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Loan guarantor: duties and responsibilities

In order to provide additional security, credit organizations demand to bring guarantors to the loan, which would share with the borrower financial responsibility for repaying the loan in full within the prescribed period.

Meanwhile, it is very difficult to find a person who would undertake obligations. As a rule, a loan guarantee is issued to the closest relatives and relatives who are ready, if necessary, to financially support a debtor who has fallen into difficult life circumstances. Otherwise, there is a great chance that the borrower will refuse to pay the debt to the bank and will disappear, and all obligations will be transferred to the guarantor.

Guarantor Requirements

Guarantor Requirements

As borrowers, the guarantors must also be inspected by the bank for compliance with 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 in which the borrower applies.
  3. Established capacity.
  4. Age over 21 years. Most often the contract of guarantee is concluded with persons under the age of 35 years.
  5. The presence of permanent income or the presence of property. The size of the income and the financial situation of the citizen must allow to provide payments on the loan in case of default on the part of the main borrower. The bank will also consider a list of property among movable and immovable property.
  6. Positive credit history.
  7. The length of service should be more than 1 year.
  8. The duration of work at the last place of employment – from six months.

In order to preliminarily assess the possibility of using one or another 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, who can become a guarantor, are made only by the bank, which will take into account the entire set of candidate parameters. 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 wages. In the end, who is the guarantor, each bank determines individually.

Credit liability

Credit liability

 

Defining 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 return of a loan on the conditions specified in the contract.

A special agreement is concluded between a credit organization and an individual, the general meaning of which is that the person will be obliged to pay fines, penalties, fees, make monthly payments in case the debtor stops performing his duties.

The responsibility of the person who became the loan guarantor is large enough to hastily agree to support the borrower when making a loan.

It is recommended in advance, before signing the contract with the bank, to perform the following actions:

  1. Assess your financial capacity to repay the loan in a situation when the borrower refuses to pay, and the solvency of the guarantor deteriorates.
  2. Carefully examine the loan contract clauses, especially the obligations of the loan guarantor and the borrower, including financial obligations (interest rate, penalties for delay, actions in force majeure situations, etc.).

Before assuming obligations, a candidate for a bank guarantee must understand that participation in credit relations is not an ordinary visit to the department 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 loss of own funds, but also unpleasant situations with collectors and bailiffs.

Responsibilities by law

 

Involvement of the person who vouched for the borrower in the financing of the debt begins with the formation of the first delay. When the debtor is unable to service the loan debt or simply refuses to pay the fees, according to paragraph 2 of Art. 363 of the Civil Code, the lender requests to fulfill financial obligations instead of the borrower.

A credit institution may do the following:

  1. On behalf of the bank, the claim for payment of the borrower’s financial obligations is sent to the guarantor. The notification form should indicate the total amount of the debt, the maturity date, and other important information on the loan.
  2. If the borrower refuses to return the amount taken at the bank, it is possible to unilaterally debit the guarantor’s account without agreeing on the fact of the debit and the amount. Such a measure must be specified in the contract to be signed.
  3. The lender has the right to file a lawsuit in court to recover the required debt from the borrower and the guarantor at the same time. After a court order is issued, it is possible to collect funds to pay off the debt, including the sale of real estate or vehicles.

Contractual obligations

 

In addition to material obligations, you need to perform the following actions during the entire loan period:

  • transmit information about the change of passport, name, address;
  • notify the creditor of the proceedings in a criminal or civil case, as a result of which the property of the person is subject to arrest;
  • transfer to the bank information about events in your personal life that adversely 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.

Guarantor Rights

 

Participation in a loan entails not only financial and non-financial plan responsibilities. A person may exercise his rights as a guarantor under a loan agreement and at the closing of a loan.

The exercise of rights at the time of the contract

A person acting as a loan guarantor is entitled to perform the following actions:

  1. Examine all the documents involved in signing the loan agreement.
  2. Determine the terms of lending on the basis of the contract.
  3. The guarantor, equally with the borrower, may contact the lender with a proposal to adjust the clauses of the agreement, based on the provisions of applicable laws.
  4. Ask for information on how the process of debt repayment proceeds and what is the amount of the balance.
  5. Contact the bank with the requirements, if the borrower’s guarantors believe that their rights are violated. If the contract states that a person bears financial responsibility only in relation to the payment of debt, the main body of the loan, interest, fines.

If the client refuses to fulfill his financial obligations, his surety is entitled to demand restructuring from the bank.

Rights at the time of closing the credit line

 

Do not underestimate the contract of guarantee – if the guarantor has repaid all the debts incurred to the credit organization, the contract is terminated and the payer has the opportunity to demand that the borrower return the money paid by the court.

As part of the implementation of the court order, the bailiff will be able to forcibly recover the necessary money on the writ of execution. In addition to the principal, interest, you can claim compensation for all costs incurred in the execution of the loan agreement.

The guarantor may appeal to the court at any time during the exercise of his duties. For filing a claim, you will need to attach copies and original documents showing the full payment of the debt and the absence of debt (certificate of full payment by the guarantor of the debt and credit agreement, mortgage on real estate, certificate of payment).

Deliberate evasion of the client from payment and ignoring SMS alerts about the need to repay debts entitle the guarantor to challenge any decision of the creditor.

Legal and financial subtleties

Legal and financial subtleties

 

The peculiarity of participation in debt relations lies in the absence of the right of the guarantor to the funds received by the borrower with the simultaneous obligation to pay the loan in case of debt formation. Financial obligations must be fulfilled, regardless of the reasons that formed the basis for debt formation. At the same time, if the borrower retains in the eyes of the bank the right to apply for restructuring, revising the terms of the loan for more profitable ones, this service almost does not apply to the guarantor.

In addition to the trouble due to the need to repay the debt for another person, another negative consequence will be the deterioration of the surety’s credit history. Even if the bank approves the loan application for such a person, the loan amount will be less. Hide information about the guarantee also fails – it is visible in the general database and provided to the credit institution upon request.

Subsidiary or joint and several liability

 

According to Art. 363 GK, the credit assumes joint and several liability. This means that if there is no payment by the borrower, the person takes on financial obligations. If the delay is allowed, not only the client who took 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 the monthly installments, 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 the current legislation, however, a different procedure for the recovery of the debt and the assignment of liability may be established in the contract with the bank.

In some cases, the responsibility for the loan may not be imposed in full. This should be stated in the bank agreement. If the parties agree to bear subsidiary liability, the lender must provide evidence that the borrower is unable to repay the loan, excluding cases of evasion. Only after the presentation of evidence that the debt is not associated with a simple unwillingness to return funds taken from the bank, the bank can send a request for payment to the guarantor. This requirement is sent on the basis of a court order, however, in the event of the loss of the borrower, the court may refuse to satisfy the claim.

When reading the text of the contract should pay special attention to the type of responsibility for credit obligations. Unless otherwise stated in paragraphs of the document, subsidiary liability applies.

Litigation

 

One of the most unpleasant consequences is a damaged credit history and involvement in legal proceedings when a client refuses to return the funds to the bank. The lender, faced with non-return, may give several months for the borrower to arrange a full repayment. If the situation has not improved during this period, the bank makes demands on loan repayments to the guarantor. However, the guarantor is in a more difficult position, because you will have to pay not only debt on overdue contributions, but also accrued fines and penalties.

The presentation of claims to the guarantor is rarely practiced in reality. Most often, a court hearing awaits a large amount of debt. If the borrower’s debt is large, the credit institution can prepare a claim within 3 months.

The court, taking into consideration all the circumstances, makes a decision. The judge may refuse to satisfy the claim, having heeded the arguments of the guarantor. However, if the claimant’s party is accepted, the defendant will face a penalty for the full amount of the loan with penalties. If the defendant cannot pay off the debt with personal funds, the court may initiate the sale of his property in order to close the debt to the bank.

Termination of the guarantee

 

 

Responsibility for a loan can only be removed when the following situations occur:

  • full repayment of the loan;
  • changing the terms of the contract without approval;
  • refusal of the bank to accept the signed conditions for the fulfillment of obligations;
  • expiration of the loan agreement;
  • the absence of a response from the lender with the outstanding debtor’s debt for 1 year;
  • removal of responsibility from the current one and placing it on a new candidate.

Thanks to the guarantor, the borrower has a better chance of getting a loan from the bank. However, signing a contract involves a high degree of risk if there is no confidence in the reliability of the main payer for the loan. After all, if the borrower decides not to return the funds to the bank, the person responsible for the citizen will have to compensate for the losses to the bank.

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