Post by dutchman on Aug 8, 2020 10:46:30 GMT
Hi,
Can somebody explain to me the value of a PG (personal guarantee) in the UK?
Since for most loans there is a PG I’m just wondering what its worth.
The reason I ask is a follows, here in The Netherlands it works as follows…
When a person (let’s call him Joe) can’t pay back a loan and doesn’t have enough other assets that can be sold, they are declared bankrupt (like a business but now personally)
In that case Joe get a guardian who handles his money.
All Joe’s income goes direct to his guardian and he/she decides how that is divided up.
Let’s say Joe owns the bank and tax man money than his guardian will pay those debs back and give Joe just enough money to live.
99% of the time Joe can never in his lifetime pay back all debts he has so our generous government says that if Joe behaves over a period of 5 years his debts are ‘forgotten’ and Joe can go back to his normal live without a guardian.
(and create new debts)
This means that for us people who lend Joe our money we see 0 back because we are at the bottom of the debtor list.
I have seen this happen to a P2P platform here in NL several times.
So back to the UK, in a worst case scenario where the property has decreased in value and what its sold for can’t pay back our loans AND the insurance is not in play AND our Joe doesn’t have any other assets
How much is his personal guarantee worth?
Just to get a feel for this (perhaps extreme) scenario.
Can somebody explain to me the value of a PG (personal guarantee) in the UK?
Since for most loans there is a PG I’m just wondering what its worth.
The reason I ask is a follows, here in The Netherlands it works as follows…
When a person (let’s call him Joe) can’t pay back a loan and doesn’t have enough other assets that can be sold, they are declared bankrupt (like a business but now personally)
In that case Joe get a guardian who handles his money.
All Joe’s income goes direct to his guardian and he/she decides how that is divided up.
Let’s say Joe owns the bank and tax man money than his guardian will pay those debs back and give Joe just enough money to live.
99% of the time Joe can never in his lifetime pay back all debts he has so our generous government says that if Joe behaves over a period of 5 years his debts are ‘forgotten’ and Joe can go back to his normal live without a guardian.
(and create new debts)
This means that for us people who lend Joe our money we see 0 back because we are at the bottom of the debtor list.
I have seen this happen to a P2P platform here in NL several times.
So back to the UK, in a worst case scenario where the property has decreased in value and what its sold for can’t pay back our loans AND the insurance is not in play AND our Joe doesn’t have any other assets
How much is his personal guarantee worth?
Just to get a feel for this (perhaps extreme) scenario.
