ltd company and personal guarantees

[need2budget]

howdy am setting up a ltd company, as ppl know banks often ask for personal guarantees for loans in ltd companies.. i have a few questions..


if i sign such a guarantee, and the company goes under sometime in the future, are my personal assets house etc at risk? ie after all company assets sold and there is still money owed to the bank?

also what is the likelyhood of a bank putting a family out on the street to recover the debt?

im trying to explore all possibilites and what risks are involved in same,

thanks in advance for replies..

 

[bond-007]

if i sign such a guarantee, and the company goes under sometime in the future, are my personal assets house etc at risk? ie after all company assets sold and there is still money owed to the bank?

Yes, they can take personal assets.

also what is the likelyhood of a bank putting a family out on the street to recover the debt?

Very slim to none to be honest. They would have to obtain a charging order from the high court to do that. Not worth the bother as most houses are mortgaged. A charging order is only used where there is no mortgage and the debt is very big. Usually they will just seek a judgement and then enforce it thru the district court by means of an instalment order. Also they would put a judgement mortgage on your house, meaning that if you went to sell the house the bank would have to be paid out of the proceeds.

 

[Importer]

I set up a new company a few years back and several parties asked me for personal guarantees. I replied that the company is a separate entity from me and stands on its own merits.I declined to give any personal guarantees - All three replied with OK , no problem
Moral of the story - All lending agencies lessors and so forth will look for as much security as possible but it doesnt always mean that refusal to comply is an automatic deal breaker.

 

[need2budget]

Yes, they can take personal assets.

Very slim to none to be honest. They would have to obtain a charging order from the high court to do that. Not worth the bother as most houses are mortgaged. A charging order is only used where there is no mortgage and the debt is very big. Usually they will just seek a judgement and then enforce it thru the district court by means of an instalment order. Also they would put a judgement mortgage on your house, meaning that if you went to sell the house the bank would have to be paid out of the proceeds.

ok i get you, but say for example you personally guaranteed 200k, and things went bad and company went bust, and you only had the ability to pay €300 back per month, i would imagine that the bank would not settle for that?

if you had equity in your house would they chase you for that, i mean paying €300 back out of 200k monthly would take many many years to repay...

imm considering the situation carefully before making a decision as its a tough one..

 

[bond-007]

Well if you could only pay €300 a month they would have no choice. If they went to court seeking an instalment order and they asked the judge for €1000 a month and you could only offer €300 they would only get an order for €300. Generally debtors come off better if they let the judge decide the amount as the banks always look for ridiculous amounts.

As to chasing you for equity, it won't happen. They would slap a Judgement mortgage on it for say €200k so if you sold your house for €400k they would get their 200k out of it after any current mortgage was repaid first thus leaving you with a very small amount.