How we settled a $246,000 debt for $30,000
We were referred a client by her accountant. Our client had personally guaranteed two lease debts to the same landlord. Our client’s business had failed resulting in a debt owed to the landlord by her company of just over $246,000. As guarantor our client was also personally liable for this debt.
Our client could not pay $246,000 to the landlord and the landlord commenced legal action to recover the debt.
Options for our client
Our client had no assets, other than a Landcruiser motor vehicle worth about $20,000. She was also not currently employed and could not pay a material amount to the landlord.
Our clients two options were to:
- Go bankrupt which would mean she would not have to pay the landlords debt, but which would also mean her Landcruiser would be sold although she would be returned a statutory amount from the sale; or
- Seek to settle the landlord’s debt.
Our client did not want to go bankrupt so she engaged us to seek to settle the landlord’s debt.
Settlement of debt
We set out our client’s position to the landlord and made an offer of settlement to pay $25,000 to the landlord over time. The landlord rejected this offer and made a large counter offer.
We subsequently offered $30,000 payable over time which was our client’s best possible offer. The landlord again rejected this offer and threated to apply for default judgment. We further explained our client’s financial position to the landlord and remade the offer of $30,000 over time which was ultimately accepted.
The funds which our client will use to pay the debt will come from her husband who is borrowing some funds from family and using his future income. As part of this transaction our client’s husband will acquire the Landcruiser motor vehicle as our client has other financial risks associated with her failed business.
This is obviously a great result for our client who was very happy with the outcome.
Advice and Assistance