Could I Lose My Home Due To A Bounce Back Loan?

Lose My Home Due To A Bounce Back Loan?

The answer to the question ‘Could I Lose My Home Due To A Bounce Back Loan?’ is if you have taken out a Bounce Back Loan you would probably be rather unlucky indeed if it were to happen.

In order for it to happen, it is likely that a series of other matters would have to combine to cause you to lose your home rather than simply not being able to repay the Bounce Back Loan itself.

Is My Home Then Protected?

Protected might be going a bit too far but the reason your home is likely not to be at risk simply because you took out a Bounce Back Loan that you cannot any longer repay, is that the bank which lent you the funds was not able to obtain a personal guarantee from you. As a result, the inability to repay the loan might lead to the company going into Liquidation but it should not result in you going into personal Bankruptcy.

Your home should also be protected because not only was the bank that gave you the Bounce Back Loan unable to obtain a personal guarantee from you as confirmed by the British Business Bank that operated the scheme for the government in its FAQs for Small Businesses: Bounce Back Loan Scheme page but also, the bank was not allowed to take a charge or security for the Bounce Back Loan over your family home.

What If I Am Unable To Repay The Bounce Back Loan?

If you are insolvent and unable to repay the Bounce Back Loan then if your company goes into Liquidation (which might be a responsible option for you to consider such as Creditors Voluntary Liquidation) then the bank will go to the government for their money. The government guaranteed all the Bounce Back Loans provided by the commercial business banks.

A Bounce Back Loan was a special breathing space provided to save businesses suffering from the Pandemic due to the restrictions imposed upon everyone by the government. It was therefore only fair and reasonable that businesses through no fault of their own were provided with a safety net to try to save them.

What Will Happen If The Loan Is Not Repaid

If the Bounce Back Loan is not repaid when the repayments fall due then the bank will seek to remind you to repay it. And if you are still unable to make the payments despite persistent reminders then the bank will start to escalate the recovery process by issuing letters to you through their normal debt collection procedures.

If you default on the repayment of the Bounce Back Loan then your businesses’ credit rating is likely to be affected when this position gets recorded. This could affect the company going forward in terms of its ability to source future finance.

Is There Any Risk To My Home?

In the vast majority of cases, a risk to your family home could perhaps arise if you have either:

• Applied for the Bounce Back Loan by way of a fraudulent application and obtained funds improperly; and or
• Misapplied the funds you did receive by improperly using them contrary to the economic purpose they were supplied to you.

However, this risk is not unique to a Bounce Back Loan. It applies if someone has fraudulently and improperly applied for finance and or misappropriated it.

In such circumstances, it is possible for a range of insolvency litigation claims such as Transactions At Undervalue or Preferences to be brought against any company Director by a Liquidator that may require repayment of monies to a company that has gone into Liquidation. That does not mean that you would necessarily lose your family home but if you were unable to make the necessary payments required, then you could be forced into Bankruptcy.

If you were forced into Bankruptcy then the consequence of that could mean that you lose the family home.

If you can’t pay a Bounce Back Loan get in touch with us for advice.