The mortgage guarantor is responsible in case of non-payment. What is a loan guarantee? Serious risks that the guarantor may bear

In order to provide additional security, credit institutions put forward a requirement to attract guarantors to the loan, who would share with the borrower the financial responsibility for repaying the loan in full within the prescribed period.

Meanwhile, it is very difficult to find a person who would take on obligations. As a rule, a loan guarantee is issued to the nearest and dearest, who are ready, if necessary, to financially support the debtor who finds himself in difficult life circumstances. Otherwise, there is a high chance that the borrower will refuse to pay the debt to the bank and disappear, and all obligations will pass to the guarantor.

Requirements for a guarantor

Like borrowers, guarantors must also be vetted by the bank to meet certain requirements.

To determine what a “guarantor” is, you need to familiarize yourself with the list of basic requirements for this category of persons:

1. Citizenship of the Russian Federation.
2. Registration at the location of the bank branch to which the borrower applies.
3. Established capacity.
4. Age over 21 years. Most often, a guarantee agreement is concluded with persons under 35 years of age.
5. Having a regular income or owning property. The amount of income and financial situation of a citizen must allow them to ensure loan payments in the event of default on the part of the main borrower. The bank will also consider a list of properties among movable and immovable property.
6. Positive credit history.
7. Overall work experience must be over 1 year.
8. The duration of work at the last place of employment is from six months.

To preliminary assess the possibility of using a particular candidate as a guarantor for a loan, you can check whether the capabilities of a particular person correspond to the required parameters of the bank. However, accurate conclusions about who can become a guarantor are made only by the bank, which will take into account the entire set of parameters of the candidate. Since the main requirement is a high level of solvency and security of a person, the bank requires a certificate confirming the amount of income or salary. Ultimately, each bank determines who the guarantor is individually.

When determining the area of ​​responsibility, it is necessary to proceed from the provisions of Art. 363 of the Civil Code of the Russian Federation, according to which an equal degree of responsibility is established for the repayment of the loan under the conditions specified in the contract.

A special agreement is concluded between a credit institution and an individual, the general meaning of which is that the person will be obliged to pay fines, penalties, commissions, and make monthly payments in the event that the debtor ceases to fulfill his duties.

The responsibility of the person who has become the guarantor for the loan is great enough to hastily agree to support the borrower when applying for a loan.

1. Assess your financial ability to repay the loan in a situation where the borrower refuses to make payments and the guarantor’s solvency deteriorates.
2. Carefully study the clauses of the loan agreement, especially the obligations of the loan guarantor and the borrower, including financial obligations (interest rate, late fees, actions in force majeure situations, etc.).

Before taking on obligations, a candidate for a bank guarantee must understand that participation in a credit relationship does not mean an ordinary visit to a branch and signing a certain set of documents, but also full financial responsibility for the loan amount. The implementation of a negative scenario can lead not only to the loss of your own funds, but also to unpleasant situations with collectors and bailiffs.

The involvement of the person who guarantees for the borrower in debt financing begins from the moment the first delay occurs. When the debtor is unable to service the loan debt or simply refuses to pay the installments, in accordance with clause 2 of Art. 363 of the Civil Code, the creditor makes a demand to fulfill financial obligations instead of the borrower himself.

A credit institution can do the following:

1. On behalf of the bank, a demand for payment of the borrower's financial obligations is sent to the guarantor. The notification form must indicate the total amount of debt, repayment period, and other important information about the loan.
2. If the borrower refuses to return the amount borrowed from the bank, it is possible to unilaterally write off funds from the guarantor’s account without agreeing with him on the fact of the write-off and the amount. Such a measure must be specified in the signed agreement.
3. The creditor has the right to file a lawsuit to collect the required debt from the borrower and the guarantor at the same time. After a court order is issued, collections may be made to pay off the debt, including the sale of real estate or vehicles.

In addition to material obligations, you need to perform the following actions throughout the loan term:

• transmit information about changing your passport, name, address;
• inform the creditor about the ongoing proceedings in a criminal or civil case, as a result of which the person’s property is subject to seizure;
• transmit to the bank information about events in your personal life that negatively affected the solvency of the guarantor;
• present any documents upon request of the bank.

Other requirements may also be established that must be fulfilled at the request of the credit institution.

Participation in a loan entails not only financial and non-financial responsibilities. A person can exercise his rights as a guarantor within the framework of the loan agreement and when closing the loan.

Exercise of rights at the time of the contract

A person acting as a guarantor for a loan has the right to carry out the following actions:

1. Study all documents included when signing the loan agreement.
2. Find out the terms of the loan based on the concluded agreement.
3. The guarantor, equally with the borrower, can contact the lender with a proposal to adjust the clauses of the agreement, based on the provisions of current laws.
4. Request information about how the debt repayment process is proceeding and what the balance is.
5. Contact the bank with demands if the borrower’s guarantors believe that their rights have been infringed. If the agreement states that the person is financially responsible only for the payment of the debt, the main body of the loan, interest, and fines.

If the client refuses to fulfill his financial obligations, his guarantor has the right to demand restructuring from the bank.

Do not underestimate the guarantee agreement - if the guarantor has repaid all debts incurred to the credit institution, the agreement terminates, and the payer has the opportunity to demand through the court that the borrower return the funds paid.

As part of the implementation of the court order, the bailiff will be able to forcibly collect the necessary funds under the writ of execution. In addition to the principal debt and interest, you can demand compensation for all costs incurred in fulfilling the terms of the loan agreement.

The guarantor can go to court at any time during the performance of his duties. To file a claim, you will need to attach copies and originals of documents indicating full payment of the debt and the absence of debt (certificate of full payment by the guarantor of the debt and loan agreement, real estate mortgage, payment certificates).

The client's deliberate evasion of payment and ignoring SMS notifications about the need to repay debts give the guarantor the right to challenge any decision of the creditor.

The peculiarity of participation in borrowing relationships lies in the absence of the guarantor’s right to the funds received by the borrower with the simultaneous obligation to repay the loan in the event of debt formation. Financial obligations must be fulfilled, regardless of the reasons for the formation of the debt. At the same time, if the borrower retains the right in the eyes of the bank to apply for restructuring or revision of the terms of the loan to more favorable ones, such a service almost does not apply to the guarantor.

In addition to the hassle of having to pay off a debt for another person, another negative consequence will be a deterioration in the credit history of the guarantor himself. Even if the bank approves the loan application of such a person, the loan amount will be less. It will also not be possible to hide information about the guarantee - it is visible in the general database and is provided to the credit institution upon request.

Subsidiary or joint liability

According to Art. 363 of the Civil Code, credit implies joint liability. This means that if there is no payment from the borrower, the person assumes financial obligations. If a delay is allowed, not only the client who took out the loan, but also the guarantor can ruin the credit history. According to paragraph 2 of Art. 363 of the Civil Code, in addition to monthly contributions, the guarantor is obliged to pay all penalties and fines for the resulting delay. If there are several guarantors, joint liability arises unless otherwise specified in the agreement.

These are the conditions established by current legislation, however, the agreement with the bank may establish a different procedure for claiming debt and assigning liability.

In some cases, liability for the loan may not be imposed in full. This provision must be specified in the banking agreement. If the parties agree to bear vicarious liability, the lender must provide evidence that the borrower is unable to repay the loan, excluding cases of evasion. Only after providing evidence that the debt is not related to a simple reluctance to return funds taken from the bank, the bank can send a demand for payment to the guarantor. This requirement is sent on the basis of a court order, however, if the borrower disappears, the court may refuse to satisfy the claim.

When reading the text of the agreement, you should pay special attention to the type of liability for loan obligations. Unless otherwise stated in the clauses of the document, subsidiary liability applies.

One of the most unpleasant consequences is a damaged credit history and involvement in legal proceedings if the client refuses to return funds to the bank. A lender facing default may give several months for the borrower to arrange full repayment. If the situation has not improved within this period, the bank makes demands for loan payments to the guarantor. However, the guarantor finds himself in a more difficult position, because he will have to pay not only the debt on overdue contributions, but also accrued fines and penalties.

Filing claims against the guarantor is rarely practiced in reality. Most often, court proceedings are pending for debts of a large amount. If the borrower's debt is large, the credit institution can prepare a claim within 3 months.

The court, having taken into account all the circumstances, makes a decision. The judge may refuse to satisfy the claim, taking into account the arguments of the guarantor. However, if the plaintiff-creditor accepts the side, the defendant will face recovery of the entire loan amount with penalties. If the defendant is unable to repay the debt with personal funds, the court may initiate the sale of his property in order to pay off the debt to the bank.

Drawing up a loan agreement with a guarantee today is far from a rare occurrence. Read our article about what responsibility a loan guarantor bears, what obligations are assigned to him in the event of failure to fulfill the loan agreement by the borrower, and whether the guarantor can file a lawsuit against the borrower.

Loan guarantee is a pressing issue in the Russian banking structure. On the one hand, the presence of a guarantor for a loan borrower minimizes the financial risks associated with possible non-payment of the loan; on the other hand, the guarantor assumes obligations for debt payments if the borrower violates the terms of the loan agreement.

Important! The guarantor has no rights to the property that the borrower acquires on credit, however, he also bears full obligations to the lender (Article 361 of the Civil Code of the Russian Federation).

The presence of a guarantor in a loan obligation is formalized by a guarantee agreement; the guarantor’s liability begins from the moment the agreement is signed between him and the creditor bank. A surety agreement may contain two types of joint liability:

• joint liability - implies equal obligations of the guarantor and the borrower;
• - occurs when it is proven that the borrower does not have the ability to pay the loan.

If the borrower had several guarantors when applying for a loan, each of them will be fully responsible for the fulfillment of debt obligations to the bank. If the debtor violates the terms of the loan agreement, the banking organization has the right to present the following demands to the guarantor:

• payment of the principal amount;
• payment of interest on the loan;
• payment of fines and penalties for unpaid payments;
• payment of legal fees.

The bank has the right to demand from the guarantor the fulfillment of obligations under the unpaid loan through the seizure of real estate. Exceptions are cases where the guarantor purchases the only home under a mortgage.

Loan liability: guarantor risks

By taking on the burden of guaranteeing a loan obligation, the guarantor acquires:

1. Financial risks: in addition to repaying the principal debt on the loan, the guarantor is responsible for paying interest, fines and penalties.
2. Bad credit history: the presence of arrears on a loan negatively affects the credit history of both the borrower and the guarantor.
3. Limitation of the guarantor’s ability to obtain his own loan: the bank carefully monitors all credit histories and, if there are obligations under the guarantee agreement, calculates the credit limit taking into account the existing circumstances, that is, the guarantor may not receive the desired amount from the bank, even if his financial capabilities fully allow it, until the guarantee is terminated due to full repayment of the loan.
4. Risk of loss of real or movable property. In the event of refusal to fulfill obligations under the loan agreement by the borrower and the guarantor, in accordance with a court decision, foreclosure may be imposed on the guarantor’s property in an amount sufficient to repay the debt.

In order to remove yourself as a guarantor, you must obtain the consent of the bank and the borrower. At the same time, the guarantee does not terminate in connection with the divorce of the spouses (if at the time of execution of the loan agreement one of the spouses was the guarantor of the other).

Guarantee agreement: rights of the loan guarantor

In accordance with Art. 365 of the Civil Code of the Russian Federation, in addition to obligations, the guarantor has a number of rights aimed at protecting his legitimate interests. Thus, if the guarantor fulfills all loan obligations, he acquires the rights of the creditor in full, that is, the guarantor has the right to demand from the debtor payment of all losses incurred, including payment of the principal debt on the loan, interest on the use of funds, fines and penalties. In addition, the guarantor may be released from fulfilling loan obligations in the following cases:

• lack of written consent of the guarantor in the terms of lending, changed at the discretion of the bank;
• transfer by the bank of a debt to another person without the written consent of the guarantor;
• expiration of the period specified in the guarantee agreement;
• termination of the borrower organization due to liquidation;
• death of the borrower.

Important! The obligations of the guarantor are inherited. The fulfillment of debt obligations by the heirs is carried out after they have assumed the rights of inheritance and the amount of the debt does not exceed the value of the inherited property.

The guarantor, who has fulfilled the loan obligations in full, has the right to file a lawsuit against the debtor demanding reimbursement of expenses incurred. If the borrower and guarantor do not have personal property, official employment and a stable monthly income, bailiffs and banks will not be able to demand payment of the loan debt. As for credit debtors, who also pay, they also have some rights in this matter. For example, the total amount of deductions for all enforcement documents cannot exceed 50% of the debtor’s salary and other income. If the debtor pays alimony, the maximum amount of payments under writs of execution cannot exceed 70% of the debtor's total income. Also, Russian legislation provides for the impossibility of foreclosure on the debtor’s property that was acquired during the spouses’ cohabitation. Joint ownership of property must be documented. If the fact of incapacity or limited legal capacity of the debtor (borrower and guarantor) is proven, the latter is released from liability for failure to fulfill loan obligations, and his rights and interests are represented by a legal representative.

Limitation periods for unpaid loans

In accordance with the Civil Code of the Russian Federation, the liability of the guarantor for loan obligations lasts for the period specified in the guarantee agreement. However, as practice shows, the contract may contain:

• the exact expiration date of the agreement is not specified - in this case, the guarantee is terminated if the bank does not file a claim in court within 12 months from the date of maturity of the debt;
• the exact term for payment of the loan is not specified - in this case, the guarantee is terminated if, within 24 months from the date of signing the guarantee agreement, the bank does not file a lawsuit to collect the debt.

Writs of execution for court decisions and court orders regarding non-fulfillment of loan obligations can be submitted within up to 3 years.

According to current legislation, the guarantor is jointly and severally liable to the creditor. However, based on Art. 361 of the Civil Code of the Russian Federation, he does not have the right to property that was purchased using loan funds. What responsibility the borrower and the guarantor bear and how the interests of the latter are protected are indicated in this article.

Liability of the guarantor to the creditor

Art. 363 of the Civil Code of the Russian Federation states that the loan guarantor bears joint liability in the event of non-payment by the title borrower. At the same time, he can demand compensation for losses incurred after full repayment of the debt. This right is granted by Art. 365 Civil Code of the Russian Federation.

Here are the consequences that await both lending participants if payment deadlines are missed:

• according to Federal Law-218.
• Calculation of penalties in accordance with Federal Law-353 and Federal Law-102.
• Possibility of alienation of collateral property in accordance with Federal Law-2872-1.
• Initiation of enforcement proceedings and seizure of all accounts of the debtor and guarantor in accordance with Federal Law-229.
• Imprisonment for up to 2 years for malicious evasion of financial obligations (Article 177 of the Criminal Code of the Russian Federation) or for fraud (Article 159 of the Criminal Code of the Russian Federation).

Typically, guarantors will not acknowledge their obligation to make payments on the title borrower's loan without realizing the consequences.

Pre-trial collection

Pre-trial debt collection is carried out by collection companies and by the creditor himself. The responsibility of the guarantor in case of non-payment of the loan by the borrower is similar, therefore it is possible to demand payment from both lending participants by all legal means in accordance with Federal Law-230.

While working with:

• Telephone conversations to clarify the reasons for the delay and the requirements for repaying the debt as soon as possible.
• Informing relatives about the presence of financial problems, without going beyond the provisions of the Bank Secrecy Act.
• Carrying out visits to the place of residence of the borrower and guarantor.
• Visits to work with the debtor and the guarantor.

These are all possible ways of influence. If they do not bring results, then a decision is made to transfer the case to court and initiate enforcement proceedings.

What are the consequences of enforcement proceedings?

According to Federal Law-229, the debtor and the guarantor have 5 days after transferring the case to a FSSP specialist to voluntarily repay the debt.

After this period, the collection of data on the status of accounts and the availability of personal property begins. If no movements occur on the account, then the bailiff decides to seize the existing accounts and withdraw money from them to pay off the debt.

By law, you can only withdraw part of the funds from your salary card. But the bailiff does not know what exactly the salary is, so a complete write-off occurs from all accounts. After this, you need to write an application for a refund of part of the money, providing a complete package of documents.

The mortgage guarantor has the same responsibility in case of non-payment, but he is not responsible for his personal residence. According to Federal Law No. 102, the bank has the right to sell the collateralized property through an auction in the event of no payment on the loan. In this case, the proceeds go to pay off the debt.

What to do if you can’t pay as scheduled

As soon as the title borrower realizes that he cannot make payments according to the repayment schedule for various reasons, he is obliged to inform the bank and the guarantor about this. If the problem is objective in nature, then bank employees may offer to arrange refinancing or. These are programs that will help you reduce your debt burden and continue making payments on schedule.

During the entire time that one of the specified programs is being processed, payment must be made. If the title borrower is unable to do this on his own, then he must be assisted by a guarantor.

It is worth keeping all payment receipts so that later on the basis of Art. 365 of the Civil Code of the Russian Federation to demand compensation from the debtor for losses incurred.

Can a guarantor refuse to fulfill his financial obligations?

The law does not provide for such a right. But the borrower has the opportunity to change the guarantor if there are objective reasons. These include:

• Divorce, as a result of which the guarantor ceases to be a relative.
• Death of the guarantor.
• He has financial difficulties, as a result of which he cannot fulfill his financial obligations if the borrower is unable to make payments.
• Moving to another city or country.
• Other reasons that the bank deems valid.

To change the guarantor, you need to write a corresponding application to the bank explaining the reason. If the answer is positive, you must provide collateral or another person to secure the debt and reduce banking risks.

Should you agree if acquaintances, friends or relatives have asked you to become a guarantor for a loan, and what are the consequences of such consent? Although less common than before, banks still practice attracting guarantors - individuals as a way to secure loan obligations.

The relationship between the bank and the guarantor is secured by a guarantee agreement. The guarantor, like the borrower, must provide the bank with a complete package of documents confirming income, the level of which must not be lower than that of the borrower.

What are the benefits of hiring a guarantor? The borrower has the opportunity to increase the maximum loan amount, and sometimes to reduce the rate (by a maximum of one or two percentage points). Banks receive an additional guarantee of loan repayment. The guarantor is only gratitude from a loved one.

What responsibility does the guarantor have? The guarantor is responsible for the borrower's fulfillment of obligations under the loan agreement. If the borrower stops paying, the bank has the right to demand from the guarantor repayment of the principal amount, interest on the loan, penalties, and payment of legal costs. The responsibility of the guarantor to the creditor is described in detail by Article 363 of the Civil Code of the Russian Federation.

Is it possible to refuse a guarantee? It happens that only after some time the guarantor understands what he signed up for and wants to terminate the agreement with the bank. Those who plan to act as a guarantor should know that the agreement with the bank can be terminated only with the consent of the borrower and the lender, who do not need this at all.

When can a guarantee be terminated:

The obligation to the creditor has been fulfilled;

The guarantee agreement has expired;

The bank assigned the debt to another person without the consent of the guarantor.

What else is useful to know:

The death of the borrower or reorganization of the legal entity - the debtor does not terminate the guarantee;

If the terms of the loan agreement are changed without the consent of the guarantor, and this turns out to be unprofitable for him, then the guarantor is liable to the bank on the same terms.

Article 367 of the Civil Code of the Russian Federation talks in detail about the termination of a guarantee.

How does a guarantee affect your credit history?

All obligations of the guarantor (amount, term of payment of interest and principal, date and amount of payment, etc.) are reflected in his credit history. This means that if the need arises to apply for a loan, the guarantee obligations will be taken into account by the bank when assessing your solvency and may not allow you to obtain a loan of the required size.

What to do if the borrower refuses to pay the loan?

Fulfill your obligations to the bank: pay debts for someone you vouch for. Otherwise, the consequences will be unpleasant. Firstly, the guarantor, just like the debtor, risks losing valuable property. Secondly, your credit history will be damaged, and your chances of getting a loan in the future are minimal.

Is it possible to get money back if you paid the bank for the borrower? According to Article 365 of the Civil Code of the Russian Federation, the guarantor who has fulfilled the borrower’s obligations becomes his creditor. This means he may demand a refund from him. If the borrower refuses to repay the debt to the guarantor, the latter has the right to go to court and reimburse all his expenses in full.

Adviсe

If you are planning to take out a large loan in the near future, then keep in mind that your obligations as a guarantor will be taken into account by the bank when assessing your solvency. It might be worth giving up.

Do not agree to become a guarantor for a person whose financial condition you have a vague idea about.

The Banki.ru portal wishes all its readers and clients to always consciously and responsibly approach the choice of financial products and services. Complete information about financial instruments is available in the Banki.ru financial supermarket.

At least once in their life, almost everyone has had a case when one of their relatives or friends asked you to become a guarantor for a bank. Of course, at first it seems like simple help to someone in need, and what’s wrong with supporting a loved one. But, for some reason, most Russians still do not understand the full extent of the responsibility that they take upon themselves, vouching for someone with their income. If you sincerely trust this person, and are confident that he will not experience force majeure circumstances and he will be able to pay all his debts, then why not. After all, you only need to put your signature in the right place. And if not? And your friend will be broke, what should you do then? After all, the debt automatically becomes yours. We will tell you right now what you need to know and take into account when agreeing to be a guarantor.

The role of the loan guarantor

By becoming a guarantor, the involved third party assumes the responsibilities of guaranteeing the return to the bank of the borrowed funds claimed by the borrower. That is, by vouching for someone, you take full responsibility in the event of non-payment of obligatory contributions by borrowers, and undertake to pay the remaining debt, including fines and interest (if provided for by the contract) in full.

In most cases, when applying for serious loans, you simply cannot do without collateral or a guarantee. By attracting a solvent guarantor, the borrower can immediately count on an increase in the maximum loan amount by combining the income of the borrower and the guarantor.

Who can be a guarantor?

Any person can become a guarantor, most often a close friend or relative, as well as an organization or employer. In most cases, the bank does not care at all what kind of family ties the borrower has with the guarantor. However, there are still a number of requirements that the guarantor must meet:

• be a citizen of the Russian Federation;
• compliance with age restrictions: most often from 18 years, less often after 21 years, and not exceed the official retirement age until the debt is repaid;
• official employment;
• having a minimum work experience of at least 1 year, subject to the last employment with an experience of at least 6 months;
• net income must be sufficient to meet both one’s own needs and to cover other people’s credit obligations in accordance with the executed agreement;
• having a clean credit history.

Of course, these are not all the requirements that a bank can put forward to a guarantor. You can find out everything in more detail only when you fill out the documents directly.

Liability of the guarantor

According to Russian legislation, the signed loan agreement can be drawn up on one of two main basic conditions of liability:

• solidarity - according to which, the guarantor is burdened with responsibility equal to the borrower, that is, he will have to repay the debt, if necessary, in full, taking into account all fines and interest;
• subsidiarity - implying liability only after a trial that caused the borrower's insolvency, while fines and interest may not be charged.

If the court found it possible to withhold the debt from the guarantor, then it can be repaid both in cash and through the sale of liquid property by bailiffs.

Possible risks

By becoming a guarantor, a person not only assumes serious responsibility to the bank, but also becomes hostage to certain risks:

• financial - there is always the possibility that the guarantor will have to pay someone else’s debts;
• credit - in case of late payments, the credit history deteriorates not only of the borrower, but also of the guarantor;
• if you need to get a loan for yourself, problems may arise - the bank will first deduct the required minimum for living from your available income, then the amount of the loan guarantee, and only based on the remaining amount will they be able to issue you a loan that can be covered with the money you have left.

To avoid all these unpleasant moments, you can always refuse the guarantee if the bank approves it.

Duration of the guarantee

By agreeing to become a guarantor, you accept responsibility for a certain period, which is most often regulated by the relevant agreement. According to the agreement, the liability period ends:

• together with the validity of the loan agreement;
• if there is no record of the expiration date of the guarantee, according to the Civil Code of the Russian Federation, you can be released from liability one year after the last payment, in the absence of claims from the bank;
• if the terms of the loan agreement are changed without notifying the guarantor, the guarantee agreement is terminated automatically;
• if the responsibility of the guarantee was assigned to the organization and it ceased to exist, it means that there are no more responsible persons;
• in the event of the death of the borrower, if he has heirs, the loan becomes their responsibility, therefore, another person becomes the borrower, and the guarantor, if called to sign a new agreement, can refuse his duties.

Important point! Full release from liability occurs three years after the last payment, if the bank has not submitted the corresponding claim to the court (the statute of limitations begins).

How to mitigate the liability of a guarantor

When the borrower still fails to cope with his responsibilities, the bank, trying to minimize losses, shifts all responsibility to the guarantor, which threatens him with material costs. However, the guarantor also has opportunities to avoid serious losses. To do this, in case of any claims from the bank, you need to do the following:

1. Contact the borrower and find out the reasons why he does not fulfill his obligations:

• if there are objective circumstances for this, and the difficulties are temporary, you can provide all possible assistance and, for a certain period of time, undertake obligations to pay the debt, while making payments on your own behalf and receiving evidence of this, so that you can then recover this money from the borrower;
• if the borrower avoids personal contact, you should contact the bank and provide information about the borrower’s location and all his sources of income, so the bank will have a real opportunity to hold him accountable;

1. If the borrower does not refuse his obligations, but at the same time he does not have the opportunity to pay right now, and the guarantor, due to his own circumstances, cannot provide financial assistance, it is worth contacting the bank together and asking the credit manager to revise the agreement. In this case, a credit holiday may be assigned or a debt restructuring plan may be proposed, and the option of debt refinancing may also be considered.
2. If the issue cannot be resolved peacefully, and the bank still wants to collect the debt from the guarantor, the only way to avoid liability is to have nothing. So, if the guarantor does not have his own property, or it is jointly acquired in marriage, or lacks official work, then he will not be able to bear the responsibility assigned to him.

Rights of the guarantor

Along with the responsibilities, the guarantor acquires certain rights:

1. the ability to recover your own costs from the borrower through the court if one or more contributions have been made - it is important to have evidence for this (receipts);
2. when making large sums to pay off a debt, you can try to sue the borrower for property belonging to him to offset the resulting debt (house, garage, car, land, etc.);
3. if the loan was taken out for the purchase of specific property, the guarantor may demand through the court that the property he paid for be transferred to his ownership;
4. if the guarantor has obligations to pay alimony or benefits for disabled dependents (more than 70%), then the creditor has no right to collect the loan debt from him.

How to avoid problems with a guarantee?

A guarantee is a serious responsibility and risk, which many for some reason consider just a formality. Of course, when the borrower is a disciplined and committed person, and does not let his guarantor down, then the guarantor really has no reason to worry about his signature. However, no one is immune from problems, and if you have even the slightest reason to doubt the solvency of a person asking you for “such a small thing” just to vouch for him on paper, feel free to refuse. It’s better to refuse once than to regret a thousand times when paying off other people’s debts.

If, nevertheless, you risk becoming a guarantor, then before concluding an agreement, be sure to ask the borrower for documents confirming his income and, to protect yourself, take a receipt from him stating that in case of problems with payments, you will have the right to demand from him to compensate for his own losses.