Welcome to the forum freshstarterG.

These are interesting questions about guarantor loans that more and more people are having to consider since they have become more popular.

When you take out a guarantor loan the responsibility for payment is yours. The guarantor can only be held responsible if you don't make the full contractual payment.

With the debt arrangement scheme you must include all of your creditors, including guarantor loans. All of your debts get treated equally, so each will receive their fair share of your DAS payment each month (larger creditors receive more than smaller creditors).

If the guarantor lenders aren't receiving the full contractual payment from you via your DAS, they could seek that your guarantor makes up the difference. The guarantor has agreed to pay this if you do not.

With DAS there's some flexibility about the amount that you offer to pay to creditors each month, so there might be some flexibility to manage guarantor loans in a way that doesn't put the guarantor under financial pressure. This would have to be looked at in detail by an adviser to give you a sense for if/how this could be made to work.

With sequestration you must include all of your creditors. You must also pay over your full disposable income, so you will not have spare cash to look after the interests of a guarantor by continuing to pay the loans directly.

The guarantor lender might eventually receive some payment from your bankruptcy process, but in the interim the lender will be fully entitled to request your guarantor makes the contractual monthly repayments.

I don't expect that either debt solution process would register directly on your guarantor's credit file. However, if they did not fulfill their obligations to the lender, they could become at risk of the lender using legal procedures to recover money from them. This could affect their credit rating seriously (and it could also ultimately put their assets at risk).

Guarantor loans add a significant extra layer of complexity to making the best decisions to deal with debts. As well as asking questions here, getting direct professional advice will likely be a major benefit to both you and the guarantor.

There's more information on this topic (including other potential remedies that you and the guarantor might want to consider) at:

https://www.trust-deed.co.uk/can-a-guarantor-loan-go-into-a-trust-deed.html

Hi freshstarterG and welcome to the forum.

Do you own any assets?

Also what is it that you are doing self-employed?

TDA has given a really good summary of the situation regarding the guarantor loans. There is normally always a way to ensure that entering into a plan doesn’t have too much of an impact on the guarantor. I’d suggest reaching out to an expert for some direct advice and from this you will have a better understanding of things.

The positive thing is that there will be a solution to help you deal with the £45,000 of debts.

Both brilliant responses, thank you very much. Most helpful.

Hi David. No, I don’t own any assets.

Hi freshstarterG. Have you been through your budget with a specialist debt adviser yet? How much do you reckon you can afford to pay towards your debts each month?

£45,000 is obviously a pretty big amount to deal with, so I am just trying to ascertain whether a DAS payment plan is realistic for you, which really depends upon what you can afford to offer. If you have no assets then an insolvency procedure such as a Protected Trust Deed or a Sequestration may be worth considering too.

Hi Kevin, I've had a budget set by Payplan for my DMP. They reckon I'd pay c£180 p/m if I went into a DAS (from memory).

Do you know if its worth me contacting the guarantors before doing anything to check their attitude towards me taking any of the above steps (I need to ensure my guarantor is not liable for the gtor loans directly).

Thanks
G

I'm afraid that DAS isn't likely to be a viable option for you in that case, as it would take over 20 years to repay your debts at that rate. It seems likely that you may need to go down the insolvency route instead - ie a sequestration or Protected Trust Deed - in which case your family members would be required to repay those debts they agreed to be guarantor for.
Do you feel the guarantor loans were missold in the first place? Many people are having success when complaining about missselling of guarantor loans, if necessary via the Financial Ombudsman Service, particularly if the lender cannot show evidence that they checked the affordability of the loans for both you and your guarantors. If successful then it could go some way to resolving that particular problem - for example there are cases where a guarantor's liability has been quashed due to insufficient checks being carried out.

A debt adviser may be able to assist you with this - did Payplan ask you these questions at all?

There's some information about potential complaint options, for you and your guarantor, within this article freshstarterG:

https://www.trust-deed.co.uk/can-a-guarantor-loan-go-into-a-trust-deed.html

As Kevin mentions, there are cases where a guarantor's liability could get removed if you/they can make a strong enough case.