Can a director lose their house due to a bounce back loan if you are unable to make repayment of enter any type of insolvency process, could you lose the family home.
The ‘veil of incorporation’ is a protection for company directors in the event that they are exposed to personal guarantees. This type risk can arise under certain circumstances, such as if you have provided security deposits or other funds on behalf an lender who demands it from your business venture
The term “company director” refers specifically those people involved with managing day-to-day operations through leadership roles at either board level positions (non executive), management teams within larger corporations etc., but even here there are always challenges when dealing with financial obligations beyond what one was expecting
Not Paying a Bounce Back Loan Cost Me the Family Home?
Not paying a bounce back loan will not cost you the family home. There are a number of options you will need to take to ensure that this does not happen though, these include requesting a payment holiday or extend the term of your loan. Consider consolidating your debts. This will help you to reduce your monthly repayments and may also reduce the overall cost of your debt.
If you’re still struggling, you can speak to a licensed insolvency practitioner who can help you to find a solution that works for you. Remember, the sooner you get help, the easier it will be to resolve your debt problem.
Bounce Back’s Required no Security on Assets
While the bounce back loan did not require any security or assets, this was one point made by the government. The government themselves acted as loan security meaning that, in the event of default, they would pay back these finance companies who offered BBL’s.
This doesn’t mean you can simply do not have to pay back the bounce back loan.
What Situations could I Lose my House due to a Bounce Back Loan?
There are a number of situations where you could lose your house or have a charge placed on it in regards to taking out a bounce back loan.
Fraud – If you have over estimated your turnover or clearly not traded at all, then you could be made to repay the amount you received from the lender.
Preference – if you have clearly taken the money and shown yourself or other credits preference you could be made to repay the money.
Wrongful trading – is a type of insolvency offence that can be committed by a director of a company. It occurs when a director continues to trade a company when they know, or ought to have known, that there was no reasonable prospect of the company avoiding insolvency. This can cause serious financial losses for creditors, employees and other stakeholders. If you are facing insolvency, it is important to seek professional advice as soon as possible to minimise the risk of committing this offence.
Contact us today for help
If you are worried you may lose your home to a bounce back loan, we are here to help and assist you thought this time. We offer confidential advice to help you close down your company in a uniformed manner.
Simply complete an online enquiry or contact us on 01246 912052.
With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.