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Debt collectors after me for money I have already paid. I think I've been stitched up.

(5 Posts)
2point4kids Sun 05-Oct-08 19:12:59

I was a Director in a ltd company (one of two Directors).
The business (a shop) was not going so well last year and I was pregnant so between myself and the other Director we decided that I would not continue with the business and that she would take it on by herself.
At the time the business was in debt and there were two things that myself and my business partner had signed personal guarantees for (the bank overdraft and a lease on some equipment).

We agreed an amount that I would pay her to exit the business (taking into account how much debt the company was in and the amounts we had personally guaranteed). I paid this on the understanding that I would no longer be liable for any debts relating to the business.
I have this in writing.

I paid the amount to my business partner. She informed me that she had paid off the bank overdraft and also paid off the entire lease amount for the equipment using my money and some money of her own that she was investing.
This was all one year ago.

Two months ago the shop closed down and the company went into liquidation.
Since then I have received letters and phonecalls from both the leasing company and the bank (receved the letter from the bank on Friday, am very worried about this) saying that as personal guarantor I am liable for any outstanding debts.

It seems that my ex business partner did not pay off these outstanding amounts and therefore my liabilty still stands.

I took out a loan to pay her the money a year ago and am still paying it off. Things are very tight and I just dont have the money to pay it again!

Is there anything I can do? Do I have any legal comeback at all or have I been taken for a complete ride and will have to take out another loan to avoid being taken to court by these people?

Any advice? I am so worried and upset by the whole thing. I thought we were friends and we have been on friendly terms since I left the shop. I even went in to give her advice and to lend a shoulder to cry on when she was deciding whether to close the shop down.
I am gutted.

Lauriefairycake Sun 05-Oct-08 19:21:54

you need specialist advice. Did she definitely not pay off the outstanding amounts? If she didn't and you are still guarantor legally then yes, as far as I know, you are liable.

Go over to for a better answer to your question. There's a chat board with really knowledgeable people and an expert on the front page too.

Good luck smile

2point4kids Sun 05-Oct-08 19:29:29

She definietly didnt pay off the lease for the equipment.

She possibly paid off the overdraft and then ran it up again.

I signed the personal guarantee when I was director of the company. The overdraft was then paid off. I then resigned as Director (and my name was removed legally from the company) and then the overdraft was run up again.
Am I still liable for that?

I will go look at that link after dinner. thanks very much

Lauriefairycake Sun 05-Oct-08 19:39:25

But did you take yourself off the overdraft account - this, I think, is very important.

2point4kids Mon 06-Oct-08 08:39:37

The overdraft account was in the conmpany name.
I removed myself as Director from the company and the overdraft got paid off.
It was a limited period overdraft so should have expired itself soon after that.
It seems that the overdraft was then run up again nearly a year later and now I am liable for it.
I just dont get it, as surely if the business needed an overdraft at a later date they would have had to do a new application and new personal guarantees, not re0-use the ones from September 07 with me as guarantor when I was no longer involved in the company.

From what I have been told, you cannot revoke a personal guarantee once you make one, unless the outstanding debt is paid off in full, so I assumed (wronglt perhaps) that paying off the debt (the overdraft) would revoke my personal guarantee. I had no idea it could be used again later!

I will be calling the bank first thing this morning and the company liquidators to see if I can get any more information.

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