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> What Are Secondary Creditors?
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What Are Secondary Creditors?
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What Are Secondary Creditors? |
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Secondary creditors include lots of different types of debts where the creditor hasn’t got extra powers (e.g. they cannot take your home). This means they do not have to be treated as a priority. The most common secondary debts include:
- credit card debts;
- personal loans with finance companies;
- bank and building society unsecured loans, overdrafts and credit cards. (Remember this may be different for business overdrafts/loans if they are essential for you to keep trading);
- charge cards;
- catalogues;
- personal debts to friends and family;
- doorstep collected loans;
- credit sale agreements;
- trading cheques/vouchers.
Once you have made arrangements with priority creditors, what you have left from your money available to creditors at Stage 6 should be offered to secondary creditors.
Work out your money for the secondary debts figure by deducting the amount you have offered to priority creditors from the Stage 6 figure. See the example offer to secondary creditors.
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Check the Name On the Bill
Business partners are each liable for all debts incurred by the partnership. This is called ‘joint and several liability’ (see Partnerships).
A husband and wife are not responsible for each other’s debts unless they are in partnership in business, or they both sign the agreement.
People under 18 can only be made to pay for ‘essential goods and services’ bought on credit. Parents are not responsible for their children’s debts unless they have signed a guarantee.
If you are a director of a limited company, you will not be personally responsible for the company’s debts, unless you have signed a personal guarantee or indemnity. There are some exceptions to this. See the section on limited companies.
Creditors may ask for a guarantor before agreeing to lend money. This means that if the person who has borrowed the money does not pay it back, the guarantor will be asked to pay.
If you have a guarantor for one of your credit debts, or if you are guarantor for someone else, phone us for advice.
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