September 21, 2017 The number of guarantors is decreasing year by year. According to the Credit Information Bureau, there were 572 thousand in 2014. In 2016, the number of residents decreased by 200,000. Holding a loan or credit card involves a lot of responsibility. The guarantor is jointly and severally liable with the principal debtor for repayment. It is worth noting that delays in repayment were recorded at 12 percent. pledged obligations. In such cases, the creditor usually requests repayment from the girrant. How do you get your money back when someone else’s loan is repaid? One way is recourse claims.
Can a resident avoid paying a guaranteed liability?
In 2016, the number of guarantors was 370 thousand. The average amount of the guaranteed loan is 28,900. zł. Delays in repayment were recorded at 11.9 percent. commitment obligations 1 . When the main borrower stops paying off the loan, the creditor has the right to require the guarantor to pay the debt. The resident is responsible for all obligations incurred with his property. Failure to pay the debt by the guarantor is associated with bailiff enforcement.
Important – the resident is exempt from fees once the loan has been repaid. The scope of the guarantor’s liability may not be broader than the contracted commitment.
Before signing the cash loan surety agreement, the guarantor must know the financial situation of the main borrower. In order to reduce the risk, he or she should force the person taking out the credit or loan insurance. It is worth noting that in the case of mortgage loans, the policy is obligatory.
Credit insurance usually covers
- Pay off liabilities when the borrower dies
- Covering the cost of credit if the contractor suffers permanent health damage
- Insurance against job loss – partial repayment if the borrower loses his job
Withdrawal from surety – is it possible?
It is possible to withdraw from the guarantee. Provided that the main debtor repays the liability conscientiously. At the moment when there are delays with the settlement of the loan, the guarantor will lose any chance of giving up the offer.
If a resident wishes to give up his role, he should submit a letter to the financial institution which gave the commitment. At this point, the bank will ask the borrower for other collateral.
Bailiff enforcement – a consequence of failure to pay back a guaranteed loan
As soon as the borrower defaults, the creditor will demand payment of the debt from the ryrant. If the guarantor refuses, the bank or loan company will launch a debt collection procedure against him. If so. soft debt recovery will have no effect, the debt case will go to court. Then the bailiff receives an enforceable title under which he can seize the property of the girrant.
What can a bailiff take?
- Żyrta property
- Movable property – cars, agricultural machinery, electronics and household appliances
- Part of remuneration (including pension and retirement pension)
- Accumulated funds on the bank account
What can’t a bailiff do?
- State decorations
- Religious items
- Scientific materials – e.g. school textbooks
How to secure a geranium? Ways to recover money
The guarantor, regardless of who he has cash loans with, should be guided by the principle of limited trust. Therefore, before signing the contract, it is recommended that he take steps that will help him recover money from the loan, someone else’s repaid.
First, a resident has the option of limiting liability to the principal, without interest and bailiffs. Moreover, he should stipulate the deadline for repayment – e.g. until the end of the period for timely settlement of the loan. It is also advised that the guarantor stipulate that the bank or loan company informs him of any delay in repayment. The guarantor also has the right to guarantee that the creditor will first reach the debtor’s assets in the event of a debt recovery procedure.
For the duration of the loan or loan agreement, a resident may take some legal steps, e.g.
- Make a transfer of title as security. It consists in the fact that the main borrower transfers ownership rights (e.g. of a car) to a giraffee, with the proviso that if the borrower fails to repay the obligation, the guarantor will become the owner of the transferred item. As soon as the debt is settled, the transfer of property loses power.
- Make a collateral in the form of a mortgage. This is possible on property belonging to the debtor or a third party.
- Security from a promissory note. The resident signs a bill of exchange with the borrower for a guaranteed amount. If the person making the commitment repays the loan, the promissory note expires.
How to recover the debt? – recourse claims
Without prior collateral, it is very difficult to recover money from the surety. The only way is to take the dishonest borrower to court. A resident, if he has repaid a guaranteed liability, may request a refund from the main borrower under a recourse claim.
It is worth noting that the recourse claim may be time-barred. In the case of natural persons, the deadline is 10 years, while when the claims are related to conducting business activity it is 3 years. The deadline is calculated from the payment of the liability by the girrant.
In most cases, the non-banking sector provides loans without a guarantee
For obvious reasons, few people agree to a loan or credit facility. Non-bank institutions, in comparison to banks, grant loans for relatively small amounts. Therefore, they do not require additional guarantees from their clients.
When granting a loan to a resident, a non-bank institution checks the creditworthiness of the principal borrower and the guarantor. If the guarantor does not have adequate BIK scoring, the decision to grant the so-called Reverse financing will be negative. For security purposes, funds are transferred to the account of the giraffee. Then the guaranteeing person transfers the money to the main debtor. An example of such a non-bank loan is Lapuda Cash.