Personally guaranteed debts and loans – What to do if you’re worried

October 10, 2014

Securing a loan or a line of credit isn’t always a straightforward or routine process, particularly if you have a relatively poor or indifferent credit rating. For any number of reasons, lenders aren’t always willing to offer loans to individuals without making sure that their debts are secured through personal guarantees.

In many cases, these guarantees will involve a borrower promising to settle debts through their mortgage or property assets in the event of being unable to make repayments. This isn’t necessarily a bad move for borrowers but, if debts subsequently become unmanageable while these guarantees are in place, then there can be serious and potentially very damaging financial consequences.

What to do if you’re worried about a personally guaranteed loan

The first thing you should be aiming to do if you have concerns about your position with regard to a personally guaranteed loan is to get clarity on the key issues. So this will mean finding out or reminding yourself of precisely the conditions under which your loans are secured by your guarantees.

You should contact your lender and establish the extent to which they are legally entitled to demand payment from you if you can’t afford your guaranteed loans. Once these aspects of the situation are resolved, you can request that a deal be reached whereby you pay your debts back on the basis of terms that do not involve you losing or having to sell off your assets.

If you are not able to renegotiate the terms of your personally guaranteed loan but you’re struggling to afford the associated payments then you should prioritise the debt in any way that you can.

What if you still can’t afford to pay your debts?

If you still cannot afford to pay off or satisfy the terms of a debt that you have personally guaranteed in some way then it may be a good idea to consider a variety of personal debt solutions available to you. If you live in Scotland then those options will include Trust Deeds, Sequestration, Debt Arrangement Schemes and Debt Management Plans.

Which form of debt solution will work best for you will depend on the precise nature of your circumstances and it could be that a thorough examination of your finances turns up a positive course of action that you had not previously considered.

Getting advice and seeking help

Whatever the broader financial picture surrounding your personally guaranteed debts, reaching out for expert help and support can make a big difference for the better. We at Scotland Debt Solutions are specialists in dealing with personal debt problems and our services have helped hundreds of people cope with the stresses that are very often involved.

So if you’re worried about what might happen if you fail to keep pace with loan repayments of any sort or you feel as if your debt situation is escaping your control then call us for a free consultation. We can clear up any issues around personally guaranteed loans and we can very clearly explain your options and obligations as a borrower.

John Baird

Insolvency Adviser

Tel: 0800 063 9250

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