A friend or relative persuades you to become a surety for his loan or loan. On the one hand, a loved one needs to be rescued, but on the other, you do not know what this is fraught with personally for you. Should I agree? We will tell you about all the pitfalls.
Who is the guarantor and why was he suddenly needed?
Your friend decided to take out a loan, but the bank had doubts about its ability to repay the debt. This usually happens when either the loan amount is very large - more than a million rubles, or your friend's credit history is tarnished.
In such cases, a loan can be issued, but only on condition: if a guarantor appears. The guarantor guarantees to the bank that the borrower will pay off the debt, and assumes financial responsibility for this.
A surety operates on the basis of the Civil Code.
Who can be a loan guarantor? If you are a citizen of your country and you have a confirmed stable income, you, as a guarantor, are suitable for a friend. But the main question is: do you need it?
Let's say I agree. What is the threat of a loan guarantee?
Suppose you sign a surety agreement with the lender, and your friend gets a loan or loan. Bad news: this is not just moral support from you. The responsibility of the guarantor under the loan agreement is practically the same as that of the borrower himself.
If your friend stops paying, you will be equally liable to the creditor. All conditions are spelled out in the contract, which must be carefully studied before putting your signature.
That is, in which case I will have to pay on someone else's loan?
Yes, and the surety is liable to the creditor to the same extent as the debtor. If a friend cannot pay, you will have to pay off the debt for him. This also includes the payment of interest, fines, as well as reimbursement of possible legal costs and other expenses of the creditor.
What if I refuse to pay?
If neither the borrower nor the guarantor pays the loan or loan, the lender has the right to go to court. Sometimes banks do not even try to convince the guarantor to repay the debt voluntarily, but file a lawsuit as soon as the borrower is late in payment for a couple of months. That is, you may not even know that your friend is late on his loan until you receive a subpoena.
A strict but fair trial will surely oblige you and your friend to pay off the debt on a specific schedule. And it doesn't matter which of you and in what proportions will do it.
So what, I don't have a chance to get my money back?
Why not. It is your legal right to recover all your expenses on someone else's debt. After you partially or fully repay the loan or loan of your friend, he becomes owed to you. You get creditor rights.
Be sure to keep all documents: a loan or loan agreement, a surety agreement, a court decision to recover the amount of debt, a certificate of the amount that you paid for the debtor, and all other documents and receipts. They can be useful to you in order to return the expenses later.
If your friend does not agree to return the money to you voluntarily, now you can go to court. There you can claim compensation for all your losses. If the borrower has no money, the court can recover his property in your favor.
What if the borrower died?
After the death of the borrower, all his debts, along with the property, go to the heirs. If the contract did not say that you agree to be responsible for the new debtor, you can breathe out: your surety has ceased.
If you have given such consent, the story will continue. The heirs - and you too - are liable for obligations only up to the value of the inheritance. This means that if it is small, the debt will automatically decrease.
If the heirs refuse to pay and you will have to pay off the debt under the loan or loan agreement, you can also collect expenses from them only within the amount of the inheritance.
What else is the guarantor at risk for the loan?
The surety also threatens to damage your credit history. The mere fact that your friend is delaying loan or loan payments does not affect your story. But if you, as a guarantor, do not fulfill your obligations, it will complicate your further obtaining your own loan.
Conclusion: you can become a surety in three cases.
Who is the guarantor and why was he suddenly needed?
Your friend decided to take out a loan, but the bank had doubts about its ability to repay the debt. This usually happens when either the loan amount is very large - more than a million rubles, or your friend's credit history is tarnished.
In such cases, a loan can be issued, but only on condition: if a guarantor appears. The guarantor guarantees to the bank that the borrower will pay off the debt, and assumes financial responsibility for this.
A surety operates on the basis of the Civil Code.
Who can be a loan guarantor? If you are a citizen of your country and you have a confirmed stable income, you, as a guarantor, are suitable for a friend. But the main question is: do you need it?
Let's say I agree. What is the threat of a loan guarantee?
Suppose you sign a surety agreement with the lender, and your friend gets a loan or loan. Bad news: this is not just moral support from you. The responsibility of the guarantor under the loan agreement is practically the same as that of the borrower himself.
If your friend stops paying, you will be equally liable to the creditor. All conditions are spelled out in the contract, which must be carefully studied before putting your signature.
That is, in which case I will have to pay on someone else's loan?
Yes, and the surety is liable to the creditor to the same extent as the debtor. If a friend cannot pay, you will have to pay off the debt for him. This also includes the payment of interest, fines, as well as reimbursement of possible legal costs and other expenses of the creditor.
What if I refuse to pay?
If neither the borrower nor the guarantor pays the loan or loan, the lender has the right to go to court. Sometimes banks do not even try to convince the guarantor to repay the debt voluntarily, but file a lawsuit as soon as the borrower is late in payment for a couple of months. That is, you may not even know that your friend is late on his loan until you receive a subpoena.
A strict but fair trial will surely oblige you and your friend to pay off the debt on a specific schedule. And it doesn't matter which of you and in what proportions will do it.
If the schedule set by the court is violated, the bailiffs will take over the case. The same measures can be applied to you as a guarantor as to the borrower: arrest your accounts, deduct up to 50% of funds from your salary, seize and sell property, restrict your travel abroad.
So what, I don't have a chance to get my money back?
Why not. It is your legal right to recover all your expenses on someone else's debt. After you partially or fully repay the loan or loan of your friend, he becomes owed to you. You get creditor rights.
Be sure to keep all documents: a loan or loan agreement, a surety agreement, a court decision to recover the amount of debt, a certificate of the amount that you paid for the debtor, and all other documents and receipts. They can be useful to you in order to return the expenses later.
If your friend does not agree to return the money to you voluntarily, now you can go to court. There you can claim compensation for all your losses. If the borrower has no money, the court can recover his property in your favor.
What if the borrower died?
After the death of the borrower, all his debts, along with the property, go to the heirs. If the contract did not say that you agree to be responsible for the new debtor, you can breathe out: your surety has ceased.
If you have given such consent, the story will continue. The heirs - and you too - are liable for obligations only up to the value of the inheritance. This means that if it is small, the debt will automatically decrease.
If the heirs refuse to pay and you will have to pay off the debt under the loan or loan agreement, you can also collect expenses from them only within the amount of the inheritance.
What else is the guarantor at risk for the loan?
The surety also threatens to damage your credit history. The mere fact that your friend is delaying loan or loan payments does not affect your story. But if you, as a guarantor, do not fulfill your obligations, it will complicate your further obtaining your own loan.
Conclusion: you can become a surety in three cases.
- The amount of someone else's loan does not scare you at all. For your budget, this is a penny. Losing a friend is much worse.
- This is a close relative of yours with whom you have a common budget. For example, a wife or a son. In this situation, it does not matter at all which of you will become the borrower and who will be the guarantor.
- You can help a friend if you are firmly convinced that he will cope with the repayment of the loan or loan under any circumstances. And you will receive a bonus - strengthen your friendship.
