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Is my home at risk with a Bounce Back Loan?

“Could not Paying a Bounce Back Loan Cost Me the Family Home”?

As a director of a limited company who took a bounce back loan during the COVID-19 pandemic, you may not be able to make further payments. So, what are the consequences should your company default on the loan?

Is my home at risk with a Bounce Back Loan?

However, losing your home is doubtful due to: –

  • Is my home at risk with a Bounce Back Loan? – Lenders Required No Security on Assets.

While most loans require signing personal guarantee documents that provide collateral, often a family house, as a security for the loan, this was not the case with BBLs.

The UK government 100% secured the loans. Therefore, should you default your Bounce Back Loand and enter liquidation? They then repay the lender.

Nevertheless, you simply cannot repay the BBL.

  • Having a Bounce Back Loan and then defaulting, what are the consequences?

The lenders remain unable to force you to sell your house. However, they can pressure you’re limited company to repay.

The UK Government has suggested that loan providers offering BBLs adopt their usual debt collection and enforcement procedures, including:

  • demand letters.
  • debt collection.
  • Once banks believe fraud has taken place, they issue CIFAS markers. Doing so blocks individuals from obtaining further credit for up to 6 years. Such action is not notified to those the markers relate to.
  • Company strikes off objection.
  • Is the company insolvent if we cannot pay the bounce back loan?

Your company is insolvent if you have a debt you cannot pay (or liabilities exceed assets). However, if you have not used your home to guarantee any loans

Then your home is not at risk.

The critical factor here for directors is that your responsibilities shift towards creditors as the director of an insolvent company. Therefore, meaning you must only take actions that: –

  • advantage creditors without giving priority to a particular creditor.
  • You cannot pay staff,
  • one supplier over another. To do so is acting ‘in preference’ and could risk charges of wrongful trading.

So, if you are insolvent, you need professional advice. Meeting with an Insolvency Practitioner does not commit you to liquidating your company. However, you can clearly understand your company’s financial position. Such a meeting helps the director decide on closure, or if viable, a rescue procedure, such as a: –

When is My Family Home at Risk?

A risk to your family home could occur if you: –

However, this risk is not limited to a bounce back loan. It applies if someone fraudulently and improperly used or misappropriated it.

In such cases, insolvency claims, such as transactions at undervalue or preferences, can be brought against a company director by a liquidator, which may require repayment of monies to a company in liquidation. Nevertheless, this does not automatically mean you would lose your family home, but if you could not make the necessary payments, you could face involuntary bankruptcy.

If you were made bankrupt, that could mean losing your home.


Bounce Back Loan advice for Company Directors

Directors should seek professional advice if they have Bounce Back Loan worries regarding repayments. The UK government introduced the COVID-19 support scheme to support businesses through the pandemic. However, repaying the loans has been difficult. So ensure you seek advice sooner than later.
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