A farmer who ran into difficulty repaying a secured business overdraft sought advice from Business Debtline
A farmer ran into difficulties with his bank when he was unable to maintain the agreed contractual repayments on a business overdraft of £55,000 which had been secured on his home.
The famer was himself due receipts of almost £45,000 from goods he had supplied including a £30,000 debt owed from one large company. However there was a delay in recovering payment for the goods supplied from this company which left him unable to maintain his repayments on the overdraft for over four months. Despite his best efforts in speaking with his bank, they were unwilling to negotiate on the existing repayment terms and due to the default on the credit arrangement had passed the case to their specialist recovery team. The specialist recovery team had indicated they were investigating applying to court for repossession of his home in order to recover their debt.
How we helped
The farmer contacted Business Debtline who advised the farmer on his options and the actions which the bank could take to recover their debt. He was also advised on the bank’s processes and how the case had been dealt with to this point.
With assistance from Business Debtline, the farmer sent letters to his debtors to recover the funds due to him for goods supplied as he had no credit control procedures in place. The farmer also sent a letter to the bank’s recovery department outlining his reasons for non-payment due to his own difficulty at receiving funds due from debtors. The farmer made a monthly offer to the bank for six months which was less than the agreed contractual repayments but was affordable and sustainable. The farmer also requested the interest of 5% to be frozen during this time to ensure his financial affairs did not deteriorate further.
After speaking to Business Debtline with permission from the farmer, the bank agreed to accept the monthly repayment offer made by the farmer for six months on the condition that any additional funds received during this time from the farmers debtors would be immediately paid off the overdraft. The bank also agreed to reduce interest to the Bank’s minimum base rate of 0.5% during this time, and the case will then be reassessed at the end of the six month period.
The farmer was very relieved that his home was secure, and more importantly was now in control of the situation. He is maintaining his monthly agreed repayment to the bank and is well on the process of recovering his funds due from his debtors, including the large company which has given him a fixed date by which he will receive all funds due.
He is more aware of the importance of credit control procedures and is adamant that the experience has taught him to ensure all invoices are paid within shorter timescales going forward.