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  • FIRST POST
    • MachoShirts
    • By MachoShirts 10th Jan 18, 6:03 PM
    • 25Posts
    • 7Thanks
    MachoShirts
    Loan Guarantor - Debt Relief Order
    • #1
    • 10th Jan 18, 6:03 PM
    Loan Guarantor - Debt Relief Order 10th Jan 18 at 6:03 PM
    A friend of my co-signed a guarantor loan from Amigo Loans for a work colleague and believed he was able to back out at any point - the loan was for £10,000 over five years with approximately £18,000 repayable over the period. The loan's nine months old, and the colleague is now three payments behind. My friend had to move from full time work to limited hours in a kitchen due to health issues and isn't in the financial position to make repayments on the colleague's behalf.

    What my friend was wanting to know is if he's able to apply for a Debt Relief Order or an IVA based on his current financial circumstances - with his income and outgoings he has approximately £20 per month disposable income, and he's only marginally earning more than he would on Universal Credits. He's unsure what his options are with there being two liable parties.

    Thanks again for any help!
Page 1
    • Pixie5740
    • By Pixie5740 10th Jan 18, 6:20 PM
    • 11,305 Posts
    • 15,912 Thanks
    Pixie5740
    • #2
    • 10th Jan 18, 6:20 PM
    • #2
    • 10th Jan 18, 6:20 PM
    A friend of my co-signed a guarantor loan from Amigo Loans for a work colleague and believed he was able to back out at any point - the loan was for £10,000 over five years with approximately £18,000 repayable over the period.
    Originally posted by MachoShirts
    If your friend did actually read the information provided to him by Amigo I have no idea* why he thought he could back out at any time. What would be the point of a guarantor loan if the guarantor can just walk away at any point?

    *Actually the guarantor can "walk away" under these circumstances:

    "You can change your mind about being a guarantor any time before the money is paid out by calling us on 01202 629 200 (Mon-Thurs: 9am-7pm, Fri: 9am-6pm, Sat: 9am-1pm).

    If you change your mind before you pay any money to the borrower, you can pay us the full loan amount back, plus any interest accrued, to close the account. Once you have given the money to the borrower, if you wanted to stop being guarantor, you would have to repay the loan in full with any accrued interest, or wait until the loan is settled by the borrower.
    The loan's nine months old, and the colleague is now three payments behind. My friend had to move from full time work to limited hours in a kitchen due to health issues and isn't in the financial position to make repayments on the colleague's behalf."

    https://www.amigoloans.co.uk/question/how-do-i-stop-being-a-guarantor

    What my friend was wanting to know is if he's able to apply for a Debt Relief Order or an IVA based on his current financial circumstances - with his income and outgoings he has approximately £20 per month disposable income, and he's only marginally earning more than he would on Universal Credits. He's unsure what his options are with there being two liable parties.

    Thanks again for any help!
    Originally posted by MachoShirts
    That's a good question. What happens to the guarantor's liability for an Amigo loan if the guarantor becomes insolvent**? Amigo's website covers the borrower becoming insolvent but not the guarantor. Your friend might want to check that with Amigo or one of the debt charities (CAP UK, National Debtline or Step Change).

    Unless he owns property then an IVA won't be a suitable option for him it would be a DRO or bankruptcy. Again this is something one of the debt charities can advise him about.

    Edit:

    **I found this online regarding bankruptcy and guarantor loans:

    What about if the guarantor goes bankrupt?

    "Turning to the other side of the coin, let’s consider what would happen if your guarantor runs into financial trouble during the loan’s term (assuming you’re keeping up with the repayments at this time). If this happens and they become bankrupt, their liability to repay the debt will come to an end and you’ll be expected to keep making payments as usual."

    "http://www.bankruptcyclinic.co.uk/blog/bankruptcy-and-guarantor-loans/
    Last edited by Pixie5740; 10-01-2018 at 6:34 PM.
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • redpete
    • By redpete 10th Jan 18, 6:27 PM
    • 4,163 Posts
    • 3,676 Thanks
    redpete
    • #3
    • 10th Jan 18, 6:27 PM
    • #3
    • 10th Jan 18, 6:27 PM
    Your friend signed up to be equally liable with the borrower for the full amount for the life of the loan, that means the lender can come to either of them for the full amount. It would make no sense for a guarantor to be able to "back out at any time" - if this was possible then everyone would do it and the lender would have no protection.

    Apologies but I can't help with dro/iva.
    loose does not rhyme with choose but lose does and is the word you meant to write.
    • MachoShirts
    • By MachoShirts 10th Jan 18, 7:09 PM
    • 25 Posts
    • 7 Thanks
    MachoShirts
    • #4
    • 10th Jan 18, 7:09 PM
    • #4
    • 10th Jan 18, 7:09 PM
    Yeah, my biggest annoyance is that I didn't find out until after the money had been handed over so I didn't get a chance to tell him how it actually works. My friend's a little too trusting and way too naive for his own good.

    I'll get him to contact the charities, so thanks for that. He's due to meet with Citizen's Advice this Friday so they should also be able to give him some advice.

    Many thanks!
    • Ganga
    • By Ganga 12th Jan 18, 6:52 PM
    • 910 Posts
    • 459 Thanks
    Ganga
    • #5
    • 12th Jan 18, 6:52 PM
    • #5
    • 12th Jan 18, 6:52 PM
    Where is the colleague with the £10,000 ? why is he not paying it back.
    ITS NOT EASY TO GET EVERYTHING WRONG ,I HAVE TO WORK HARD TO DO IT!
    • Stu5788
    • By Stu5788 14th Jan 18, 12:39 AM
    • 2 Posts
    • 0 Thanks
    Stu5788
    • #6
    • 14th Jan 18, 12:39 AM
    • #6
    • 14th Jan 18, 12:39 AM
    I find Amigo one of the ‘better’ guarantor loan companies going, tell him to phone them & explain the situation.

    Getting a guarantor proves very difficult these days. I have a loan with Amigo for £1000, trying to top up to £1500 & can’t get a guarantor for it.

    I hope your friend gets it sorted, Shame on the borrower for leaving him in the lurch like that.
    • tonycottee
    • By tonycottee 14th Jan 18, 10:33 AM
    • 1,066 Posts
    • 2,066 Thanks
    tonycottee
    • #7
    • 14th Jan 18, 10:33 AM
    • #7
    • 14th Jan 18, 10:33 AM
    A friend of my co-signed a guarantor loan from Amigo Loans for a work colleague and believed he was able to back out at any point - the loan was for £10,000 over five years with approximately £18,000 repayable over the period.
    Originally posted by MachoShirts
    I would ask your friend to check that the figure is correct. That sounds awfully cheap for an Amigo loan. Their interest is usually 49.9%, so the total to pay back is almost £24k.
    • Caz3121
    • By Caz3121 14th Jan 18, 10:46 AM
    • 10,917 Posts
    • 7,129 Thanks
    Caz3121
    • #8
    • 14th Jan 18, 10:46 AM
    • #8
    • 14th Jan 18, 10:46 AM
    I would ask your friend to check that the figure is correct. That sounds awfully cheap for an Amigo loan. Their interest is usually 49.9%, so the total to pay back is almost £24k.
    Originally posted by tonycottee
    agree
    £10,000 loan @ 49.4%APR over 60 months would be £455.34 per month
    £17,320 interest meaning £27,320 due back in total
    • soolin
    • By soolin 14th Jan 18, 1:25 PM
    • 59,728 Posts
    • 42,401 Thanks
    soolin
    • #9
    • 14th Jan 18, 1:25 PM
    • #9
    • 14th Jan 18, 1:25 PM
    I find Amigo one of the ‘better’ guarantor loan companies going, tell him to phone them & explain the situation.

    Getting a guarantor proves very difficult these days. I have a loan with Amigo for £1000, trying to top up to £1500 & can’t get a guarantor for it.

    I hope your friend gets it sorted, Shame on the borrower for leaving him in the lurch like that.
    Originally posted by Stu5788

    ONly my opinion of course but I'm actually pleased that it is getting harder to persuade someone to be a guarantor any more as that means people are waking up and actually understanding what they are committing to.
    I'm the Board Guide for the Ebay Board , Charities Board , Dosh & Disability , Up Your Income and the Local MoneySaving-England board which means I volunteer to help get your forum questions answered and keep the forum running smoothly. However, do remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com
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    • Stu5788
    • By Stu5788 14th Jan 18, 2:22 PM
    • 2 Posts
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    Stu5788
    Some folk wouldn’t mind doing it & others just aren’t in the position to do it.

    I only need my top up as I’m currently off for a 6 week holiday from work - go back to work on January 29th. Before I finished up I made a payment to the current loan that covers payments until I’m back & getting a regular wage again so the danger of me skipping payments is slim to well nil. Tried contacting work agencies to keep me ticking over while I’m off but none will entertain me for a fortnight of work.
    • sourcrates
    • By sourcrates 14th Jan 18, 3:03 PM
    • 13,034 Posts
    • 12,339 Thanks
    sourcrates
    I suppose the question you must ask yourself is what happens if both the borrower and the guarantor go Bankrupt.

    Bankruptcy wipes the slate clean as far as CCJ`s, or liability as a guarantor goes, so the loser would be Amigo.
    I'm a Board Guide on the Debt-Free Wannabe, Credit File And Ratings, and
    Bankruptcy And Living With It, boards. "I volunteer to help get your forum questions answered and keep the forum running smoothly".
    Board guides are not moderators and don't read every post. If you spot an abusive or illegal post then please report it to forumteam@moneysavingexpert.com. Any views are mine and not the official line of MoneySavingExpert.com.

    For free debt advice, contact either : Stepchange, National Debtline, or, CAB.
    For Legal advice see : http://legalbeagles.info/
    • Malthusian
    • By Malthusian 16th Jan 18, 4:00 PM
    • 3,560 Posts
    • 5,460 Thanks
    Malthusian
    ONly my opinion of course but I'm actually pleased that it is getting harder to persuade someone to be a guarantor any more as that means people are waking up and actually understanding what they are committing to.
    Originally posted by soolin
    Nobody* who signs up for an Amigo or other guarantor loan understands what they are committing to. If they understood what they were committing to, they would get a loan in their own name at a lower interest rate and then lend it on to their "friend" at the same interest rate.

    *The words "nobody" "never" "everyone" "ever" should never be taken literally.
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