Guarantor

[mountain_smith]

hi , can i ask what is a guarantor in a loan agreement liable for? what if the payer defaults payment? what is the guarantor liable for?

[anric79]

It means that if the owner never pay instalment for a certain of period then the motorshop willl call for the gurantor to pay him.

[fabian]

in short,

 

Payer runs away, guarantor "tah"....

 

[Guest quizesilver]

hi mountain smith,

 

i would refer this post to legal and regulation thread, shld bring you more info.

 

cheers

[three]

If hirer defaults payment, a letter will reach the guarantor, stating defaultment period and amount + interest. Only after bike have been reposessed then loan company will go after both hirer and guarantor.

 

If go for writ of summon, both name will appear in the court document. If go for bankrupt petition, both will drown together.

[mountain_smith]

hmm sounds quite serious. ok thanks anyway!

[2_wheeler]

Guarantor stuck with paying off friend's car loan

 

30 March 2005

The Straits Times. Your Personal Adviser

 

Q. LAST year, my husband became the guarantor on a car loan that a friend took up with a bank.

 

Later, this friend defaulted on his monthly payments several times until his car was seized. He did not pay the outstanding amount on the loan.

 

The bank demanded that my husband pay up in monthly instalments; otherwise, it would take legal action against him.

 

He agreed to make the monthly payments, but insisted that the bank take action against his friend by declaring him a bankrupt.

 

This friend has refused to disclose his current address. He is putting up with a relative to avoid his creditors.

 

Can my husband take legal action against his friend to recover the payments he has made?

 

 

A. IT IS quite clear that your husband's liability to the bank is based on the contract of guarantee.

 

The bank has a perfectly legitimate basis in law to look to your husband for the outstanding loan amount. Usually, there is no way to avoid a guarantee, except on highly technical grounds, and one would expect a bank to use a properly drafted contract.

 

When your husband became a guarantor for his friend (the principal debtor), he actually entered into a separate contract with the bank.

 

His obligation to pay under this contract is quite distinct and separate from the principal debtor's obligation.

 

The bank is not obliged to exhaust all possibilities of recovery from the principal debtor before seeking payment from your husband.

 

Your husband has no legal right to dictate to the bank that it should take all necessary action against the debtor or make him a bankrupt.

 

Many people assume the obligations of a guarantor without appreciating what a burdensome contract they are entering into.

 

Your husband, like any guarantor, can pursue a claim against the debtor by way of a statutory demand (SD) or a writ of summons.

 

Usually, if there is no dispute over the amount or the facts of the case, the SD provides a faster alternative as the debtor has 21 days to pay up or 14 days to apply to court to set aside the SD.

 

If the debtor does nothing at all, a bankruptcy petition can be presented to court.

 

Amolat Singh

Lawyer

Amolat & Partners

 

* Advice provided in this column is not meant as a substitute for comprehensive professional advice.

 

This article first appeared in ST on March 27, 2005

[archenemy]

in other words...

 

dont be a guarantor...

[kennethy]

no say dun lah... but know who to guarantee for... cos alot of people just sign the paper without understanding the legal implication behind...