The lender wants more security for an old debt.

More time is being offered in exchange for another asset

A business lender offers more time on an overdue facility if the director gives a mortgage over personal property. The director sees the proposal as paperwork needed to avoid immediate action. The debt already exists, but the new security may change what assets are exposed and what happens if the revised plan fails.

Compare the old and proposed position

Collect the current facility, guarantees, security and default notices, then obtain the proposed variation and mortgage. List the new obligations, assets and parties involved.

Ask what concession the lender is actually committing to: time, reduced payments, further funding or something else. A discussion about possible relief is not an agreed benefit.

Examine the security’s scope

Ask a lawyer which liabilities the document secures, whether other debts are included, and what release conditions apply. The QLS practice note highlights the need to understand security scope and enforcement consequences.

Check ownership and existing mortgages or other interests. Do not assume a second-ranking interest is harmless or that only the current arrears amount is exposed.

Source: Queensland Law Society — Independent guarantee advice practice note

Test the revised repayment plan

Prepare a forecast including the new terms and ordinary obligations. Show a slower-receipt scenario and the consequences if the concession period ends before the business recovers.

If the revised plan remains unaffordable, additional security may increase personal loss without solving the business problem. Obtain financial and insolvency advice separately from the explanation of the legal document.

Make an informed decision before signing

Allow time for independent advice and clarification of costs, conditions and release mechanics. Ensure any agreed concession appears in the final documents.

If you decline or cannot meet the conditions, ask advisers about the remaining options and response to existing notices. Do not sign solely because the lender has set a short commercial deadline.

Test the concession and the added exposure together

Compare existing exposure with every new security term.

Identify the lender’s binding concession and release conditions.

Test affordability before placing additional assets at risk.

Call CRP today to coordinate advice before more security is offered for an old debt.