Guarantor help please

peachey0796

Hey,
Can anyone help me, my husband guarentored a loan for my brother who has since started proceedings for debt consolidation. The lender has understandably contacted my husband to take over the loan.
Where do we stand on this as the lender has not been told they will not be paid by the borrower they have been told they will get 65p per £ borrowed. The original loan amount has been paid its now just interest. Also, I believe my husband agreed this verbally and by text no legal document.
Please help

[Deleted User]

Your husband is responsible for paying any remaining amount.

The original amount had not yet been paid off. Payments go towards both capital and interest.

BrassicWoman

Has your husband asked the lender to prove he owes the money?

Brock_and_Roll

peachey0796 wrote: »

Also, I believe my husband agreed this verbally and by text no legal document.
Please help

Well that bit sounds a bit odd!

Assuming there is paperwork to support the guarantee, then husband will be on the hook for whatever their shortfall was on the total amount outstanding (including interest) at the point of default. Of course the OPs brother can pay this back in due course if he has any morals.

I am afraid that is exactly what a guarantee is!

Other MSEers - do these guarantee docs usually allow lender to recover costs etc from the guarantor?

MEM62

peachey0796 wrote: »

Hey,
Can anyone help me, my husband guarentored a loan for my brother who has since started proceedings for debt consolidation. The lender has understandably contacted my husband to take over the loan.
This would be the standard approach once your brother defaulted on the loan.
Where do we stand on this as the lender has not been told they will not be paid by the borrower they have been told they will get 65p per £ borrowed.
The lender does not want £0.65 in the £, they want the full amount owed. As your husband guaranteed this and your brother is not going to pay up your husband not has to make good on his guarantee.
The original loan amount has been paid its now just interest. Also, I believe my husband agreed this verbally and by text no legal document.
I am sure that the legalities were tied up properly by the lender before the money was released. It is unlikely that your husband will be able to escape his obligation.
Please help

Unfortunately, these are the risks assumed by a guarantor. In short, he has agreed to repay in the event that your brother did not. Your brother hasn't so it now falls to your husband to do so. That is what it means to be a guarantor.

foxy-stoat

Best find out the settlement figure and find some cheaper finance for himself.

System

Brock_and_Roll wrote: »

Other MSEers[/B] - do these guarantee docs usually allow lender to recover costs etc from the guarantor?

ALWAYS. The guarantor is equally liable for the loan. In fact companies like Amigo Loans take it so far that they actually pay the loan into the guarantors account to prove a link, not the applicant. It is therefore much better for the borrower if the person they were going to get to be the guarantor instead gets a loan for them in their own name. That way the borrower gets a much better rate on the loan and if they don't repay it then the person who applied for the loan is in no different position than if they'd been a guarantor but would benefit from the fact the amount to be repaid would be less.

Xbigman

By consolidation do you mean an IVA?

This would bring up an interesting point. Could the lender agree to take a percentage from the borrower and then go after the remaining percentage PLUS FEES from the guarantor? If so the way forward might be for the guarantor to take out a loan to clear the debt and then get themselves placed on the creditors list of the (presumed) IVA for whatever they can get. Thus avoiding any fees incurred as a guarantor but not avoiding interest on the loan they've taken out or their part of the shortfall.

I'd like to know the answer to this too.


Darren

Craig1981

Xbigman wrote: »

By consolidation do you mean an IVA?

This would bring up an interesting point. Could the lender agree to take a percentage from the borrower and then go after the remaining percentage PLUS FEES from the guarantor? If so the way forward might be for the guarantor to take out a loan to clear the debt and then get themselves placed on the creditors list of the (presumed) IVA for whatever they can get. Thus avoiding any fees incurred as a guarantor but not avoiding interest on the loan they've taken out or their part of the shortfall.

surely paying this loan off in anyway would be "favouring" a creditor, and may cause IVA to be declined?

as guarantor, they will chase for whatever outstanding amount is owed

boo_star

Craig1981 wrote: »

surely paying this loan off in anyway would be "favouring" a creditor, and may cause IVA to be declined?

The guarantor is basically the debtor in these circumstances.

I doubt, if the guarantor took it upon themselves to repay the loan, that the other creditors could do anything about it. The other debtor can't stop them repaying what is essentially their loan.