegarty (11 Aug 2009)

*Re: My Parner's Debts*

Is the loan held by the Limited company ?

Did they give any personnel guarantee beyond the barns ?


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## Bronte (11 Aug 2009)

*Re: My Parner's Debts*

Did your partner use the house as security for the loans.  You mention limited company but you also say personal loan.   What do you mean by a couple of barns as security, are these barns on land owned by them?  How much was borrowed, can they repay it?  What is the land worth now.  Can you give more details so that you can get better replies.


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## Moneyworries (11 Aug 2009)

*Re: My Parner's Debts*



niceoneted said:


> Does your partner and his brotehr have any income at all from any job/work/business or otherwise that they can use to pay towards the loan?
> Is there a possibility of selling the land?
> Is there a possibility of leasing out the land - would it be good as agri land?
> What is the amount of the loan and what are the repayments/term of the loan?


 
They both have incomes and had been repaying the loan up until recently.  The bank met with them in recently and told them they would not be lending them any further funds to complete their plan of building the shop/cafe. Obviously, they expressed their concern (ie without the shop/cafe add on business they would be unable to generate enough the money to repay the loan). The bank agreed (but didnt put it in writing) to give them some time and give them a break on making the monthly payments.  I felt they should continue to make the repayments, but they trusted the bank. The bank have called another meeting for next week. The land price has obviously dropped as they bought it a couple of years ago and nobody is buying land at the moment.  Its not suitable as agri land.  The business is a limited company, but the cost of the business + extra land is somewhere around the total loan is around the 900k. No sure on terms.


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## Moneyworries (11 Aug 2009)

*Re: My Parner's Debts*

Sorry if I wasnt clear.  They bought a going concern business and set up a limited company. (They had to take out a personally secured loan to buy the business).  They then took out a further loan to buy the extra land so they could add onto the business.  They didnt use their homes as security for either loans, but the bank insisted they use something else, so they used a mortgage free property that they jointly owned (the barns & the land they are on). At the time these assets were worth enough to cover the loan if they defaulted.  Obviously they are not worth any way near that amount today and the original going concern business, would not be worth what it was either.


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## jhegarty (11 Aug 2009)

*Re: My Parner's Debts*

They spent 900k on a site ????


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## Moneyworries (11 Aug 2009)

*Re: My Parner's Debts*



jhegarty said:


> They spent 900k on a site ????


 
Approx 480k on exisiting the business & it's refurbishment, the balance on further land, stamp duty, legal fees, groundwork etc 

Please, I'm already cross, but it is what it is. It's done and they cant change it.  They know they will have to repay what they borrowed some how (probably for the rest of their lives). My concern is that I will lose everything I have worked so hard for too.  You see, when we bought our home I put in 50% of the money and my partner matched it. We had intentions of getting married, but we had no will drawn up at the time, so I made sure that we were down Joint tenants with both our names on the deeds. ie we both own the property outright.  There is no 50/50 split of shares. That way if either of us died, the property would automatically go straight to the other.  I'm worried that the bank is going to look at our home as a mortgage free asset and force us to sell it to repy a loan that I had no involvement in taking on.


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## papervalue (11 Aug 2009)

*Re: My Parner's Debts*

It looks like the land is in their owe name.

Is the Company renting the land from each?

Does company have much of a cashflow.

Could the land be sold to the company?


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## niceoneted (11 Aug 2009)

*Re: My Parner's Debts*

I am slightly confused!!
I thought in the first post you said they bought land that they want to develop into a business.
They used already owned land and bars as collateral. 
Was this beside the land they already owned?
Now you are saying they bought a going concern business. So was there not some income from this business or was it in development stage or what stage was it at?
Can there not be an income made from this business?
Can some of the land be sold as sites to generate some money?


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## Moneyworries (11 Aug 2009)

*Re: My Parner's Debts*



papervalue said:


> It looks like the land is in their owe name.
> 
> Is the Company renting the land from each?
> 
> ...


 
No the company is not renting land from each.

Company is just ticking over it pays its suppliers, staff & utilities with little v. profit I imagine (I'm guessing here as it was just getting going & I didnt reallly pay too much attention - didnt know I needed to!)


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## papervalue (11 Aug 2009)

*Re: My Parner's Debts*

Have they got any advice from their accountant and Solictor of what to do?

I assume the accountants would have all the figures?

Did you get any legal advice in regard to your own position regarding house?


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## Moneyworries (11 Aug 2009)

*Re: My Parner's Debts*



niceoneted said:


> I am slightly confused!!
> I thought in the first post you said they bought land that they want to develop into a business.
> They used already owned land and bars as collateral.
> Was this beside the land they already owned?
> ...


 
They bought the premisis of a business that someone else had previously owned which had been let go for some years into a near derelect state. So they borrowed the money with a personally secured loan to buy the premisis and renovate it and for all the normal costs involved in setting up a business. Then they saw that if they bought the extra land around the property, they would be able to expand and keep adding onto the business. To do that they borrowed more money via a loan, which they personally secured using their assets (the barns) as collateral. They know they are probably going to end up losing the business & their collateral, its the oustanding balance that is causing the stress. My worry is our home.


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## Moneyworries (11 Aug 2009)

*Re: My Parner's Debts*

I need to get some legal advice I think.  Dont know where I stand as we are not married & have no children, so not sure if our house would be treated the same as a family home.  

If in the worse case scenario, if they force us to sell our home in this climate, would they let me keep half of the proceeds or will they take whatever is outstanding on his loan?  It's making me physically sick at this stage and my partner is just burying his head in the sand.


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## mf1 (11 Aug 2009)

*Re: My Parner's Debts*

You own half the house. Half the house proceeds are yours. No-one else is entitled to them. The bank will have to get a judgment first before they can compel the sale. 

If they do get a judgment against your partner, they are entitled to look for payment from him. They are entitled  to look for satisfaction from his share of the house - but not yours.

mf


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## sunrock (11 Aug 2009)

*Re: My Parner's Debts*

Was the home given as collateral in obtaining the loan.As a joint tenant did you sign or did your "husband" sign over the house as collateral. I am not a legal person but I would think... that if you did not sign your interest in the house  as collateral for the bank loan... then the bank could not chase you for your stake in the house.
However they might be able to go after your boyfriends stake if he signed that as collateral.
Just looked at the above post as I was writing this and he is on the ball.
Hope your relationship with your boyfriend is strong enough to survive this...ahem...little hiccup!


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## Moneyworries (11 Aug 2009)

*Re: My Parner's Debts*



mf1 said:


> You own half the house. Half the house proceeds are yours. No-one else is entitled to them. The bank will have to get a judgment first before they can compel the sale.
> 
> If they do get a judgment against your partner, they are entitled to look for payment from him. They are entitled to look for satisfaction from his share of the house - but not yours.
> 
> mf


 
Is that still the case even if we own it under joint tenancy, rather than tenancy in common. We only did it that way because we didnt have a will made out at the time and wanted to ensure that if anything happened to the other before we were married, the house would automatically go to the other, without the worry of 50% going into the estate of the deceased.


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## Moneyworries (11 Aug 2009)

*Re: My Parner's Debts*

Little hiccup!  I could strangle him!

He didnt use our home as security intentially.  I'm the cautious worry guts of our relationship (the type that has 3 months wages in an emergency account & he's the feckless one the type that a girl would be too worried to marry for fear of financial ruin.)

I never wanted to be one of those women who held the purse strings, but ......


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## jhegarty (11 Aug 2009)

*Re: My Parner's Debts*

I would seek professional legal advise tomorrow morning if I was you.


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## Moneyworries (11 Aug 2009)

*Re: My Parner's Debts*

I intend doing so, as my partners latest suggestion is for us to get married, so he can sign the house over to me.  How romantic!


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## mathepac (11 Aug 2009)

*Re: My Parner's Debts*

God help him, he's not winning in the romance or smarts stakes.


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## Moneyworries (11 Aug 2009)

*Re: My Parner's Debts*



mathepac said:


> God help him, he's not winning in the romance or smarts stakes.


 
Dont feel sorry for him!  Feel sorry for me.  I'm the eejit who still loves him despite the position he's got us in. I'm just trying to do some damage limitation if at all possible, but I certainly won't be rushing down the aisle anytime soon!


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## papervalue (11 Aug 2009)

*Re: My Parner's Debts*

What is total loan outstanding?

What is monthly repayment?

How long do they have to repay it?

How are they financing repayment up to now?

Exactly who's name is loan in- Have brothers got a joint parnership loan?

What his his brother attitude to repaying the loan?

Could company afford to repay loan monthly till property market picks up?

If they have to realise a sale on barns and property they renovated- how much would this raise and what would be the shortfall?

Would you have any idea say would bank accept say 75% of debt repaid?


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## sunrock (11 Aug 2009)

You should ask your OH what was used as collateral for the loan....it may be the house was used for collateral.Joint tenancy means you both own the house together so I don`t know if the bank would be able to accept the house as collateral without your permission.....are you sure you didn`t sign anything?You should see a solicitor....he could write to the bank clarifying if the house is in "play".
I wouldn`t get married ..yet if I were you....there might be some legal issue with it.
I also think  your OH by himself, even just for his interest in the house , can`t use a joint property as collateral ....consult a solicitor about that.


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## Bronte (12 Aug 2009)

900K is a very serious amount.  You urgently need proper legal advice.


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