Girlfriend in bother with a loan - any help/advice?
Discussion
Brief summary of situation, GF took on a pub (lease) with ex in April 23. She made the mistake of signing up most things in her name as her ex had crap credit. The business was taken on as a partnership. She left him/the pub in April this year (he's carried on as a sole trader) and she has pretty much buried her head ever since. He shut the pub in November as no longer viable. They still need to submit partnership accounts for y/e March 24 at which point it will be notified that she is no longer part of the business from April and the ex is a sole trader.
He owes her lots of money and so she made a very foolish mistake in September this year of signing a new loan agreement with a company with her noted as a sole trader (her name, (t/a pub name)) and the ex as a guarantor. She apparently did it so the business got some funding so the ex could keep paying the GF what she was owed from him as well as him being able to pay off some business debts. The loan was to be repaid via the business till & takings, of which obviously there are now none, so her and the ex are getting bombarded and threatened by the loan company.
Is she completely goosed with this or is there any point challenging that she has signed it as a sole trader (naively/didn't notice?) that she has never been. What would happen if this ends up going to court?
Any advice gladly received!
He owes her lots of money and so she made a very foolish mistake in September this year of signing a new loan agreement with a company with her noted as a sole trader (her name, (t/a pub name)) and the ex as a guarantor. She apparently did it so the business got some funding so the ex could keep paying the GF what she was owed from him as well as him being able to pay off some business debts. The loan was to be repaid via the business till & takings, of which obviously there are now none, so her and the ex are getting bombarded and threatened by the loan company.
Is she completely goosed with this or is there any point challenging that she has signed it as a sole trader (naively/didn't notice?) that she has never been. What would happen if this ends up going to court?
Any advice gladly received!
I can't help with the loan aspects of it, however my understanding of being a 'sole trader' is that you're personally liable for 'business' loans, as you are one and the same.
If it was set up as a Ltd Company, then you and your business are separate entities.
I would be surprised if adding "T/A Fox and Goose Pub" after your name would absolve you of your debts.
Am I reading it correctly, she took out a loan in her own name, gave the money to her ex, who has a history of bad credit, so he could then pay back instalments of the original money she loaned to him?
If it was set up as a Ltd Company, then you and your business are separate entities.
I would be surprised if adding "T/A Fox and Goose Pub" after your name would absolve you of your debts.
Am I reading it correctly, she took out a loan in her own name, gave the money to her ex, who has a history of bad credit, so he could then pay back instalments of the original money she loaned to him?
warninglight said:
Am I reading it correctly, she took out a loan in her own name, gave the money to her ex, who has a history of bad credit, so he could then pay back instalments of the original money she loaned to him?
My understanding is that the business was set up as a Partnership, the loan agreement notes her as a sole trader (with the ex as guarantor), so just wondering how that would stand up in court?Yep she's been really silly, he owes her not insignificant amounts of money for stuff he's had when they were together (watches etc) that's been financed in her name but is his stuff, he usually pays her these amounts monthly. So he was making noise about not being able to pay her so she panicked and thought getting the loan (for the business, but yes ultimately him really) would mean she kept getting her payments from him. She didn't know at that time that the pub would be closed, he misled her that he had people lined up to take over the lease come April next year and just needed to keep going until then. That isn't how it has turned out. Can't turn back the clock though unfortunately!
nuyorican said:
Are you sure you're not being played OP? How long have you known this GF?
Probably just me being suspicious. Reads like one of these girls who tell you all about the long list of terrible, evil, dishonest, abusive ex boyfriends they've had. You think 'what makes me so different?'. Answer: You're not. You'll soon be added to the list.
Appreciate your concerns thank you, I'm 110% she is not playing me though! Probably just me being suspicious. Reads like one of these girls who tell you all about the long list of terrible, evil, dishonest, abusive ex boyfriends they've had. You think 'what makes me so different?'. Answer: You're not. You'll soon be added to the list.
She has not asked me for any money or my help, but I'm trying to reach out to see if I can help her. She's a good woman with a good professional job but currently can't see the woods for trees, she fires from the hip and doesn't think clearly. Things have changed, but I just need to try and get her out of the hole she's (through her own poor judgements) fallen into. I'm as shocked as anyone that she did this extra loan thing in September but as much as I can tell her she's been stupid, she already knows that.
Earlier poster is correct that due to her being sole trader/partnership then the loans are her personal liability.
'Didn't realise' unfortunately isn't a viable excuse for debt, sorry OP but she is stuffed as previously mentioned.
If it ends up going to court/the whole way she would likely end up being declared personally bankrupt.
'Didn't realise' unfortunately isn't a viable excuse for debt, sorry OP but she is stuffed as previously mentioned.
If it ends up going to court/the whole way she would likely end up being declared personally bankrupt.
The Gauge said:
If needed Stepchange are a charity that help mediate on behalf of people in debt and their lender but focus on getting a fair outcome for the borrower. They can arrange repayment plans that the lender wouldn't ever offer as an alternative to them getting nothing at all.
That's useful, thank you.Baldy881 said:
So for clarity, the fact that she has signed a document as a sole trader when she demonstrably wasn't, would still stand up in court as a legally binding document?
I suspect you're putting too much emphasis on the "sole" of "sole trader"Generally with business stuff like that you'll have to tick one of two boxes as to how you operate that business. "Ltd. co" or "Sole Trader"
If it wasn't run as a Ltd. Co., but was run as a Sole Trader/Partnership, I'd expect it to still fall into "Sole Trader"
I'm not sure it's the get-out you're hoping for. But IANAL.
The simplest way of looking at it is that if it’s not a limited company then there is no limit on liability.
If a partnership owes money then I think any/either of the partners can be chased for payment, I’m not sure that the liability can be limited by any proportions described in any partnership agreement.
I would imagine that if debts start to get chased, the very last person to be paid is going to be OP’s GF, by her ex.
The only good news might be that the ex does have some liability for the loan as a guarantor but if he doesn’t have a pot to piss in and the GF has a professional job then she will most likely be the target of any chasing.
If a partnership owes money then I think any/either of the partners can be chased for payment, I’m not sure that the liability can be limited by any proportions described in any partnership agreement.
I would imagine that if debts start to get chased, the very last person to be paid is going to be OP’s GF, by her ex.
The only good news might be that the ex does have some liability for the loan as a guarantor but if he doesn’t have a pot to piss in and the GF has a professional job then she will most likely be the target of any chasing.
Previous posters are correct.
The debt lies with the individual. I agree it may be worth getting legal advice but Limited Companies are quite binary in that you are either limited (a separate entity and the debt is not yours individually) or you're not.
Partnerships and Sole Traders are very similar in how they are treated for tax purposes and so would imagine they are looked at similarly in the eyes of the law.
The debt lies with the individual. I agree it may be worth getting legal advice but Limited Companies are quite binary in that you are either limited (a separate entity and the debt is not yours individually) or you're not.
Partnerships and Sole Traders are very similar in how they are treated for tax purposes and so would imagine they are looked at similarly in the eyes of the law.
Baldy881 said:
Is she completely goosed with this or is there any point challenging that she has signed it as a sole trader (naively/didn't notice?) that she has never been. What would happen if this ends up going to court?
She wants to challenge it on the basis that she wasn’t actually a sole trader? Yet she did so in order to obtain finance?I’m sorry, but this could get a lot worse than people have already suggested if the bank take the view that it’s not a bad debt case but is also a fraud case…
As for Stepchange… they will delay things but, from experience as a creditor, they don’t do much to “mediate”. Use with caution.
LooneyTunes said:
She wants to challenge it on the basis that she wasn’t actually a sole trader? Yet she did so in order to obtain finance?
I’m sorry, but this could get a lot worse than people have already suggested if the bank take the view that it’s not a bad debt case but is also a fraud case…
As for Stepchange… they will delay things but, from experience as a creditor, they don’t do much to “mediate”. Use with caution.
No she doesn't want to do that, it's me asking the question. I'm just questioning whether the loan company has failed in its due diligence by potentially lending money to someone who wasn't a sole trader but in a partnership, and whether that has any clout, but at the time of the loan application the ex was the sole trader but that won't be reflected until the partnership accounts have been submitted. I understand there is a potential fraud side to this also!I’m sorry, but this could get a lot worse than people have already suggested if the bank take the view that it’s not a bad debt case but is also a fraud case…
As for Stepchange… they will delay things but, from experience as a creditor, they don’t do much to “mediate”. Use with caution.
Only thing in her favour I see is that she has nothing really, leased car, rented property and a f
k ton of outgoings (many of them his but in her name) as well as a dependent child (not his). The ex has a house, inherited, so no mortgage but tells her he won't be selling it. He has plenty to go at, she has barely anything.Edited by Baldy881 on Friday 13th December 11:57
Baldy881 said:
No she doesn't want to do that, it's me asking the question. I'm just questioning whether the loan company has failed in its due diligence by potentially lending money to someone who wasn't a sole trader but in a partnership, and whether that has any clout, but at the time of the loan application the ex was the sole trader but that won't be reflected until the partnership accounts have been submitted.
Exactly. The loan company’s position will have relied on what they were told. There will almost certainly be various representations and warranties in the agreement through which she will have confirmed that the statements made and information given were correct. Trying to say that they failed to spot something when they were actively misled is definitely NOT an approach that I would be recommending. It could well cause the situation to escalate.
Peterpetrole said:
I would guess therefore there is no conceivable way she's going to be paying off a reasonable amount of the debt? No prospect of a inheritance?
Surely filing for bankruptcy is the way forwards for her, I'm told bankruptcy is "not that bad really".
Well not really, we've offered on a property together and have an AIP with the mortgage company. That's all down the sSurely filing for bankruptcy is the way forwards for her, I'm told bankruptcy is "not that bad really".
t pan if it comes to an IVA or bankruptcy but I'm hoping it doesn't come to that and that's not what the thread is about.Gassing Station | Finance | Top of Page | What's New | My Stuff